Pie Charts Show True Impact of Warner Bros. Move to Blu-ray

by Patrick Steen on January 5, 2008 at 5:10 pm

Toshiba eat blue humble pie

With their collective tail between their legs, Toshiba and the HD-DVD Group must be devastated. It’s easy to see why when the results of Warner’s move is in the form of a delicious red and blue pie.

Warner Bros. have officially painted themselves blu (missing the ‘e’, apparently for copyright reasons) and with them New Line Cinema, or so we’re led to believe. With this news the high-def format war is surely over. This isn’t a preference speaking, this is common sense.

When Paramount decided to back HD-DVD exclusively, apparently due to the cheaper price of HD-DVD players, no seeds of doubt were sown. Most expected Blu-ray would pull through, or at least both formats would continue undeterred. Blu-ray wasn’t going to die the death from this move.

This resolute stance for Blu-ray can be seen in three responses. Speilberg, who is under Paramount studios, stated that he would not support HD-DVD only, and actually preferred Blu-ray. In fact, even Paramount themselves appeared to prefer the larger capacity of Blu-ray discs.

Michael Bay, director of Paramount’s Transformers, was incensed by the decision, and has since announced on his forums that he’s pleased in Warner’s recent move:

Well another studio down. Maybe I was right? Blu-ray is just better. HD will die a slow death. It’s what I predicted a year ago. Now with Warner’s down for the count with Blu Ray. That makes it easier for Wal-Mart to push Blu Ray. And whatever Wal-Mart pushes – wins.

HD better start giving out those $120 million dollars checks to stay alive. Maybe they can give me some so I can give it to my Make-A-Wish charity, just to shut me up. Have faith people Transformers will come out in Blu-ray one day!

Thirdly, what showed Blu-ray’s non-movement in Paramount’s decision was the resolute response from the Blu-ray Group. They didn’t think their format was damaged in the slightest, calling out Paramount as being foolish. Sony even claimed that Paramount would be back soon enough:

Paramount switched allegiance. We understand that it was only for a set period of time. I think that if the progress of the Blu-ray format continues, Paramount will have to come back.

All in all the industry thought that Paramount was making a big mistake – stay neutral or choose the stronger side, don’t back the perceived loser as you’ll only prolong things.

The Blu-ray Group’s response to Paramount’s move contrasts strongly with Toshiba’s (creator of HD-DVDs) comments on Warner’s move:

Toshiba is quite surprised by Warner Bros.’ decision to abandon HD-DVD in favor of Blu-ray, despite the fact that there are various contracts in place between our companies concerning the support of HD-DVD.

We will assess the potential impact of this announcement with the other HD-DVD partner companies and evaluate potential next steps.

Tail between their legs, they have even postponed their event at the upcoming CES:

Based on the timing of the Warner Home Video announcement today, we have decided to postpone our CES 2008 press conference scheduled for Sunday, January 6th at 8:30 p.m. in the Wynn Hotel. We apologize for any inconvenience this may cause.

We are currently discussing the potential impact of this announcement with the other HD DVD partner companies and evaluating next steps.

Instead of standing strong, they appear to have already given up. And it’s easy to see why when you look at a graph showing the estimated size and presence of Hollywood studios and where their fingers lie in the High-Def Pie.

With only Universal and Paramount holding fort, it’s easy to see why Toshiba are wavering. It’s also very apparent that the war would be all but over if Paramount hadn’t gone over to the HD-DVD camp, showing they should have been in contact with other studios instead of accepting money hats.

It’s easy to see why Warner chose to go Blu when looking at this graph. If they had chosen to follow Paramount they would be splitting the cake right down the middle and prolonging a format war that was scaring away consumers from going HD.

Toshiba are most likely even more surprised,when it has been rumoured that they were in talks with both 20th Century Fox and Warner to exclusively support HD-DVD:

According to a trusted source that was close to the negotiations, Warner and Fox were working on a deal to go exclusive to HD-DVD as recent as last week. Our source tells us that Warner was only willing to go to HD-DVD if Fox would go with them. Their thinking was if they just went to HD-DVD by themselves, it would not end the format war.

With 20th Century Fox deciding to support Blu-ray exclusively, Warner’s only rational move was to paint themselves blu also. However, if both of these studios had decided to support HD-DVD only, things would look very different.

Blu-ray may have been able to continue, but it would be a precarious journey that was not likely to have seen them win, because when one sheep strolls on the rest will follow.

Toshiba, thus, after expecting an end to the format war, got just what they expected, but not in their favour.

