Tilted Forum Project Discussion Community - View Single Post - Blu-Ray vs HD-DVD

Sensei · 02-19-2008, 08:51 AM

Now it's official. Warner put the nail in the coffin Januray and that nail was driven in by NFLX, BBY, and WMT last week.

Quote:

Toshiba's stock slipped 0.6 percent Tuesday to 824 yen after jumping 5.7 percent Monday amid reports that a decision was imminent. Goldman Sachs has said pulling out would improve Toshiba's profitability between $370 million-$460 million a year.

I was going to say, the players I commented on two posts back have to be bleeding red ink...

http://www.variety.com/index.asp?lay...ategoryid=1009

Quote:

Blu-ray wins high-def war
Toshiba concedes its HD DVD defeat
By DIANE GARRETT, DIANE GARRETT, MARK SCHILLING
Faced with a spate of high-profile pullouts by major retailers, Toshiba is accelerating its exit from the HD DVD biz, ending the billion-dollar battle between high-def DVD formats that split both Hollywood and consumers.

The Japanese electronics concern is expected to cede defeat to Sony's Blu-ray format today .

Although neither side would disclose figures, the battle has been costly for both: Sony and Toshiba took a loss on the sale of lower-priced players, and Nikko Citigroup analyst Hiroyuki Masuko projected that Toshiba will see a ¥50 billion ($462 million) loss from the HD DVD biz in its fiscal year ending in March. Masuko said Monday that Toshiba's exit from the format could boost its operating profit by 20% in the next fiscal year.

Toshiba had apparently been planning a more gradual, face-saving pullout before last week's moves by Wal-Mart, Netflix and Best Buy forced its hand.

The company, which had the backing of tech giants Microsoft and Intel, refused to give up the high-def fight lightly: When Warners endorsed Blu-ray in early January, Toshiba responded by slashing prices on its players to drive sales. As recently as a few weeks ago, it ran a costly Super Bowl ad promoting its players, hoping, at the very least, to sell off some machines and foster demand for more movies in the format.

But the aggressive moves weren't enough to jumpstart sales significantly. Mass merchants, already coping with returns of HD DVD players, put the final nail in the coffin by throwing their support behind Blu-ray.

Wal-Mart delivered the fatal blow Friday when it announced that it would begin to phase out HD DVD discs and players over the next few months in favor of Blu-ray and standard DVD. The retail giant projected that its Wal-Mart and Sam's Club stores would be HD DVD free by June -- the same month Warners said it would stop production of discs in that format.

Earlier in the week, Netflix made a similar endorsement, and consumer electronics giant Best Buy said it would favor Blu-ray more than it already does at its stores. Toshiba's exit will draw studio holdouts Universal and Paramount to Blu-ray by necessity. Both had been hanging tough with Toshiba since Warners' Blu-ray endorsement.

HD DVD backers, notably Microsoft, funneled promotional coin to studios in exchange for their support. Paramount and DreamWorks animation reportedly received $150 million when they exclusively backed HD DVD last summer. Both camps dangled major coin before Warners to entice it into an exclusive endorsement, although the studio said that money paled in comparison to the overall amount at stake in the worldwide homevid biz.

Toshiba's exit from the format fight would conclude a six-year battle with Sony, which has been pining for a victory ever since its Betamax lost the videocassette battle with VHS in the early days of homevid.

Studios are eager to jumpstart the high-def biz because standard DVD sales are slowing. Last year, according to Adams Media Research, consumer spent $186 million on Blu-ray discs and $90 million on HD DVD discs. That's a tiny portion of the $15.38 billion spent on discs Stateside last year, according to Video Business. High-def discs sales are lagging behind standard DVD sales at a comparable period in that format's evolution.

Studios are ramping up digital delivery of their pics, but that market is even smaller and more unproven than high-def discs. Some prognosticators believe consumers will ultimately embrace digital delivery, via downloads or video-on-demand, instead of high-def discs.

Microsoft and Toshiba are both expected to concentrate on technology for digital downloads. On Monday, Microsoft, which supported HD DVD through an add-on device to its Xbox 360 player, said it did not believe Toshiba's exit would have "any material impact."

Sony's PlayStation 3, meanwhile, should see a bump in sales from Blu-ray's victory. PS3 consoles already comprise the majority of Blu-ray players in the market.