Xbox 360 HD-DVD Drive Outsells Standalone Players

[Jeremy Charette]

<div class='os_post_top_link'><a href='http://www.slashgear.com/add-on-for-xbox-360-outsells-standalone-hd-dvd-players-255905.php' target='_blank'>http://www.slashgear.com/add-on-for-xbox-360-outsells-standalone-hd-dvd-players-255905.php</a><br /><br /></div><i>The Xbox 360 add-on has sold over 155,000 units, while according to a study in April, only 100,000 standalone players had been sold. I’m sure that many of you will be quick to note that there have still been more than 255,000 Blu-ray players sold. The only difference is that every HD-DVD player was bought with the sole purpose of watching movies, that is not the case for all Blu-ray players, most notably the PS3...for every HD-DVD player, 4 compatible movie titles were purchased, while ratio of Blu-ray players to movies is 1:1."</i><br /><br /><img src="http://www.digitalmediathoughts.com/images/xbox_hddvd_1.jpg" /><br /><br />The numbers don't quite tell the whole story in the HD format wars. While Blu-Ray players have outsold HD-DVD players, a substantial number of those Blu-Ray players were PS3s, and most of those PS3s were not purchased with the intent of watching HD movies on them. The same can't be said of the 360's add-on drive however. If you buy one of those, you're watching movies on it, and nothing else. The more telling figure is the 4:1 ratio of movies to players on HD-DVD, which blows the Blu-Ray camp out of the water. It's going to take some time for the market to settle down, but the long-term predictions still point to HD-DVD eeking out the win.

[Jeff_R]

I won't bother reposting everything I put in the "Blockbuster going Blu-ray" thread; check my comments there to see details as to why I respectfully disagree. Obviously, no one has a crystal ball and can guarantee that one format will win over the other, but all the figures I quoted in my other post point to Blu-ray.

Buying a player with the sole intent of watching movies is good; buying 4 movies per player rather than 1 is also good; however, it's quite clear logically speaking that it doesn't mean much in isolation, since the goal is to sell movies. Movies per player doesn't pay the rent; units sold, regardless of how many to a given individual, matter.

Blu-ray is outselling HD-DVD 2 to 1 this year. Let's say the average movie price is $20 (for simple math). If you're a retailer, would you rather make a million dollars with Blu-ray, selling to a 50,000 people, or five hundred thousand with HD-DVD, selling to 6,250 people? (2 to 1 sales, 4 movies per person on HD versus 1 movie per person on Blu-ray). Twice as much money? Eight times the potential audience? Yeah. Me too.

It looks like this is actually more good news for Blu-ray. More units sold + less units purchased by any one individual = wider potential audience. That tells me, as a studio, I have more potential customers out there.

[Jeremy Charette]

Where is Blu-Ray outselling HD-DVD? Players? Standalone players? Discs?

If you're talking discs, keep in mind those numbers are hugely skewed by the release of Casino Royale on Blu-Ray. One hit does not a format winner make.

If you're talking players, well that's not really a valid argument as 14 out of 15 of those are PS3s.

If you are talking standalone player to standalone player, then Blu-Ray and HD-DVD are about dead even. Many of the numbers being brandished by the Blu-Ray camp don't quite tell the whole truth.

This format war is still in the first quarter. I think HD DVD is going to be the first to $199, sometime around holiday season '07. Once that happens, we'll see where the chips fall. Until then, it's too early in the game to call a winner.

But personally, I'm putting my money on HD-DVD. 8)

[Felix Torres]

Never mind the ratios or percentages; what is the average number of copies sold of any single movie on either format?
The numbers I've seen say its a few thousand.

1- A recent Sony press release bragged that BD held a 90% market share in Australia. The fine print admitted the total market was 5000 disks for both formats combined. This in a land that is a Playstation stronghold.)

2- BD attach rate at 1 to 1 works out a bit less than 4 million BD disks world-wide; about $100M in sales versus $20Billion in SD DVD sales and, $170-200Million in XBOX LIVE video marketplace sales (projected). Claiming leadership at this point is like claiming leadership in the 80-and-over age group in a 5K race; impressive-sounding but meaningless. :roll:

Both sides try to spin, obfuscate, and dissemble but the reality is both formats are heading nowhere; the pricing structure makes no sense today for customers. Recent reports that back-catalog movies are *not* selling as well as recent releases raises an enormous red flag; in both the transition from LP to CD and from VHS to DVD the bulk of sales and profits came from the back catalog; in the current market, people are *not* buying HD disks to replace their existing SD DVDs and that means the ramp up to market domination is going to take a looonnnggg time.

