This is exactly how they think.

I've been in the situation where the company forecast X revenue for the year. They came up ~15% short and even though that represented a record in overall revenue, there were no bonuses paid because bonuses were tied to making the projected revenue.

One thing is certain: they are losing money in my case (the BD only studios that is). I used to spend $200-300 a month on DVDs and now that has dropped to zero.

I remember this from a while back. I did a search and found it in this post back in 4/5/06.

If you look at that post, the "Sound and Vision" article link is not active anymore, but this is the part that I quoted:

I believe DigitalFreakNYC quoted that whole Sound and Vision article somewhere at about that time, but I didn't search specifically for that. You could probably find it if you searched hard enough.

^ Depending on when one starts that "year and a half", Sony might still be able to manage 10 million PS3s sold.

It was supposed to start in March '06. And HD DVD was supposed to be still born, too. Things have changed enough that I think it is reasonable that options are being re-thought. That's why I think the rumors have some substance behind them and are not simply made up.

Does anyone know where the 360 is?? I thought I remember seeing that they were at 6 million so far and wanted 10 million by years end.

As far as the PS3, they might make the 10 million mark in a year and a half, but that doesnt mean that 10 million will be used for BD.

I bet the numbers for BD usage will be similar to the numbers of hd-dvd drives sold for the 360. Thats my opinion.

I think these formats will be neck and neck for a while.

If we are looking at a "HD Pie" then HD DVD (currently) is 2/3 of the pie. If a studio is releasing onto ANY HD format, then they are clearly looking to make some money. The basic fact is any title released on HD DVD AND BD has a potential to hit 100% of the market and not 50% (and that is with the assumption that BD has 1/2 the market whch they do not). That is basic math.

I don't know how many have been sold, but MS is still estimating (as of 8/2006) that they'll have shipped >10 million units to retailers by the 2006 holiday season (source)



So you think BD is going to catch up?

The year and a half starts when Sony says it does.

I'm still waiting for the PS3 to come out and hear all the bitching from J6P's who put in TN and don't see a difference.

I think it's a big assumption to make that everyone buying the PS3 will know that you won't get HD from the cables supplied...or even care about BD. And I'd say the same thing if the 360 was being touted as the trojan horse for HD DVD.

But we've been through that 1000 times on this board.

Correct. Perhaps "lost sales" is more correct than "lost money."

::

Simple maths also tells us that a title released on both formats will cost the studio more (though less than twice the cost). Since none of the current releases are likely to be profitable this doesn't make sense short term. Other studios can always release later on when the initial costs of start up have already been born, and a profitable marketplace established. A studio would need to release on BD, HD DVD, WMV-HD, and D-VHS to get 100% potential in the HD pre-recorded market place. But it's such a tiny marketplace at present...

Hardware wise yes....The PS3 will sell. The standalones will probably do ok too.

With the new toshibas, addon drive for the 360, BD standalones and the PS3, I think both are poised to do well. Now, titles is the big question mark.

I think it's pretty clear that BD studios are definitely losing revenue by not having the releases on HD DVD.

Let's look at my logic using some extremely simplified accounting.

Let's say the average studio margin per BD or HD DVD title is $1. Let's say it costs $5,000 to prepare a title in the first format (BD or HD DVD), then $3,000 for the second format (HD DVD or BD); some of the work was done the first time around.

Let's also say that there are 20,000 BD owners and 40,000 HD DVD owners.

Here are our two example titles, released by our studio, MetroGate Vistafilms.

What Moon are We On?, featuring the combined talent of Tim Allen and Eddie Murphy, this is a 2004 family favorite about two dads dealing with raising their families in space. As such, 30% of BD/HD DVD owners will want this title.

The studio's art-house arm is also releasing Solitude of the Monarch Butterfly, their critically well-received Mexican drama about a family facing death at home and abroad. That title will sell only to 5% of owners but is being included because the studio head is friends with Gael Garcia Bernal and he promised him it would come to hi-def.

OK, so here's what we've got so far:

Both titles released only on one format.

What Moon are We On?
Cost: $5,000
Margin Revenue: $6,000 if on BD only , $12,000 if on HD DVD only
Profit/Loss: $1,000 if on BD only, $7,000 if on HD DVD only

Solitude of the Monarch Butterfly
Cost: $5,000
Margin Revenue: $1,000 if on BD only, $2,000 if on HD DVD only
Profit/Loss: -$4,000 if on BD only, -$3,000 if on HD DVD only

Combined
Total Profit/Loss: -$3,000 if on BD, $4,000 if on HD DVD



Both titles released in both formats.

