Format war impacting sales

Dominant US industry lobby group, the Consumer Electronics Association (CEA), has slashed its sales expectations for competing next-generation DVD players amid consumer warnings about the dangers of buying into either format.

The CEA estimated only 200,000 HD DVD and Blu-ray DVD players were shipped in 2006, down from earlier predictions of 600,000.

The organisation reported that consumer electronics companies had lost around US$300 million in potential revenues in 2006 due to the ongoing conflict.

It said it expected sales to remain poor while confusion reigned among consumers about the respective merits and long-term commercial sustainability of the duelling DVD standards.

At the recent CEA Industry Forum staged in San Francisco, industry experts and supporters of both formats went head-to-head in a heated debate regarding the current format ‘war’.

Chris Crotty, senior analyst for consumer electronics at market research fi rm iSuppli, described the current conflict as “the most pointless war ever”.

Crotty was joined by Blu-ray and HD DVD supporters who showed no signs of a willingness to consider compromise.

“I’m not trying to defend the fact that there’s two formats,” said Andy Parsons, senior VP of product development for Pioneer and spokesperson for the Bluray Disc Association. “Everyone’s mad at us because we ‘allowed’ it to happen. What should we have done instead? We’re going to give up 10GB per layer? Should we just throw that away?

“We all work for companies that are for-profi t enterprises.”

Mark Knox, advisor to Toshiba’s HD DVD promotion division, said there was a common perception that either one of the formats would “soon disappear”.

“But that’s not the way things are going to happen,” he added.

Knox also ruled out rumours of a dual-format player being developed at any point in the near future, stating that the costs associated with producing such a player would prove prohibitive.

South Korean Blu-ray DVD supporters LG Electronics and Samsung Electronics recently ruled out developing dual-format players because of the costs involved.

HD DVD has stolen a considerable march on its Blu-ray rival in terms of consumer perceptions, according to a recent study published by online market research fi rm Cymfony.

The study, entitled ‘A Blue Christmas for Blu-ray’, reported that while Blu-ray and HD DVD were receiving a similar number of mentions on online discussion forums, the latter format had received 46% more positive feedback than Blu-ray.

Blu-ray format developer Sony’s mixed history with new technologies – including the Betamax and MiniDisc failures – has also made it an easy target for its detractors. HD DVD players have so far outsold their Blu-ray counterparts in key markets including the United States, with industry analysts attributing this to the comparatively lower cost of the players and the widespread availability of around 160 HD DVD titles released to market to date.

This situation is likely to change however, with the recent release of Sony’s Playstation 3 console, which includes a Blu-ray DVD drive as standard.

Interestingly, Cymfony claimed that this factor had also attracted stern criticism from some gamers, who argued that the Blu-ray DVD drive was an unnecessary feature that drove up the price of the console, and forced gamers to ultimately side with the format over the HD DVD standard.

Regardless, with the recent commercial introduction of dual-layer 50GB Blu-ray discs, Hollywood studios are ramping up their Bluray releases for 2007, with more than 50 new films planned for introduction in the next quarter, and around 100 more scheduled for release before the end of the year.

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