Panelists: No end yet to high-def war
Player sales climbing, but consumers still confused about competing formats
By Susanne Ault -- Video Business, 3/8/2007

Early adopter of next-gen DVD content: Male; ages 25-34 and 55+; Hispanic skew; $100,000+ income; Pacific/South Atlantic regions; action-adventure fan

MARCH 8 | SAN DIEGO—The good news-bad news message that high-definition DVD is a real market but neither HD DVD nor Blu-ray Disc is likely to win the format war this year was woven throughout the DisplaySearch Flat Panel Display Conference 2007, held here March 5-8.

On the positive side, sales of stand-alone high-def DVD players in both formats on a dollar basis combined to represent 8% of the conventional DVD player market during January—twice high-def’s share during the fourth quarter of 2006—said Ross Young, DisplaySearch founder and president. Also during January, monthly PlayStation 3 sales on a dollar basis surpassed those of standard-definition DVD players.

Sharply growing adoption of HDTV sets in U.S. homes have pushed consumers to seek out accompanying next-generation players. The ongoing DVD format war compounded by consumer confusion, however, will work to curb HD DVD and BD adoption for some time, speakers said.

For the last two months, twice as many Blu-ray discs have sold as HD DVD discs, noted conference speaker Vito Mandato, an executive consultant to Paramount Home Entertainment. But he does not see that as a sign that the end of the format war is imminent.

“Some studio chiefs have claimed to have won, but quite honestly the war continues,” said Mandato, who led his speech with the disclaimer that his views may not represent the views of Paramount.

Mandato predicts the number of hardware units in homes by the end of 2007 will be at 1.7 million for each format. On the HD DVD side, that includes 1.2 million stand-alone players and 500,000 Xbox 360 add-on drives. For BD, Mandato is counting only 22%, or 1.2 million, of the 5.5 million PS3 units projected to be sold during the year, plus 500,000 stand-alone players, because his analysis suggests that just 22% of PS3 households purchase movies regularly.

Industry sources say both BD and HD DVD stand-alone player sales were about equal in February. BD stand-alone sales were miniscule compared to sales of the PS3, which one source said surpassed 150,000 units during the month.

Sales are likely to grow slowly until consumers have a better understanding of what high-definition DVD and the two separate formats are, said Russ Crupnick, NPD Group VP-senior industry analyst of entertainment.

A recent NPD survey showed 83% of DVD buyers said they had bought HD DVD titles, and 69% said they had bought BD titles. NPD determined that most had actually bought neither, based on the fact that the titles they reported purchasing were not released in either format.

“So in consumer’s minds, next-generation is closing in on a 2% share of all DVD sales,” said Crupnick. “But in fact, [HD DVD and BD sales] are less than 0.5%.”

Crupnick added that there is stiffening competition for BD and HD DVD as other media forms gain steam. Currently, iTunes’ TV and movie digital sales are 10 times the size of high-def title sales.

Fewer than 10% of DVD buyers said they intend to buy HD DVD or BD in the next six months, when accounting for both HDTV owners and non-owners.

“Research, not speculation, shows that consumers are wildly confused,” said Crupnick. “We need to clarify and educate in order to get that purchase intent from 10% to over 50%.”

Sounds about right.

I still think that HD is going to be hard sell to the mainstream consumer without a format war. Which only makes it slightly harder because I'm feeling a lot of indifference toward HD from most people. Back in '99 and '00, people were really excited about DVD; it was like the home video killer app. I'm just not getting that sense from either HD-DVD or Blu-Ray. It's the kind of thing people will stop and watch for a couple of mintues, say it looks nice, and then walk away.

As long as the sales remain low, the format war will drag on. Even if BR is outselling HD-DVD 2-to-1, at 0.5% its still an insignificant piece of the larger pie.

So, yeah, no end in sight.

(And, just wondering, but what's with the "Hispanic skew?")

Male; ages 25-34 and action-adventure fan

This is the part that is very troubling to me. This could really limit the types of films we get in the HD formats. However, 55+ and 100000+ incomes were mentioned as well so maybe I have nothing to worry about.

I'm glad we have some honest information on what impact the PS3 really has on the disc sales. However, even if its only 1/4 of PS3 owners regularly buying discs that 1/4 is growing very fast and will be a big advantage for Blu-ray. Both sides need much cheaper stand alones.

So if we build the wall... HD sales will suffer.

George Bush hates HD people!

Moving to Politics...

I'll tell you, this "war" won't really start to get interesting until the real big titles start coming out for both sides. That's why I would hope that WB and Universal would start to get their asses into gear, because frankly, BD studios have more of those titles.

....or a much cheaper dual-format player.

Also during January, monthly PlayStation 3 sales on a dollar basis surpassed those of standard-definition DVD players.

So that's just talking money spent rather than units, correct? Considering most people are now buying $30 dvd players, I guess that doesn't surprise me when you look at a $600 PS3.

By that logic, Plasma TVs outsold 13" Symphonics by a very wide margin.

HDTVs have finally hit their stride. Nowadays it is difficult to find a "regular" TV at a price of much above, say $600. It's all HDTV. Almost every projection TV sold now is HDTV.

What it means is that HD/BD's share is really somewhere near 2% (give or take).