What Moon are We On?
Cost: $8,000
Margin Revenue: $18,000
Profit/Loss: $10,000

Solitude of the Monarch Butterfly
Cost: $8,000
Margin Revenue: $3,000
Profit/Loss: -$5,000

Combined
Total Profit/Loss: $5,000


In this scenario, the studio went from making -$3,000 or $4,000 to making $5,000. The endeavour became more profitable. It certainly didn't double their profits, but it increased them.

From a purely financial/accounting standpoint, it would not make sense for the studios to switch over to HD DVD if the returns were very poor. I could see them not doing it with movies that won't sell very well. Sure, we can live without Benchwarmers for now, but I guarantee a lot of HD DVD owners would buy Monster House. And Disney would be better off releasing Chicken Little than Dinosaur.

If studios are losing money all across the board, across every title, then it doesn't make sense to release on both formats. But, titles making money on BD will certainly make that much money (or more) on HD DVD. Titles losing money on BD may lose money on HD DVD, but it may be a smaller loss.

There's roughly about 40 BD-only titles on the market so far. Figure each would sell 10,000 copies to HD DVD owners in 2006. Talking in plain revenue, that's 400,000 titles. At $20 a pop, we're talking $8 million on the table. That's not a huge amount of money, but by end of next year that could be 150 BD-only titles that could sell 50,000 copies to HD DVD owners. Now we're talking $150,000,000.00

That's going to be mighty difficult to ignore especially with a board of investors directing home video strategy (as we saw in the Sony/Fox MGM article).

My issue is that HD DVD has sold because of two reasons: quality and value.

A lot of the BD-only releases have neither. So without those two things, why would the current HD DVD owners buy into it even if they were to suddenly switch over?

LG is going the right route by re-encoding everything to VC1 which should solve the problems. But what about Disney, Fox and Sony? All are releasing sub-par releases on one or both accounts. If any of those studios suddenly flipped, that doesn't guarantee money from everyone who would buy the titles available. They have to match the quality already being pushed by HD DVD. Sure, some people may buy the movies just to buy them but somehow, with how closely people here watch the reviews, I can't see the BD titles being a big draw on HD DVD unless something drastic changes.

That is all in personal preference. Quality to you probably means something different to someone who is an audiophile and wants the lossless/uncompressed audio.

Then explain why LG's next release will be The Decent in MPEG-2?

Look, every single studio has released subpar (at least in the minds of some) releases. No one is innocent.

That might be the case with The Fifth Element. But going by HD Digest, most of their recent releases have been very good. I'd have no problem picking up Monster House for example. But the very bad releases from this summer are history. To be fair to HD DVD, the "bad" titles are the fault of the transfer (FMJ) and the titles were equally bad on HD DVD and BD.

BUT...

dfnyc is absolutely right on value. Even if BD delivers 80-105% of what HD DVD is offering (today), the hardware is still extremely expensive.

While I agree that preference is important. Its hard to deny that hd-dvd quality has been high. There have been few (if any) reviews that have said differently.

As far as BD, they have had some poorly reviewed titles (mainly early on) and seem to be getting better (at least on par with hd-dvd).

You seem to be the only one who thinks hd-dvd is not high quality.

Maybe the work for this one was done already and they are sticking with it for this one title. Also, it very well could be delayed or changed to VC-1 before then. We just dont know yet.

it might not be a big issue, but I find it interesting and a tad worrisome that all the studios, sans Universal and the proposed plan from the Weinsten Company, are releasing either exclusively on Blu-Ray and in some case and HD-DVD. I get the sense the studio support in general is swinging to support HD-DVD and Blu-ray (as an after thought), but not the other way. If Fox, Disney never release content in HD-DVD, could this be a huge detractor for HD-DVD in the long run?

Going by the size of the audiophile market, I'd say those whose personal preference is lossless/uncompressed audio are in the small minority.

It's funny.

Josh is trying to tell someone who bitched about DVD's compressed sound for 8 years about quality.

As someone who had a laserdisc player long before DVD, I can tell you first-hand that uncompressed audio kicks ass. Unfortunately, that also eats into the bit-rate for BD titles.

That's not what I was referring to.

I was referring to extras.

And the quality of BD matching HD DVD is still debateable. While their quality may not suck anymore, it's still not matching HD DVD. I guess that's a plus for them?

Giles, this has been discussed to death...even in the last few pages.

They're not going to stay on one side for long if the other side is severely outperforming the side they've chosen.

an official comment/ commitment from Disney 'and' Fox for dual BR/HD releases would be nice

AFAIC, there's been far more interesting "unofficial" information posted about this format war thus far than official.

As has been stated, Disney is expected to announce at CES in January. Fox may take a little longer. This holiday season is pretty much everything to the studios. I don't think they want to be producing on 2 different formats any more than we want there to be 2 formats, period.