Last year I said that upscaled DVD quality made me skeptical of HD disk formats and I've seen no reason to change that opinion.

For either format to replace red laser disks I see a need for *three* pre-requisites:
1- Universal disk format (could be BD, HD-DVD, or the WB combo disk)
2- player priced at upscaling DVD prices
3- disks priced at existing red-laser prices (~$15 for new releases, &lt;$10 for back-catalog titles.

And, they have to get there before 100Mbps broadband becomes generally available in NorthAM.

The clock is ticking; holographic storage is coming...

[Jeremy Charette]

Like Felix says, it's a pointless format war, and neither side is going to "win". On-Demand HD video is coming fast, and it's going to push Blu-Ray and HD-DVD to the wayside.

Me? I just re-upped my Columbia House DVD Club membership. 8 DVDs for just $22.84, with only 2 more to buy! On top of that, they have Airwolf Seasons 1-3 on DVD for less than Amazon.com, and it counts toward my membership purchases. 8)

[Felix Torres]

... they have Airwolf Seasons 1-3 on DVD for less than Amazon.com, and it counts toward my membership purchases. 8)

Airwolf? Airwolf!? Shirley, you jest...

At least I've been stocking up on the Wild Wild West!
(They did steam punk before there was steampunk...!)
If only Fox didn't overprice Briscoe County Jr...

Anyway, lately I've been finding myself doing most of my movie rentals via video marketplace rather than blockbuster's. As tempting as all those HD-DVD drives at $250 are, doing the d/ls is risk-free and keeps me in business until the war either gets settles or officially fizzles like the audio-DVD war...

[Jeremy Charette]

Airwolf is one of those shows that's so bad, it's good.

[Felix Torres]

Like anything with Bruce Campbell in it? ;-)

[Jason Dunn]

Recent reports that back-catalog movies are *not* selling as well as recent releases raises an enormous red flag; in both the transition from LP to CD and from VHS to DVD the bulk of sales and profits came from the back catalog; in the current market, people are *not* buying HD disks to replace their existing SD DVDs and that means the ramp up to market domination is going to take a looonnnggg time.

Agreed 100%. Other than one favourite movie of mine (The Last Samurai) I haven't done any back-catalog purchasing of HD-DVD movies, because like you said, up-sampled DVDs look pretty damn good already. I think HD-DVD is going to "win", but it's going to be a mostly hollow victory by the time it's achieved.

[Jason Dunn]

Airwolf is one of those shows that's so bad, it's good.

Haha. So true...although I find that as I re-discover things from my childhood that I thought were the COOLEST ever...well, they don't always age that well. Like the season one of the Dungeons &amp; Dragons cartoon. :lol:

[Jason Dunn]

Like anything with Bruce Campbell in it? ;-)

Bruca Campbell is THE MAN. He just rules. Army of Darkness is one of the greatest movies ever made. :twisted:

[Felix Torres]

...although I find that as I re-discover things from my childhood that I thought were the COOLEST ever...well, they don't always age that well. Like the season one of the Dungeons &amp; Dragons cartoon. :lol:

I've been lucky that way; I've recently managed to track three of the four shows that I used to *love* and they hold up reasonably well. (Time Tunnel, UFO, The Champions). No cringing there. Now if they would only release a proper DVD set of the Green Hornet! (Bruce Lee before he became BRUCE LEE.)

[Felix Torres]

Bruca Campbell is THE MAN. He just rules. Army of Darkness is one of the greatest movies ever made. :twisted:

The Old Spice babes seem to think so. :lol:

[Jeff_R]

I agree; Bruce Campbell kicks serious ass (and I REALLY want him in one of my movies one day!) Believe me, the fact that Army of Darkness is on HD-DVD only is a major annoyance to me. 8)

To answer the earlier question, I was referring to discs. Casino Royale is a major title that did affect the numbers, yes, but Departed was on both formats and sold half again as many copies on Blu-ray as HD-DVD. (58K to 35K) Also, there are a great number more major titles on the horizon for Blu-ray than HD-DVD, so the skewing of the numbers will likely continue. Every number, every fact, either from a consumer or a producer's point of view, every one I've seen shows Blu-ray in the lead and aimed to "win", as much as anyone will. Possibly, other people have seen different numbers than I have.