Whether Fox and Warner were paid off is irrelevant. I suspect Fox received a nice $500 million pay packet, but Warner only had one choice. Go Blu or lose money. Continuing to support both formats would mean consumers would continue to buy neither.

When Blu-ray discs are already outselling HD-DVDs 4:1 in the US, 7:1 in Europe, and 9:1 in Japan, Toshiba only ever had cheaper HD-DVD players to support them. Even though greater sales of HD-DVD stand alone players was touted, they failed to take into account the Playstation 3.

With 8 million of these Blu-ray consoles around the world, it’s no wonder that sales look like they do. That’s a lot of consumers not buying HD-DVDs, even if they aren’t actively going out and buying Blu-ray’s

Whether Warner have put Toshiba out of their misery can be debated, but what’s clear is that Toshiba will be eating a nice chunk of blue humble pie.

Tags: blu_ray_discs, common_sense, format_war, hd_dvd_players, high_def, humble_pie, michael_bay_director, new_line_cinema, paramount_studios, preference, seeds_of_doubt, toshiba, transformers, warner_bros

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Scott

It's not over yet...I think Toshiba will now drop their HD-DVD drives down to $99 bucks. People will love the cheap HD machines and than they will demand more movies. All these companies will be forced to make both HD-DVD and Blu-Ray movies. Just like video games: Xbox360 vs PS3 when it comes to games

Richard

You touched on the 1 issue that i think will the the "tell" (to use a poker term) for this format war.

Imagine how the pie would look if micorsoft had included an hd-player inside every 360 that was sold. with their head start in the console wars, and the explosion of live, the format war may have been over already. i'm sure this is a lesson Toshiba nor microsoft will long forget, as Sony has effectivley just taught them a lesson on long-term strategy and marketing.

Granted, not a lot of ps3 owners claim to use the ps3 as a movie player, but i personally find it hard to belive that they have not bought or rented even one movie to see what the new format is capapble of. Sony once again proves that they know what they are doing, they just need to stop stumbling over their own feet - and totally revamp their marketing dept.

Dogmeatstew

I'll just take a second to point out that you completly missed microsoft, and while I know their just an ity bity company, the x-box is HD supporting and really this should be taken into account... I mean really we're all dependant on them so movie companies opinions are kind of irrelevant with microsofts opinion in mind...

David Petersen

Do you think that if Microsoft came out with a XBOX 360 successor that included a HD DVD drive internally that would change anything? I also hear in 2008 Toshiba will install HD DVD drives in all their Toshiba laptops and they are one of the top selling laptops in world. Given that Warner still may produce HD DVD's for another 6 months or so. I own both Blu-ray and HD DVD and just hope more people get into buying more content in High Definition.

Dru

First of all, believing that if MS had put an HD-DVD drive in the 360 and assuming they'd be in the same position they are in now is a big mistake. Imagine the manufacturing costs, component manufacturing, console price and the time to mass produce. These would've contributed to push the 360 into the same launch timeframe as PS3. They would've had no lead and probably an even lower incentive to be adopted anywhere, but in NA. Second, HD-DVD never lined up support in the beginning like BD did. Assuming that movie studios were teetering every other day on which way to go was ridiculous. Considering the number of companies behind BD, doubting their success was a waste of time.

Jim Bob

If Microsoft put an HD player into the Xbox now, or even during the past 3 months. They would be strapping themselves to a nuclear bomb. Basically they cannot set a baseline for future Next Gen gaming with the platform based on a couple of things... Xbox core, Xbox with Hard drive, Xbox with HD Dvd player, etc etc...as opposed to the PS3 which has a baseline of Bluray support, Harddrive (All of them have it), etc etc.

So I think the Msoft Xbox HD Dvd embedded drive would have gone furthur to seperate the baseline of which game devs have to work with, and thus hurt the Xbox 360 and definitely wouldnt have added anything to the HD Dvd format war.

ron

long live to blu-ray hd-dvd sucks.

ron

sony has the better player , thats all. i find blu-ray movie to be more constant in quality

Patrick Steen

Whether having an HD-DVD drive in Xbox 360's would make a difference I'm not so sure.

Why? Because at the time of release (a year before the PS3) it would have been more expensive than the PS3's release cost. I'm talking £500.

The price of these drives has gone down very quickly, but in 2005-6 they would have been far too expensive.

This is one of the reasons why Sony waited until 2006-7. It's also why they wanted to release the PS3 in 2007-8, but Microsoft pushed them out early.

What happens when your console is too expensive? The machine is seen as over-priced, the company is seen as arrogant, and the lack of games at launch is magnified.

