The race often goes to the swiftest, and if that’s the case in the technology realm, HD-DVD will get a leg up over rival next-gen optical storage format Blu-Ray this week when Toshiba's HD-DVD player starts shipping to U.S. retailers four months ahead of Sony's scheduled release of Blu-ray format players.
North America represents by far the most important market for the new high-definition digital formats, accounting for more than 60-percent of all high-definition television sets expected to be shipped during 2006.
What does this mean for the prospects of the rival formats? Will HD-DVD's earlier entry to the market and substantially lower price tag give it the edge over Blu-ray? The answer may be “yes” in the short term, but as time passes, complicating factors may shift the balance, according to ABI Research.
By the end of 2006, according to the latest update to the firm's Consumer Electronics Research Service, Blu-ray players alone will account for only about 30 percent of the global high-definition DVD player market, but there is a spoiler: PlayStation 3. Sony's next-generation game console will play Blu-ray discs, and when it is launched, the mammoth sales that are expected could change the market dominance picture dramatically.
According to ABI Research's Vamsi Sistla, director of broadband and multimedia research, Sony has another card up its sleeve: its strong relationships with the major movie studios.
“However, the studios' support is not carved in stone, but is based on the perceived size of the market for a particular technology,” Sistla cautions. “If studios see that HD-DVD has a higher market share, or continues to increase its penetration, they could support it instead of – or as well as – Blu-ray. They don't really care what technology is used as long as it meets their copyright protection needs and enjoys support from the vendor community.”
For example, Netflix, the leading online movie retailer, has announced that it will support both formats.
But who will bear the brunt of the extra costs needed to support two standards? Initially, it probably will be shared between content owners and consumers. Releasing titles on two formats simultaneously means content owners will be less able to benefit from economies of scale. A further consequence of an ongoing “battle of the brands” is that the prices of both players and discs are likely to remain at relatively high levels longer than if there were a single standard.
Does anyone win in such an equation?
“Yes,” says Sistla. “Retailers such as Amazon, Best Buy, and Wal-Mart, who will carry whatever sells [will win].”
