Surprise, Surprise: Blu-Ray Still Not Catching On

from the late-to-the-party dept

Way back in 2005, as we sat through yet another ridiculous and self-defeating standards battle over the "next generation" standard for high definition DVDs, we pointed out that it was probably already too late, as the market was already beginning to recognize that disc-based storage made less and less sense. And yet, because the two sides fighting over the standard could only see monopolistic dollar signs from winning the "battle" they kept on fighting. Yet, with two competing standards, very few people wanted to bet on either one, knowing if they bet wrong, they were stuck with a useless box. And this went on for years. And years. And eventually Blu-ray won in early 2008, even though it was clearly already too late.

The latest numbers suggest, indeed, that despite Blu-ray "winning" the standards battle, it likely missed the big window for success, as many people just don't see the point in buying yet another new box and having to get movies all over again -- especially as online delivery is becoming more and more effective and efficient. I don't think Blu-ray will collapse completely, but it seems like the standards battle became a prisoner's dilemma of sorts -- with both sides ending up much worse off. If they had just agreed to a standard back in 2004/2005, when they had a chance, because online delivery options really weren't that good. Today, however, they're not just good enough for many people, they're getting better all the time.

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Blu-Ray To Allow Users To Make 'Copies' -- With Lots Of Strings Attached

from the asterisk dept

"Beginning next year, studios and other content holders will be required to give consumers the ability to make one copy of any Blu-ray Disc they buy," says the article (via Engadget). Sounds great -- movie studios and others finally realizing that people should be able to freely back up DVDs they legitimately purchase. The devil, of course, is in the details. While discs will have to support this "managed copy" feature, it will require new hardware, and there's no mandate that DVD player manufacturers include support for it at all. The copy, as you'd expect, is all DRM'ed up, and in order to make the copy, the Blu-ray player will have to connect to an "authorization server". This is the sort of model that's caused lots of problems in the past, when companies decide to pull the plug on the servers, rendering the feature useless. But the biggest potential problem with the feature is that movie studios and others will be free to charge whatever they wish for it. That means this really isn't a backup or a copy at all, it's simply the distribution means for the latest incarnation of the entertainment industry's favorite business model: getting people to pay for the same content over and over. That's why the studios want to block things like Real DVD -- not because they'll increase piracy, but because they cut off the only business model the studios can see for digital content.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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Selling A Different Kind Of Plastic Disc Will Save The Video Industry?

from the missing-the-point dept

An industry analyst says that Blu-ray disc sales could help save the home-video business, which is hurting as sales of traditional DVDs drop off. This seems to be at odds with earlier stories, which said that Blu-ray sales were particularly bleak, and weren't prompting consumers to upgrade their libraries of standard DVDs. Blu-ray continually gets portrayed as some sort of quantum leap in DVD technology, but in reality, it doesn't look like it offers enough advantages over standard DVDs to tempt large numbers of consumers to buy in at its higher price. Innovative online services -- if the movie studios will allow them to emerge -- would seem to offer the industry a better chance at salvation, rather than yet another form of locked-down plastic disc at a higher price.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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Hollywood's DVD Cash Cow Starting To Falter

from the more-for-less dept

DVDs are Hollywood studios' most significant moneymaker these days, but sales are falling: one service says they're off 9 percent overall this year, while sales of higher-priced new releases are down 22 percent. With the way the economy is going, a spending slowdown isn't all that surprising, though entertainment revenues have historically held up quite well in down times. But studios are facing a scarier fact: perhaps consumers are losing interest in buying DVDs. One particularly bleak spot is the sales of Blu-ray, which was intended to spur consumers to buy expensive DVD players to match their new HDTVs, then replace their libraries with expensive new Blu-ray discs so they could get better picture quality than from standard DVDs. But sales of players have been slow, and sales of the discs haven't been much better.

The original article spends a lot of time talking about price, but never goes so far as to say that it's starting to look like consumers have no willingness to pay a premium over regular DVDs for Blu-ray's supposed benefits. For many people, the difference in picture quality simply isn't enough to justify buying a new DVD player -- no matter how cheap -- and buying more expensive discs, particularly as money gets tighter. James Surowiecki at the New Yorker has a good post on this angle, saying the vast difference in picture quality between VHS and DVD helped drive sales of the latter, but the difference between DVD and Blu-ray isn't wide enough to have a similar effect. But the studios say the down economy will give Blu-ray a boost, because "the supply of Blu-ray players is likely to sharply exceed demand in the coming holiday season, pushing down prices." That seems like a nice way to spin low sales expectations, but even if you ignore that, Blu-ray prices have a long way to fall before they're anywhere near competitive with upconverting standard DVD players.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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Blu-ray Working Great, For Pirates

from the unintended-consequences dept

Blu-ray "won" the next-generation DVD standards battle, but that victory has, thus far, been pretty hollow, as consumers haven't wholeheartedly embraced the new format (and the new DVD players they need to take advantage of it). But one group of people is loving Blu-ray: Asian movie pirates. The pirates rip Blu-ray movies, then burn them onto DVDs using the AVCHD format, at a resolution that's lower than Blu-ray, but still higher than standard DVDs. The lower resolution means the pirates can burn onto regular blank DVDs, not blank Blu-ray discs, holding their costs down and creating fat profit margins on the $7 bootlegs. Wasn't one of the reasons the movie industry was so hot on Blu-ray its fantastic DRM that was supposed to make life hell for pirates? All it appears to have really done is annoy customers, while Blu-ray itself is making the pirates' business even better.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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Predicting Blu-ray's Troubles Didn't Take A Crystal Ball