Richard: Whether PS3 owners actually buy the Blu-rays doesn't really matter. Firstly they now get 7 Blu-rays free. Secondly they won't be buying HD-DVD's....ever.

Moreover, although Microsoft can talk with its wallet - they have a lot of friends in the movie industry - they own a lot of it, and are close to the base. Sony are also much closer to the technology that Microsoft. It was always in Sony's favour - they design hardware, they do movies. Microsoft is software and wallets.

Monarky

This is a reverse repeat of Beta/VHS Format War! Sony was determined to not let this one get away from them. They had the best format then and this time along with having the best format, the main difference is they own a major chunk of the film Industry Studios. That piece of the pie they bought was in preparation as insurance this round!

Last round it was Sony swallowing their pride and dumping superior Beta Machines for pennies on the dollar, that were worthless in a very short time. Because nearly all the studios had decided to go VHS and Sony owned none. Like I said that piece of the Studio Pie they bought gave them the wedge and axe. Now Warner is the Come-along that's going to pull this monster tree over.

Now like Kojima and MGS4 saying, "if you want to play MGS4, you will have to buy a PS3"! ...Warner just is now saying, "if you want to view our movies, you'll have to buy a BluRay Player (PS3 LOL)"!

So just like Beta/VHS Wars in reverse, you could buy a Beta Machine (today an HD-DVD player cheap), but you couldn't/won't be buying many of the latest movies then or NOW! ;) ...it's over boys. Now lets go home and "Party like it's 1984" in Reverse!

Patrick Steen

Monarky: Sony has fought many more battles than this. From the floppy disc (which they won) to the mini disc (which they lost), the SACD (which they lost) to the CD (with Phillips - which they won).

Toshiba and Sony have been at each other before with the SD and the MMCD - which Toshiba just about won, but they both combined to form the DVD.

In summary, Sony has over the years introduced these standards: Umatic (~1968), Betamax (1975), Betacam (81), Compact Disc (82), 3.5 inch Floppy Disk (82), Video8 (85), DAT (87), Hi8 (88), Minidisc (~90), Digital Betacam (~90), miniDV (92), Memory Stick (98), Digital8 (99), PSP Universal Media Disc (~2003), HighDV (~2004), Blu-ray Disc (2006).

This is what Sony does.

Bill Rogers

No matter how cheap they make HD-DVD players, J6P (Joe six-pack) won't buy them with a format war going on. $99 or not, it's still $99 in the trash if that format goes the way of Beta.

As soon as the final nail is in HD-DVD's coffin, where it's just a landslide victory for Blu-Ray, and it's obvious to J6P, then and only then will the consumer masses seriously consider making the switch to Blu-Ray.

This Warner deal is the first nail in HD-DVD's coffin. Paramount will be next with many of it's directors publicly supporting Blu-Ray (like Spielberg and Bay).

Monarky

Yeah, Patrick your right, Sony loves to capitalize on their R & D investments. They started the entire videocassette recording industry founded in Umatic (original Beta format) and followed it with consumer, improved or miniaturized versions over the years. A full 6 of those formats (U mention) revolved around the Beta cassette concept and technology alone excluding audio.

When Universal decided to go after Sony and leave JVC alone, it was because Betamax was the dominate format and Sanyo the dominate Player for well over 5yrs (cheap inferior VHS players didn't kill Beta). The reality of that War boiled down to Quality versus Total Recording Time (hint)!

...and to think although they are viewed as losing the Format War, it was their Win against Universal Studios that gave us the ability to record broadcasts for later listening and viewing. Which is what beat them in the so called format Format War. Consumers didn't necessarily want quality home movies, just the ability to put more TV TIME on one tape (smaller 5hr tape vs 10hr larger tapes, ect)!

Sony's formats are always the best quality. Though they may not make it commercially every time. As consumers, we see Beta and it's relatives as a failure, but in reality tape cassettes put more Money in Sony's bank (in general, including audio Walkmans and PCM audio technology) than anything else they've invented, including the first Transistor Radio.

Sony, when you really look at the BIG PICTURE has always been a step ahead in preparing for the future, ahead of everyone else with overlapping technologies routed in Industrial success first. They know each format will not live forever. So when cassette tapes were living, Optical was being born. First CD and then later DVD. Now it's BluRay's turn (to the chagrin of Universal Studio's revenge ploy,LOL). Oh and BluRay is one of those that actually started in 2001 used in High Capacity Commercial Data Storage (next is 500gig Halographic Micro-reflector Disc technology, new format? No, a format evolved for the next generation)!

