Paramount's CTO on Why His Studio Is Dumping Blu-ray

[Jeremy Charette]

<div class='os_post_top_link'><a href='http://www.pcworld.com/article/id,136253-pg,1/article.html' target='_blank'>http://www.pcworld.com/article/id,136253-pg,1/article.html</a><br /><br /></div><i>"In a surprise move, Paramount and DreamWorks Animation announced this week that they would align themselves exclusively with the HD DVD high-definition format...according to Alan Bell, executive vice president and chief technology officer for Paramount Pictures, there's more to the change in allegiance than either a mere abandonment of Blu-ray's higher-capacity advantage or pure business dealings."</i><br /><br /> <img src="http://www.digitalmediathoughts.com/images/dumping.jpg" /><br /><br />It's been discussed heavily here on the forums, but Alan Bell confirms many of the reasons we like HD DVD. Cheaper players, more stable specs, better backwards compatibility, and more interactivity. Bell also points out that 25GB is plenty of space for an average movie, with extras. If space becomes a problem, they have no problem going to a second disc to accomodate extras. We see it all the time in DVDs these days, so it makes complete sense. I feel pretty secure that I've made a good choice in buying the Xbox 360 HD DVD add-on player. I'm watching The Bourne Supremacy on it now, and the picture is phenomenal.

[Felix Torres]

Talk about burning bridges!
Very candid answers; you don't normally get that kind of answer out of corporate mouthpieces.
So the bottom line is that each set of extras for BD is a whole new Java program that has to be fully coded and debugged, wheras HDi is an actual scripting engine with pre-defined and pre-debugged features. And, surprisingly, the difference is enough to impact the bottom line.
Ouch.
New data, that.

[Jeremy Charette]

Ars Technica (http://arstechnica.com/news.ars/post/20070822-reasons-financial-and-technical-lurk-behind-paramounts-hd-dvd-coup.html) has a good interview with Alan Bell as well. All the same points, and another big one: every HD DVD player must have connectivity (basically, an ethernet port). This an absolute necessity for managed copy. Blu-Ray has not imposed a connectivity requirement in their hardware spec.

I'm a huge proponent of content portability, so that feature alone is enough to sway me.

[Jason Dunn]

&lt;Jason does the HD-DVD happy dance>

:D

[whydidnt]

All of the reasons Mr. Bell states for wanting to use HD-DVD may have some truth to them. But let's not kid ourselves into thinking that is why Paramount and DreamWorks made this decision. From the Wired article announcing this:

Update: According to The New York Times, Viacom execs who wished to remain nameless said that Paramount and DreamWorks will be receiving about $150 million in financial incentives in exchange for the exclusivity. Microsoft denies providing any such financial incentives.

I would say that the Movie Studios had about 150 million reasons to agree to this exclusivity and none of those had to anything to do with the earlier reasons stated regarding costs, ease of use etc. They simply sold out to the highest bidder. In the long run it's bad for all of us because it drives costs up AND continues to HURT the adoption of a standard for HD-DVD, meaning it will be longer until both the hardware and media become mass produced and bring with them the low prices we have come to enjoy on standard DVDs.

[Felix Torres]

In the long run it's bad for all of us because it drives costs up AND continues to HURT the adoption of a standard for HD-DVD, meaning it will be longer until both the hardware and media become mass produced and bring with them the low prices we have come to enjoy on standard DVDs.

Okay.
You're not the first to float this idea out there, so you're not the target, okay?

But...
How does it cost consumers money when Viacom (and that's who we're talking about here, really) chooses to support the disk standard that features the cheaper players, the cheaper disks, and the most features?
Does it prolong the war? Yes.
Which means the pressure on both sides to drop prices continues.
The pressure on both camps to deliver value continues.
The pressure on BD to live up to the standards of HD-DVD continues.
How is this bad for buyers of either format?

This is bad for Sony, no doubt.
This is bad for Blockbusters if they end up eating their words.
This could be bad for Target if Wal-Mart eats their lunch for the holidays by selling HD-DVD drives to folks who can't but them at Target.
This could be bad for Fox and Disney if they end up with warehouses full of unsold BD-ROMs.
And it could be bad for investors in those companies.
But that assumes BD is going to lose.
And we don't know that.
All we know is that BD won't win just by holding press conferences and releasing lists of B-grade movies to be released in october. That they're going to have to win the old-fashioned way; delivering value to customers.
This is a bad thing?
For the gang of three maybe.

