HD DVD Walking Tightrope But Still Moving Forward

HDDVD_Tightrope.jpgWhile it seems that the HD DVD gang has been on a wobbly tightrope for years, surrounded by jeering Blu-ray supporters like Sony, Samsung and Panasonic, it sometimes feels like HD DVD could stay on that tightrope for a very long time. Last week we reported that it's finally rolling out the long promised support for downloaded content; this week, two more announcements made the underdog seem good and spunky.Microsoft announced a deal with its Seattle-based neighbor, Amazon.com, creating the "1,000 HD DVD Indies Project." The Amazon subsidiary CustomFlix will sell up to 1,000 feature-length indie flicks to Amazon customers, burning and shipping the HD DVDs only as orders for them come in. From what I gather, this uses the HD DVD-R disc format, just as standard-def CustomFlix orders are burned to regular DVD-R. This isn't the same as signing Disney or 20th Century Fox, but it is a sign of life.

At the same time, Paul Erickson, an analyst at IMS Research, put out a statement specifically stating that the Blockbuster selection of Blu-ray has "little impact" on the format war.

Erickson's logic is a little dubious, though. He says for the most part, the deal was just a way for Blockbuster to cozy up to Sony:

"Sony is a supplier of video content to Blockbuster, has a major retail presence in video-related consumer electronics that can potentially be linked with Blockbuster on a promotional basis, and is a significant investor in the online movie download service Movielink, which Blockbuster has actively been trying to acquire. It makes much more strategic sense in general for Blockbuster to ally itself with Sony's Blu-ray Disc format versus Toshiba's HD DVD."

And this is supposed to reassure the HD DVD crew how, exactly?

The best bit of news appeared at the bottom of the IMS release: "The expectation is for the HD DVD players to reach the coveted $200 price point by hoiday 2007." Erickson then spoils it by adding, "...or early 2008." HD DVD has lasted a while against great odds, but I say if it's not priced to move fast this Christmas, there's no way it will survive another year. And Microsoft, while you're out there promoting HD DVD, how about paying a visit to your own Xbox compound and pitch an integrated high-def drive?

Say what you will about the technical virtues and drawbacks of each format, Blu-ray has far more marketing muscle, and much greater capability to mount the massive offensive once all the troops are in line. If HD DVD's happy few, this band of brothers, makes one false move, that's it. Game over. Maybe that's why it's so fitting that the next big HD DVD movie release is 300.

Press releases:

Blockbuster Choice of Blu-ray has Little Impact on Blue Format War

Austin, TX (July 2, 2007) - Blockbuster's recent announcement that 1450 of its stores would exclusively carry Blu-ray Disc titles as their high-definition offering, has been noted by some as a potential turning point in the battle between the two formats. However, the development may be considerably less significant than it appears on its surface, in affecting a format war that is arguably still a year away from crowning a victor.

Paul Erickson, market analyst with IMS Research, feels the alignment between Blockbuster and the Blu-ray Disc format should not come as a surprise; "Sony is a supplier of video content to Blockbuster, has a major retail presence in video-related consumer electronics that can potentially be linked with Blockbuster on a promotional basis, and is a significant investor in the online movie download service Movielink, which Blockbuster has actively been trying to acquire. It makes much more strategic sense in general for Blockbuster to ally itself with Sony's Blu-ray Disc format versus Toshiba's HD DVD."

Based on his work in the report, "The Future of High-Definition TV -2007 Edition," Erickson states that the announcement will ultimately have limited impact: "The retail video rental business remains in a steady decline. Though this announcement appears to be a PR coup for Blu-ray Disc, it is doubtful that it will actually drive increased hardware penetration. Actual sales indicate that mainstream consumers are generally happy with DVD, and still find both blue formats' standalone players too expensive for mass adoption, regardless of content availability. Also of note, only a portion of Blockbuster's approximately 4500 retail outlets in the US are affected. The company has hedged its position by stating that consumer demand would govern its choices and by allowing its existing 250 stores that offer both blue formats, as well as its online rental service, to continue renting HD DVD titles."