So we already know who will introduce the next format revolution. Yes it's the Format King of them all, Sony! ...and personally I'd like to thank them for bringing it all to us with QUALITY being first and foremost, especially in my PS3! ;) ...now it's not just video recorders, audio players and formats, it's game platforms. Where the Future is always repeating the past, Now! PS3peat (it may not look like now, but it's coming, hehe)

Note: You are one of the best writers I've seen on any of the review sites! ...it's the QUALITY! ;) ..always a pleasure reading your intelligent stuff!

Ryan

theres no way HD DVD players will go for 99$, its jus too little, if that did happen, i could easiily see BD players price drops to retaliate, BD is overall the best buy IMO, better quality disc, more space...the future is blu ppl

Patrick Steen

Monarky: That's very kind of you to say so. I aim to please. Researching, legibility and humour is the key. Spread the word for Ripten and myself. It's a shame this story was buried on Digg - though the title picture is exaggerated, the article is full of information.

I was unaware that the casette days were so profitable for Sony. I believe most of these companies profit whether they win or lose. Guess who makes the Cell in PS3's....TOSHIBA.

Patrick Steen

Microsoft seem to have played a much more vital role in this format war than I thought:

"Hewlett-Packard (HP) made a last attempt to broker a peace between with Blu-ray Disc Association and Microsoft. The company demanded that the Blu-ray Disc Association adopt Microsoft's HDi instead of its own Java solution, and that Blu-ray Disc adopt a mandatory managed copy feature. If the demands weren't met, HP threatened to support HD DVD instead.[30] In a research report, Gartner analysts Van Baker, Laura Behrens and Mike McGuire wrote that if HP's proposal was accepted, Blu-ray Disc would become the winner of the format war.[31] However, the Blu-ray Disc group did not accept HP's proposal."

Zachhar

It doesn't matter if HD-DVD player goes for $99 if there is no content for it. Most of the studios are going for Blu-ray, and some of the HD-DVD studios have to release in blu-ray also because of directors like Spielberg. People complained about the cost of the PS3 & Adding a HD-DVD drive to the 360 is just plain stupid. That would raise the cost of the 360 to about the cost of the original PS3. You couldn't make games on the HD-DVD for the 360 because that would leave out all the buyers of the original 360.
HD-DVD had a good run, but it looks like Blu-ray is going to be the victor.
Long live blu-ray

Monarky

@Patrick When you consider that every single one of those formats was targeted at data storage in some form, it should tell you how right you are in saying Sony Loves setting format standards for everyone else to follow. Data Storage and the tools to Create it, is their forte!

From reel to reels, tape cassette, audio and video, Walkman to Discman, Beta to Betacam, CD to DVD, recorders to players Sony loves to show the world how it's done and now it's BluRay's turn!

With Umax they owned the video, commercial/industrial data storage and recording market throughout the 70's to be replaced by Betacam in '82. With Betacam they owned the commercial recorded data of ENG "Electronic News Gathering" along with the World of Pre-recorded Television. Betacam is still used some today (over 35years of Beta Cassette Tape products). From Soaps to Late Night Television Broadcast Networking Sony has ruled with what? Beta, Betamax, Betacam and it's cousins. It's only the public that thinks it died! lol ...meanwhile they're still making money and setting standards for other to follow! ;)

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Also, I am spreading the word. One of the things I like about this site is that you have people who actually like and use the each product reviewing them. If you have a someone only interested in the PS3 reviewing or doing articles about the Xbox 360, they will reflect their own view even if only subconsciously. If someone who hates Sony does a review of the PS3 or it's games it's going to show. That's what most of these sites have going. Either that or they are pushing the sites prejudices or patronizing to their advertisers!

Here you guys actually have a PS3 doing reviews and articles on it. YOU! ...that's cool. And if your personal love is the Wii, that's also covered here and it's not by a Microsoft or Sony kind of guy. That's unheard of on the web these days! LOL ....YOU guys are are bucking the trend of cnet's and 1UP's of the World! But most importantly it's with great articles with more facts and true honesty than others. Facts may not be right 100% of the time, but nobody in the world is perfect. Not even Me! ....and especially not you! LOLz ;) jk

kaylas friend

hey patrick my friend thinks that ur cute

passingtramp

Patrick - what figures are those charts based on? Box office sales or DVD sales?

Patrick Steen

Both. The charts were based on the total gross earnings at the time.

passingtramp

Thanks!

Patrick Steen

No problem. Why the interest passing tramp?

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