As far as the "how meaningful is that lead" question, well yeah, not meaningful at all in terms of Blu-ray becoming the replacement for DVD. LP to CD and VHS to DVD both share one thing in common: they were the transition from analog to digital, so anyone who expects the same sales shift is going to be sorry. Back catalogue will obviously not sell as well; back catalogue tends to be bought by collectors, and I've got way more reason to replace my fuzzy VHS copy of Seven Samurai with my nice new Criterion version on DVD than DVD to hi-def.

Still, it's better market penetration than SACD and DVD-Audio... talk about damning with faint praise.

The biggest problem is that the whole HD intro was one of the worst messes in consumer history. HDMI, HDCP, which version, HD-ready, 1080i, 720p, 480p... the average consumer wanted one thing. HD. Nothing else, and the crossover of the computer world and the TV world was a disaster. Couple that with the fact that BOTH hi-def DVD camps screwed their launches with terrible titles, compatability issues and dodgy quality, and it's no surprise the numbers are low. Besides, considering most people with HD sets are watching SD content and not realizing it, is it surprising they aren't buying those strange blue and red DVDs in the smaller cases?

Hi-def VOD? I'm not betting that way. VOD only works when people can get it, no glitches, right now. The popcorn's ready, hey, let's watch a movie, press play and away we go. No downloading, no delay. The bandwidth for hi-def, all across North America? Wake me when it gets here. That's some MAJOR infrastructure that is not in place yet. Heck, last year some people were still complaining they couldn't get broadband to their towns, and this wasn't some place with Pop. 76 on the welcome sign either. So there's a way to go there.

Bruce Campbell for President. (or Prime Minister, if he'd run up here!)

[Jeremy Charette]

VOD only works when people can get it, no glitches, right now. The popcorn's ready, hey, let's watch a movie, press play and away we go. No downloading, no delay. The bandwidth for hi-def, all across North America? Wake me when it gets here. That's some MAJOR infrastructure that is not in place yet. Heck, last year some people were still complaining they couldn't get broadband to their towns, and this wasn't some place with Pop. 76 on the welcome sign either. So there's a way to go there.

I can do that now with Xbox Live Video Marketplace and my Time Warner Cable Roadrunner connection.

[Jeff_R]

Streaming 1080p content with no interruptions? Wow! I had no idea it could be done yet... that's very cool. I want! :P

[Felix Torres]

VOD only works when people can get it, no glitches, right now. The popcorn's ready, hey, let's watch a movie, press play and away we go. No downloading, no delay. The bandwidth for hi-def, all across North America? Wake me when it gets here. That's some MAJOR infrastructure that is not in place yet. Heck, last year some people were still complaining they couldn't get broadband to their towns, and this wasn't some place with Pop. 76 on the welcome sign either. So there's a way to go there.

I can do that now with Xbox Live Video Marketplace and my Time Warner Cable Roadrunner connection.

Anybody with cable or satellite can do VOD *now*.
Right now the availability of HD is limited (but not zero!) which is why XBL leads. That will not last. If DTV actually ships a decent-looking MPEG4-based system and if the cable operators are truly serious about HD-quality those services are going to ramp up their customer base fast. With zero up-front costs. Folks buying the $399 LCD HDTVs this fall are more likely to pay $4-6 a movie for cable-based HD VOD than they are to shell out another $400 to rent flicks at Blockbuster.

If the disk-based formats don't ramp up fast, they *will* lose the rental market. (Bye-bye Blockbuster!)

So, that is one *big* revenue-stream the blue-laser boys can't count on.

Add that to the diminished role of back catalog and upscaled DVDs eating up the low-end of the market and its very likely the disk-based formats are more likely to be the spiritual succesors to Laserdisk than the true heirs to DVD.