The expectation is for HD DVD players to reach the coveted $200 price point by holiday 2007 or early 2008 while maintaining a 40-50% price advantage over the cheapest Blu-ray players. Combined with slow Sony Playstation 3 sales in the US, Erickson believes these factors point to a format war that is still quite in contention: "The format that can achieve the greatest mass-market hardware penetration of its standalone players will ultimately win. With the price drops for both formats' players expected for the end of this year, 2008 will be the true test of whether HD DVD's low entry price or Blu-ray's greater studio support will prove the stronger factor in driving the mainstream sales numbers needed for victory."

About IMS Research

IMS Research is a supplier of market research and consultancy services on a wide range of global electronics markets. The company is supported by headquarters in Wellingborough, UK and offices in Austin, Texas and Shanghai, China. IMS Research regularly publishes detailed research on the consumer electronics and digital TV markets, including digital set-top boxes, DVD recorders, HDTV, IPTV, and mobile TV. www.imsresearch.com

Amazon.com and Microsoft Team Up to Help Indie Filmmakers Jump Into HD DVD

Up to 1,000 new indie titles to be made available in HD DVD through the CustomFlix DVD on Demand Program; Sundance Channel original series, "Big Ideas for a Small Planet," to be among first HD television offerings on Amazon.com.

SEATTLE and REDMOND, Wash. -- July 2, 2007 -- Amazon.com Inc. and Microsoft Corp. today announced the 1,000 HD DVD Indies Project, designed to lower the barriers to entry for filmmakers to produce and distribute movies in the HD DVD format through the innovative manufacturing-on-demand technology of CustomFlix, a part of an Amazon group of companies. Jointly sponsored by Amazon and Microsoft, the project will provide free authoring and setup services for up to 1,000 selected indie titles.

"This collaboration with Microsoft is a great opportunity for independent filmmakers to reach Amazon customers with their films via the HD DVD format," said Peter Faricy, vice president of music and movies at Amazon.com. "By working together with Microsoft and leveraging the proven CustomFlix DVD on Demand model, we can lower the barriers to entry for independent filmmakers and dramatically increase the selection we offer our customers."

The project will be spearheaded by CustomFlix, which will bring as many as 1,000 feature-length independent films to Amazon customers using the CustomFlix DVD on Demand technology, which produces and ships DVDs only as they are ordered. This model greatly improves the cost structure for independent filmmakers by eliminating the need for costly inventory.

"From a technical standpoint, we found that the HD DVD format fits our business model perfectly," said Dana LoPiccolo-Giles, co-founder and managing director of CustomFlix. "With retail shelf space at a premium, our model eliminates the risk of carrying inventory and immediately expands the number of great HD DVD titles available to consumers."

"Programs like this one from Amazon lower barriers to entry for independent artists and provide audiences with increased access to high-quality, high-definition content," said Christian Vesper, senior vice president of programming, acquisitions and scheduling for Sundance Channel.

Sundance Channel will be reviewing the high-definition features for potential broadcast on the network as well as making its own HD original eco-series, "Big Ideas for a Small Planet," available for purchase through Amazon's HD DVD program.

"Amazon's participation in this project will be a major benefit to independent filmmakers wanting to break into the high-definition market segment," said Amir Majidimehr, corporate vice president for the Consumer Media Technology Group at Microsoft. "The use of Microsoft® technology and authoring expertise will ensure that all the HD DVD titles offered by Amazon have impeccable quality, thanks to the VC-1 codec and innovative interactive scenarios with HDi™."

Amazon.com offers a broad and growing selection of HD televisions, players and DVDs through its HD DVD store at http://www.amazon.com/hddvd. Filmmakers interested in submitting their HD DVD work for consideration as part of the 1,000 HD DVD Indies Project can go to http://www.customflix.com/hddvdindies.

About CustomFlix CustomFlix, a member of the Amazon.com group of companies, is the leader in manufacture on demand services for independent and enterprise media content owners. CustomFlix was founded in 2002 with the mission of profitably connecting content owners to a worldwide audience. Today, CustomFlix offers professional digitization into the Future-Proof Archive service, as well as inventory-free physical media distribution via both CD and DVD on Demand and video downloads through Amazon Unbox.