IN HOLLYWOOD, EVERYBODY at the studio knows how the story ends before the cameras roll. And when it came to the one about the sparring home-video technologies, they stepped in to write the final act.
Here’s the story premise: You may not know it, but that perfectly good DVD player sitting under your TV at home has been doomed to the trash heap of techno history.
Too old. Too fuzzy. Too ’90s.
The high-definition DVD player came along with a boffo picture that will knock the socks off any real movie lover. The only catch: It came out in two incompatible formats -- Sony’s Blu-ray and Toshiba’s HD DVD. So, in order to develop the high-definition market, sell movies, and gain new fans for the format, studios had to choose whether they would produce discs for one or both of the technologies.
Not bothering to wait for consumers to decide a marketplace issue, many of the film-studio chiefs took a leading role in hammering out an end to the high-noon showdown between two of the world’s biggest electronics manufacturers. When Warner Brothers locked arms and marketing campaigns with Blu-ray, helping to nail down about 70 percent of the movie content market, more than a few people in the home-video biz started to roll the credits. A month later, after Wal-Mart had thrown its Himalayan retail weight behind Blu-ray, Toshiba bowed to the inevitable.
Fade to black.
THERE ARE SOME market ironies here that live on, though, along with some insights into today’s technology wars. In the past, when conflicting technologies rolled out simultaneously, their manufacturers would woo consumers with features like capacity and price. After a few years, one technology would eventually prevail, relegating the rest to our closets -- personal Smithsonians packed full of old, unsupported computers, PDAs, and dead cell phones.
“It’s a bit of a messy process,” says Pioneer’s Andy Parsons, chair of the U.S. promotion committee for the Blu-ray Disc Association. “Innovation is not a clean thing.”
But this fight wasn’t decided based on points assigned for superior technology or price, says Josh Martin, an analyst with Yankee Group’s Consumer Research Group. Blu-ray discs had an edge in capacity, but HD DVDs cost less. In this war, he says, the decisive issue “was all about content.”
And the content wasn’t selling.
In the battle for consumers’ hearts, eyes, and wallets, nothing chills a market quite like a pair of conflicting tech formats. Forced to choose between HD DVD and Blu-ray, the nation’s technology intelligentsia, which includes a legion of sales clerks at big-box stores, advised consumers to sit back and wait until the digital dust had settled.
“Nobody in their right mind wants to get stuck with a loser,” opined CNET’s executive commentary editor Charles Cooper in one of his columns, “so it’s prudent to wait on the sidelines until things get sorted out.”
But one thing studios didn’t want to see was consumers lining up on the sidelines, their money tucked away in their pockets. And no one knew that better than Sony, having learned a few hard lessons while playing the losing side of the long war between VHS and Betamax.
“In the days of VHS and Betamax, it was a completely new delivery system,” says David Bishop, president of Sony Pictures Home Entertainment. “The concept of having movies you could take home was unique. No one knew that it would work or get consumer traction. I think studios that aligned themselves around both technologies didn’t know where it was going.”
By the time high definition showed up in stores for its consumer close-up, though, the stakes had crystallized as clearly as a Disney snowflake.
“Going in, enough studios realized that a format war would create consumer confusion and slow down the adoption rate,” Bishop says. “That’s why studios would align on one side or the other.”
The studio jury also had a compelling reason to bring in a verdict quickly: They needed the money.
“The DVD business is in the mature phase now, and for the first time in the last decade, we started to have slightly negative year-over-year sales,” says Bishop. “I think that spurred [companies] like Warner. Also, some of the retailers around the world were starting to decide they only wanted to support a single format.”
“This industry, for the most part, doesn’t want to have more than one format for very long,” said Parsons just days before Toshiba threw in the towel. “You can tolerate it during a competition period. But you don’t want two of everything in the store. It restricts the growth of the market. If you multiply standard DVD and two high-definition standards, it’s just untenable. Consumers want there to be fewer choices.”
But Blu-ray’s fresh-won monopoly won’t last forever.
“[Studios] need to drive new sales of movies and provide some kind of a way to hold on to the physical media until downloading from the Internet becomes practical,” says Stephen Baker, NPD Group’s vice president for industry analysis.
High-definition players, you see, are just one of technology’s stepping-stones. Many analysts are already looking past the high-def players to a day when movies can be swiftly downloaded from the web. How and when that plays out -- and who wins and who loses -- is still anybody’s guess.
“These technologies don’t just appear one day,” says Baker. “We know that infrastructure, security, and other issues around downloading haven’t been solved. Whether downloading gets to be a huge opportunity in 2010 and 2015 is a big deal.”
In the meantime, Warner Brothers -- which is preparing huge movies for the summer blockbuster season, including Star Wars: The Clone Wars -- is betting that its megahit machine will conjure some major profits in the entertainment biz. They want your neighborhood sales clerks down at the big-box electronics stores to get fully focused on moving Blu-ray machines so they can sell more high-def movies. After all, to the victor go the spoils.