As for sales of single titles, yeah; the peak of BD runs at 50K, but the average is well south of 15K. And the reliance on PS3 to ramp up the format has one fatal flaw: gamers are renters more than buyers. That is why Blockbusters saw the skew they saw; folks buying into HD-DVD are *buying* into HD-DVD. So yes, there's less of them; but they buy more movies each. Hence the 4:1 attach rate which will only go up. Over time the demographics will tell. (Simple math: you have $600 to spend on HD movies. You can buy the Toshiba HD-DVD player at $260 at Amazon along with 5 freebies, plus another 17 movies at $20. Or, you can buy a PS3. Now, if Funai's BD-player actually materializes and its not junk, then maybe the numbers will crunch out differently. But I'm not holding my breath for a Million-seller from either camp any time soon.)

Also, don't get too carried away with current (or near-term) ship totals for BD titles because with Blockbusters 10000 stores skewing the market you can be sure BD will have ample fodder to puff up the unit numbers early on. But since rentals depress outright sales, over-reliance on rentals to gamers is *not* going to do much for the actual movie sales. That is simply trading tomorrows dollars for todays pennies.

I still see neither format going nowhere.
Maybe things will change in the fall if somebody actually gets to $199 at WalMart, but there is still a big joker in the deck.

BD fans have yet to be exposed to BD+.
That may well turn out to be the secret weapon HD-DVD needs... :twisted:

[Felix Torres]

Streaming 1080p content with no interruptions? Wow! I had no idea it could be done yet... that's very cool. I want! :P

Y'know, you're focusing on internet-based services.
There are other, proprietary VOD systems out there today.And they work fine.

FIOS uses MS tech for the content and back-end but it does not run on the open internet.
And the CableCos have their own pipes to work with with that are more than up to the task.
Remember the old Qwest ads? "Any movie ever made?"
Its coming.

[Jeff_R]

I'm not focusing on any particular format; I just hadn't heard of anyone streaming a 1080p VOD signal. If someone is, cool! And I still want. :D

[Jeremy Charette]

Jeff: XBLVM videos are encoded at 720p and approximately 6.5 Mbps. In a head to head comparison (http://www.xyhd.tv/2006/12/reviews/why-xbox-live-video-marketplace-competes-well-visually-with-hd-dvd/), they were nearly identical to HD-DVD at 1080p and 33+ Mbps. My Roadrunner connection typically runs around 10 Mbps, so I can download and watch XBLVM videos in real time, in HD, with 99% of the quality of a blue laser disc. No need for a $300-600 player, no trip to the store to purchase a disc (or wait for UPS to come), no need to return a rental to Blockbuster...

Now, I do like owning my movies (on DVD), but if I look at what I've spent per DVD, I could have saved a ton of money by simply renting those movies when I wanted to watch them. With the advent of huge online catalogs of movies, I'm more inclined to rent rather than buy in the future.

So Jeff, if you dont' already have one...buy an Xbox 360. :D

[Felix Torres]

I'm not focusing on any particular format; I just hadn't heard of anyone streaming a 1080p VOD signal. If someone is, cool! And I still want. :D

Fair 'nough.
For the record, what I currently have is a plain old Scientific Atlanta 8300HD with Time Warner (nee Adelphia) cable. The way they have it set up, you go to the on-demand channel, pick the movie you want, and it downloads (not streaming) to the STB HD in a minute or so and you get a 24 hour window to watch with full VCR-type controls. Now its not 1080p; the STB only supports 1080i out. And like I said, the HD assortment is minimal, so far. Comcast, for one, is claiming to be prepping a system with several hundred on-demand channels (they count each movie in the active catalog as a channel) and other HD suppliers are following suit.

XBL is much better but even that only takes me a couple hours to DL and my DSL is the slowest of the slow; 768Kbps. (I don't really do enough high-bandwidth stuff to justify bigger pipes anyway.) I'm not into instant gratification (much) so I have no problem with starting a d/l when going to bed or in the morning for viewing in the evening or a couple days down the road.

The transition to HD is what folks in the industry call a disruptive influence and basically everybody is scrambling to latch on to everybody else's customers while trying to keep their own. So the telcos, cablecos, and sat companies are all looking for ways to conveniently deliver HD to the owners of the flood of cheap HD sets that are moving out the doors these days. With this mainstreaming of HD comes chaos and like Lt Nick Holden (Operation Petticoat) said; "In chaos there is opportunity."

