Are the Holidays Make or Break In the Format War, or Just Break Even?
Then Paramount jumped ship, going with HD DVD exclusively, and all of a sudden the little format that could had a few more hot exclusives of its own to deliver for the holiday shopping season, namely Shrek the Third and Michael Bay's summer hit, Transformers.
Transformers held up its end and stormed out to huge sales, and thus far has handily outsold day-and-date Blu-ray exclusive hits such as Spider-Man 3 and even Pixar's Ratatouille. All of a sudden even Sony's Howard Stringer is widely quoted (or misquoted) as calling the format war stalemate.
And a stalemate for both formats has the unpleasant consequence of looking more and more like a loss for both sides. And Hollywood doesn't want this. DVD volume sales are already in decline. Only the popularity of high priced TV show box sets has kept the dollar amounts about even for the last year or two. Hollywood definitely wants one more physical medium to use to resell its wares.
The two formats so far are doing OK in year 1-2 comparisons to DVD's sales milestones in hardware and software. But there's no question that neither format is making anyone forget DVD. The biggest selling titles have sold a few hundred thousand copies on both HD formats combined. A big DVD release will do 4-5 million units in a single week.
Explosive growth in years three and beyond made DVD the CE industry's biggest success story ever, driving those kind of software sales. While it's doubtful any physical format will ever be as ubiquitous as DVD, 2008 is when Blu-ray and/or HD DVD need to push into the mainstream. And whenever consumers are asked (polled), they respond with apathy in general and negativity over the competing formats. This leads to the perception that neither format will have mainstream success unless or until there is only one format.
Do any of the studios want that badly enough to try something bold to make it happen?
In looking at this question, Warner has got to be the elephant in the room. Paramount is reportedly tied to HD DVD exclusively for the next 18 months, and Universal is apparently not going to change course until something dramatic happens. I think we can be sure Sony and MGM (which Sony owns) wouldn't do HD DVD until a very bitter end is forced upon them, and Disney and Fox have publicly been staunch in their belief that BD's victory is inevitable.
So, barring another unforeseen defection from Fox or Disney, that leaves Warner, which currently supports both formats, as a potential swing vote. If Warner decided one format was needed which way would it go? If it wanted the swiftest resolution to the format war, probably Blu-ray. Already leading 2:1 in software sales, which has even held up on Warner's own dual-format releases, how could HD DVD stand if Warner jumps ship? Moreover, how could Warner justify jumping ship to HD DVD?
Toshiba is definitely building an HD DVD player install base. It claims there are now 750,000 combined HD DVD players and Xbox add-on drives. Toshiba also claims that people who buy HD DVD players and Xbox add-ons not only buy HD DVD movies, they buy lots of them, whereas PS3 owners are far less reliable movie buyers for the studios. Transformers performance against the top exclusive BD titles so far might be an indicator this is true (then again Shrek the Third's numbers could mean the opposite). Of course if there were ten or fifteen million PS3s in the US instead of two and change, the question would be moot. The PS3's price drops are gaining it some momentum, but it's clearly not enough so far to KO HD DVD.
Even casting all of the above in the most flattering possible light for HD DVD, is any of that enough to get Warner to take such a bold step as dropping Blu-ray support? Blu-ray has made as big of a mess of its hardware support and platforms as imaginable, and its stabs at interacivity are doing nothing but decreasing the performance of the players out there now. If Warner hasn't pulled the plug on BD by now it's hard to imagine what would tip the balance.
Who knows. But we've got one month left in 2007 and a few more big exclusive releases on both sides. Warner will have some more dual format titles to gather sales data from. Both the price reduced PS3 and Toshiba HD DVD players figure to make their way down a lot of chimneys. We'll see if anything happens that could break this thing loose moving into 2008, or if we'll just keep meandering toward a loss for both sides.