But for consumers?
Consumers stand to make out like bandits, here.
The longer the war goes on, the lower the entry costs to get onto the winning format, whichever it may be.

The only consumers that might end up paying more are those that already committed to BD because they believed BD had already "won" the war. But then again, those early adopters are going to have to buy new players anyway if they want access to the full features of whatever the BD spec finally evolves into by next year.

Sorry guys, but that's life on the bleeding edge. There are no guarantees when you choose to be an early adopter of a new tech. As the saying goes: you can tell the pioneers by the arrows in their backs.
Well, guess who put them in the line of fire in the first place?

As the romans used to say: Caveat Emptor.

[Jeremy Charette]

whydidnt: Would VIACOM et. al. have made the switch to HD DVD without the financial incentive? We'll never know, so I won't debate it. No doubt that it influenced their decision, but it still hasn't been confirmed by anyone in the know. The arguments presented by Alan Bell are compelling though.

Those arguments are the reason I finally picked a format, and made the leap to HD DVD. Stable specification, excellent backward compatibility, and built-in managed copy. And no BD+ DRM. My Xbox 360 HD DVD drive will continue to work with my console, and my PC, for many years to come, even as new titles are released. Blu-Ray can't make the same guarantee.

Oh, and nobody's mentioned that all of the Porn studios (except Vivid) have chosen HD DVD exclusively. That's gotta count for something. :lol:

[Felix Torres]

Oh, and nobody's mentioned that all of the Porn studios (except Vivid) have chosen HD DVD exclusively. That's gotta count for something. :lol:

About as much as the fact that european art-house movies will all be on HD-DVD. ;-)

Hmm, come to think of it; anybody hear from Bollywood on the subject? :twisted:

[whydidnt]

But...
How does it cost consumers money when Viacom (and that's who we're talking about here, really) chooses to support the disk standard that features the cheaper players, the cheaper disks, and the most features?
Does it prolong the war?

Because that $150 million dollars HAS to come from somewhere. Corporations aren't in the habit of giving money away unless they have the expectation that they will make it up somewhere else. The organization that spent that money (and I'm not sure it's Viacom, just that Viacom leaked the information) has to make it up somewhere, since HD-DVD is targeted at consumers, they are going to make it up by adding charges "somewhere" in the foodchain that eventually gets to consumers. This means we will pay higher prices, longer.

[gdoerr56]

About the 'alleged' $150 Million:

It is essentially a zero sum game. If it is true then the HD-DVD camp believes it can generate higher sales volume for the discs AND the players (for which they receive a royalty of some sort on each unit) so they pay for exclusivity. Don't believe for a minute that if they didn't spend the $150 Million, they would have either given it back or lowered their royalty fees. The money likely came out of a Marketing budget and it probably means $150 M less they will spend on advertising.

[Felix Torres]

Assuming the mythical $150 million payoff is real, which some reports say it isn't, but for the sake of argument lets say it is...
Let's say somebody offered $150 million over X years to Viacom to drop BD; yes, they expect to make it back somehow.
But they can only make it back off HD-DVD buyers.
They're not going to stand in alleys mugging BD-ROM buyers. So, if you don't buy HD-DVD, then they can't make any money off of you. And if you buy HD-DVD its because you like what they're offering you (lower prices on hardware and media and more features); again, nobody is putting a gun to your head to make you buy either format...
If you don't believe in the HD-DVD value proposition, the best way to protect yourself is not to buy HD-DVD. Simple as that.
Just like those of us that don't see value in BD-ROM, as it exists today, aren't buying BD.

Here's one right back; does anybody actually think the reason Target dropped HD-DVD has *nothing* to do with Sony sweetening their deals on TVs and Playstations? Its common knowledge that Sony ties supplies of their hot products to vendors willingness to stock up on their less desirable products. Standard business practice tying pricing to shelf-space devoted to your products and competitors'; if you don't stay on the manufacturer's good side, you stand to see them favor your competitors...
There's more than one way to buy a market. Sony has it own bag of tricks and, if Toshiba and partners can't play the same cards, it should be no shock to see them play other cards.

They don't call it a war for nothing; if they don't fight back they might as well surrender the market to Sony and let them call all the shots. And if Sony gets to call all the shots, what is that going to do to prices?
Sony wants a monopoly on the cheap.
The HD-DVD crowd is the only thing standing in their way.

I say let them fight it out.