The value of IP-delivered video is that you can ship it anywhere in your licenced region regardless of who provides the bandwidth. The downside, it requires IP bandwidth. The proprietary systems like FIOS and whatever the cablecos end up using don't lack for bandwidth; they just lack the receivers (STBs) and those are coming ASAP.

So, anyway, when folks talk of online movie delivery being the likely winner in the HD movie distribution wars, we're not just talking XBOX, PC, or Apple TV 3.0, but rather today's existing STBs and their next-gen kin coming in the second half of this year, just in time for the xmas HDTV explosion.

And that is the environment that BD and HD-DVD have to sell into.
I know a lot of folks laughed when they heard the MS rep at a conference suggest that in 5-10 years optical media would be displaced by digital distribution technologies, but if you look closely at the trends around us, this whole format war may turn out to be a fight for third place and table scraps, not the leadership of the industry.

http://www.homemediaretailing.com/news/html/breaking_article.cfm?article_id=10757

Doesn't mean optical disks will vanish; they just won't be the industry drivers.

[Jeremy Charette]

Actually, it was Bill Gates:

"The format that's under discussion right now, HD versus Blu-ray, that's simply the last physical format we'll ever have."

Gates has been touting the "digital distribution" model for the past five years, and really started pounding the drums with the release of the 360 and HD video on XBLVM. MS really sees the HD-DVD add-on drive as a stopgap measure in the HD format wars.

I can't find any hard numbers, but I suspect that more HD movies are being purchased on XBLVM than on HD-DVD or Blu-Ray. I know that XBLVM is number 2 for TV and movie downloads behind iTMS, and number 1 for HD downloads.

The HD format war has just begun and physical media is already behind.

[Jeff_R]

Jeremy: Oh man, Dead Rising PLUS XBL HD movies? Great! Just what I need... another excuse to spend money. (grumble)

Can't really argue with any of the digital distribution arguments... although I still really enjoy seeing my walls of movies. Can I justify the $40K I've spent? Not really... renting what I've watched of them would be far cheaper. However, it's also a professional resource for me, and when some producer says they want a film that's like Title X from twenty years ago, and I can grab it off my shelf and see what they mean, it's got real value. When VOD has everything I could get at my local specialty video star (rather than 80 copies of the current Will Farrell film), then I think it'll be ready for me. However, I'm not the guy driving the market; it's the 80 people who want to watch Will Farrell at the same time who decide things, and VOD has them covered.

As far as the article on XBL versus HD-DVD, that was interesting... some of the stuff they mentioned as caveats would bother me, but again, I'm not the average consumer, so they may have a good solution. Still, it'll be a while before the general public think of their game consoles as a vector for HD movies. Those shiny discs have mindshare for a while yet... the one thing that I think is obvious out of all of this is that good ol' standard DVD will be the big boy on the block for the near future. Now if I can just convince Best Buy to give me the replica Spartan helmet from the DVD package when I buy my Blu-ray "300"....

[Jeremy Charette]

So I finally found some numbers, XBLVM has over 150 movies with over 35 available in HD. Estimates put total HD movie downloads on XBLVM at 272,000 per quarter. That's an average of nearly 8000 downloads per title, in just three months. That CRUSHES just about every Blu-Ray or HD DVD title released so far.

One of the blue laser disc formats is going to win the battle, but they'll both lose the war.

[Jeff_R]

Well, let's not jump to any conclusions. :lol: There's no way to say what's going to happen; I don't think we're ever going to see XBOX360 having the same universal market penetration that DVDs have now, so it's hard to say what the eventual outcome will be, especially using 35 movies as a sample size. Small title availability leads to large purchases per title; just look at the crappy games I've bought on PSN.

Something will be the HD standard. It may be VOD, it may be Blu-ray, it may be XBL. Blu-ray and HD-DVD is an apples to apples comparison in that they are the same medium and competing standards. Assuming that XBOX360 market penetration and XBL usage will maintain market share proportionate to Blu-ray players or STBs is a pretty big leap. I don't see the average person using a game console as their movie player until it stops being perceived as a game console.

At this point, I feel it is VERY safe to say that Blu-ray is beating HD-DVD in all available stats. Beyond that, I ain't committing to nothing! 8O What seems most likely is that the market will fragment and no one format will enjoy DVD's dominance.

