The HD Experience: The Future Of Blu-ray And The HD Consumer

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The HD Experience
The Aftermath...The Future
January 6, 2008

Well, it's only been a week into 2008 and we've had a hell of a ride. And an awakening. Warner Brothers announcing they are going Blu-ray and ending all HD DVD releases by May 2008, has certainly given Blu-ray proponents time to celebrate. However, this celebration may not be as sweet as some would like. There are many questions still left unanswered, and with the new HD shift in formats, more questions are arising as to the actual life of Blu-ray itself, given almost half of the HD consumer base has now been left behind.

"Because The Consumer Prefers Blu-ray..."

Warner Brothers announced on January 4, 2008, they were choosing Blu-ray exclusively, and it had to do with their empathy for the HD consumer. They said their choice was made in the interests of a strong consumer preference for Blu-ray. However, because of Toshiba's $99 HD DVD player and promotions related to HD DVD software (the movies), it is hard to believe Warner Brothers would make such a statement, given HD DVD ownership was at an all-time high by the end of 2007. It is well-known Blu-ray and HD DVD were fairing about half the market a piece. Blu-ray did have sales which were stronger than HD DVD, however, these sales did not indicated Blu-ray was taking a strong lead. They were at the same levels they always had been, and in some reports, declining a little.

"When someone tells you from the onset of a competitive event, that one side is already preferred, doesn't that seem odd?"
One of the major problems with quoting sales figures to explain the situation in this article (and any article related to HD for that matter), is we have biased reporting from both sides, although, I will admit, I saw more of the propaganda figures being released by Blu-ray supporters. Maybe it was because they had a larger campaign and the HD DVD sector didn't have that strong of a campaign. This is probably the reason, but still, the type of information being released was not on the level. It sounded too good to be true. When someone tells you from the onset of a competitive event, that one side is already preferred, doesn't that seem odd? Of course it does. How can one make a statement of preference, when the competition is hardly over, and hasn't even penetrated the fan base? How can one determine if one is better than the other, if there hasn't been enough time to use the product?

"Unfortunately, the future for the HD consumer could slow down considerably, before it gets better..."
So, unfortunately, it's impossible to know just what the honest figures are. What does seem realistic, is that HD DVD had at least a 40% market share, and Blu-ray a 60% share in the HD format. Yes, it tells us Blu-ray is in the lead, but we have to look at that 40% figure. That's a lot of people who own HD DVDs and HD DVD players. And now I have to ask why Warner Brothers, how this could be a smart financial move, when knew they were going to take a serious financial hit? Warner Brothers announcing their Blu-ray preference, just doesn't make a lot of smart consumer sense--doesn't make smart business sense either, and this is why I am writing this article, hoping to raise some flags for not only HD DVD consumers, but for newly-adopting Blu-ray consumers who believe this format war is over, and things are now going to be nice and easy.

Unfortunately, the future for the HD consumer could slow down considerably, before it gets better.

Blu-ray Prices Will Remain As They Always Have...Right?

One of the realities of competition, is low prices. In our economy and any economy which allows the freedom of businesses to compete, the consumer will appreciate the lower prices associated with that competition. This is standard procedure, and also allows for a wider acceptance of a particular product, and forms a foundation for the product to launch from. Without competition, products have a much lesser chance of survival, as well having more inherent problems because competition forces businesses to take a hard look at their product, revise any issues it may have, because they know a consumer is going to buy the competition's products which have less problems. Competition also has a way of letting businesses know just how much a consumer is willing to spend for that product.

Now that Warner Brothers has announced their Blu-ray exclusive intentions, Blu-ray is certain to be the only format available after this year. Other studios like Paramount and Universal, are more than likely going to announce their Blu-ray plans. In any case, if you're an HD fan, the future is rather Blu for you. No pun intended. Well ok, maybe a little. Here's why.

Sony has forked out a lot of cash over the last year. We will never know the exact amount, but Sony is highly invested in Blu-ray because after all, it's their product. They created it. How can you continue to offer such low prices when you no longer have competition? Does it make sense to keep prices low when you have now cornered the market? Not really. And here is where Blu-ray owners might feel a financial crunch. Sony just cannot continue to offer the $10 price point on their Blu-ray discs, if they want to make as much money as they can. Once again, Sony has a history of creating a proprietary product, and then charging as much as possible for it, regardless of how large its consumer base is. What I fear, is this latest move by Warner Brothers, at such an early time into the HD format war, created an opportunity for Sony to sell their products to an elitist group, where the majority of the consumer cannot afford HD media.

Warner Brothers didn't go Blu-ray because they wanted what was best for the consumer. This should be fairly obvious, but we have some proponents, defending Warner Brothers, saying this is the case. Why would Warner Brothers choose a manufacturing process that is more expensive than Blu-ray? Why would Warner Brothers cut their consumer base almost in half, just to choose Blu-ray? Why would Warner Brothers lose such a large percentage of their consumer base, in the face of a declining economy that on the same day, dropped several hundred points off the DOW Jones and a recession is now almost certain? The only answers to these questions are subsidies. Warner Brothers was more than likely subsidized by Sony, not only in the manufacturing process, but media sales as well. Whether Warner Brothers was given outright cash, is a possibility as well.

So, the question is, will your Blu-ray movies cost more in the future? Well, I can't say for sure. However, given what we do know, and how a company cannot continually expand by offering discount prices on its media unless it has a massive increase in its consumer base, I'd say the chances of higher prices are very likely. Now, some will comment that I'm just sour from being an HD DVD owner. Not really. In fact, Warner Brothers made my HD DVD collecting go into overdrive because HD DVDs will eventually be sold at discount prices. We know Blu-ray and HD DVD combo players are already being announced at CES 2008, so having cross-compatibility isn't too much of a concern. Why would I want to sell all my HD DVDs, take a considerable loss, and re-buy them on Blu-ray at a later date? For the HD DVD owner, who has a fairly large collection of HD DVDs (50+), you're in for a treat.

I should note, a few factors could change these predictions. Sony may do a complete turn-around as a company, and offer low prices for the HD consumer. We shouldn't disregard this possibility. And second, we might have such a large fence-sitting HD consumer population, that their purchasing of Blu-ray hardware and software will compensate for a decline from HD DVD consumers. Third, the amount of HD DVD consumers selling their equipment and movies for Blu-ray equipment and movies. I suspect the last factor won't have much of an effect, because most HD DVD users can't justify a complete re-buy of their movies and hardware.

These are my latest thoughts on The HD Experience.


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