[Jeremy Charette]

I agree with that last set of statements. I don't think XBLVM will be the next DVD, but it's a portent of the future. Anybody's guess as to who will be the leading HD VOD provider.

[Felix Torres]

Blu-ray and HD-DVD is an apples to apples comparison in that they are the same medium and competing standards.

Very much so.
In fact, for all the smoke and mirrors dished by both sides the only *meaningful* difference (from a consumer point of view) between the two is copy protection. To a lesser degree, the quality of the interactivity. Interactivity favors HD-DVD but copy protection favors BD which is why the consumer-hostile FOX and Disney favor it. Last I heard, FOX was holding back all future BD releases until BD+ is implemented and fire-tested.

However, the thing to consider is that moving forward HD distribution is going to by a *lot* less monolithic than the digital SD business has been. DVD rules over all. It beat out network broadcasts, cable, satelite, everything.
No longer.

What you're going to see is that the *aggregate* of all on-line distributors (in multiple formats and business models) will dominate the early HD era (the next 10 years) and that physical HD distribution will be a minority medium. No, Video Marketplace isn't going to get anywhere near 50%. But it may very well, on a dollar basis, surpass BD and/or HD-DVD individually. Ditto for Apple TV version 3.x (if Apple stays with it), the PS3 (as long as Sony doesn't use Connect for their video service), FIOS, UVERSE, NETFLIX, Disney's Videobeam (if it isn't superceded by AppleTV), Unbox 2.x and the other emerging online services. Or their euro or asian equivalents.

Individually the best of these services will be lucky to hit 10% market share by 2012-2015. But together... Ah, together they can easily hit over 50%. (I'm guessing over 70% myself, at least in NorthAm, based on cable/satellite STB penetration.)

What we end up with is what we have in the TV business; once upon a time 3 OTA networks ruled over all with 60-80% aggregate share. Today the 6 majors OTA networks together barely make up 17% of the viewership and the rest of the market is fragmented among a couple dozen paid delivery-only channels.

The key, to me, is not to track BD vs HD-DVD player sales, but rather BD or HD-DVD player vs STB sales.

By focusing on the format war, the mainstream and technical media are both missing the bigger picture; the ongoing STB war. And that war is a free-for-all that dwarfs the blue-laser format war by two orders of magnitude, at least. Just consider that 75% of the us gets cable. 19% gets satellite. And all those are getting new STBs over the next three years, most of which will carry embedded HD VOD services.

As pointed out, the really big money comes from servicing the masses and the masses will be better served by either upscaled DVD or online delivery for quite a while yet. Back in the day, video-philes chose laserdisc while the masses chose VHS; expect a similar scenario for the next decade unless the blue-laser guys do something extreme in the next year.

$400 players and $25 movies are simply not competitive with "free" players and $6 rentals.

[Jason Dunn]

I've said this before and I'll keep saying it: to move consumers away from DVD to an HD format, or to STB VOD rentals, is going to take a combination of many things:

1) OBVIOUS quality improvements over DVDs
2) INCREASED convenience over DVDs
3) SAVINGS over DVDs
4) FLEXIBILITY allowing them to do more than with DVDs (put it on their PMP, etc.)

Every new format available today fails on one of more of those. DVDs still have a lot of years left in them.

[Jeff_R]

I agree with nearly everything Felix said; my big disagreement is that I don't think copy protection is the only meaningful difference from a consumer point of view (unless you're only referring to technical differences.) The big difference between the two is studio support. People will go with the format that has most of their favourite titles. (Or get annoyed they can't have both and wait for STBs to take over.)

Jason: Are you saying that DVDs replacements need all of those things? I don't see 3 or 4 being needed; DVDs were always more expensive than VHS, but #1 was so obvious that DVD won quickly. I also don't see PMPs as being ubiquitous enough to tip the balance at all. When PMPs are as commonly used for video as iPods are for music, then there's something, but Joe Sixpack doesn't do that yet. #1, I'd say hi-def has over DVD quite clearly; the problem is the Consumer Electronics industry has done the worst job in history of sales. Old sales saying: You can't sell a feature, you can only sell a benefit. The CE industry has been selling nothing but features for HD, and that only helps the gear heads.