from the that's-gotta-hurt dept

A bunch of regular readers of Techdirt have been sending in Robin Harris' analysis that, despite beating HD-DVD in a drawn out standards battle, Blu-ray DVDs don't seem to be gaining much traction. Harris specifically states: "16 months ago I called the HD war for Blu-ray. My bad. Who dreamed they could both lose?" I guess Harris doesn't read Techdirt. Because we predicted such an outcome 3 years ago when the standards battle delayed adoption, and again when Blu-ray launched over two years ago, and again when HD-DVD dropped out earlier this year. It wasn't exactly rocket science to recognize what would happen, if you just compared the standards battle over DVDs to previous standards battles, and looked at the competitive environment and tech horizon, you could see that an extended standards battle would hurt both sides. That said, I'm actually not as pessimistic as Harris about Blu-ray's chances. I think that it will catch on somewhat and become more widely used -- though, not nearly as widely as if the standard had been set three years ago, before online delivery of movies was a viable option.

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Despite Winning The HD Format War, Blu-Ray Sales Dropped

from the whoops dept

We've been pretty harsh on the warring camps over the next generation DVD standard, pointing out, frankly, that most people just didn't care, and the longer the two sides battled, the worse the problem would get. However, even given that I wouldn't have expected the latest news that Blu-ray sales have plummeted from January to February, following its eventual win in the standards battle. Research group NPD chalks up the sales drop to the high prices of Blu-ray DVD players... but that doesn't make any sense. The players were already expensive -- so you'd at least expect sales to remain constant, even if selling prices may have bumped up a bit without the HD DVD competition.

My guess is that a few different things may have impacted the decline in sales. First, there's the seasonal aspect of it (and February is a short month). But, perhaps even more important is that the whole standards battle itself turned users off from any form of next generation DVDs. Those who were HD DVD early adopters are pissed off that they bet on the wrong horse, and those who didn't follow the space closely just know that some folks got screwed -- and don't want to take the chance. One other factor may be the widespread stories warning people not to buy Blu-ray, because the player profile is getting updated, and many older players are not upgradeable. Either way, the backers of Blu-ray can't be all that thrilled that the end of the standards battle didn't lead to a jump in sales. Perhaps they should have spent a bit more time coming up with reasons for consumers to buy rather than wasting all that time fighting with HD DVD.

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Blu-ray Prices Go In The Wrong Direction (For Now)

from the wait-and-see dept

Gizmodo points us to the news that it appears Blu-ray DVD player prices have gone up, rather than down, in the wake of finally winning the standards battle with HD DVD. Of course, the immediate finger pointing is to the fact that it no longer needs to compete with the cheaper HD DVD players (and certainly that new HD VMD thing isn't serious competition). However, it seems unlikely that this price hike will last very long. As more movies come out on Blu-ray and competition heats up between the makers of Blu-ray players, price drops are inevitable. Besides, given the growing (if still quite weak) efforts to deliver movies online, Blu-ray isn't completely free and clear of competition. Besides, as the Tom's Hardware article makes clear, buying a standalone Blu-ray box these days doesn't make much sense, as the standard is about to be upgraded, and most of the players on the market today won't be upgradeable.

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Blu-Ray Will Likely Catch On Despite Flaws

from the patience dept

I've had my own share of criticisms of the Blu-Ray format in the past, but even I think the thesis that Blu-ray is doomed is over the top. Don Reisinger claims that having won the battle with HD-DVD, Sony's Blu-Ray format is still going to lose the war of consumer indifference. I think there's clearly something to this. Clearly, lots of people are still buying DVDs, and the reasons Reisinger identifies -- inflexible DRM, high prices, many consumers' inability to tell the difference between HD and regular definition content -- are certainly reasons to expect uptake of the Blu-Ray format to be relatively slow. But I think it's important to keep the longer-term perspective in mind. People were saying many of the same things about the DVD format a decade ago: complaining about the price and wondering if consumers would care about the quality difference. But the DVD format is indisputably successful. Prices came down. Consumers got used to the higher quality of DVD. It didn't happen in a year, but it took less than a decade.

The same thing will happen with Blu-Ray. Blu-Ray players today are no more expensive than DVDs were a decade ago, and the PS3 doubles as a video game console. As people upgrade their TVs, more and more of them will get used to high-def picture quality. We've pointed out before that faster bandwidth will ultimately render physical formats obsolete. But fortunately for Sony, as bad as Blu-Ray's DRM is, the download services' DRM is even worse. You can at least be reasonably sure you'll be able to play your Blu-Ray disc on most TVs, something that's often not true of video download services. So in the short run, Blu-Ray probably has time to reach critical mass among consumers before Hollywood figures out how to design a movie download service consumers will actually be interested in. Blu-Ray would catch on faster if it weren't for the issues Reisinger identifies, but I don't think there's much doubt Sony and its partners will sell tens of millions of the things.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

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HD DVD May Finally Be Dead... Only Three Years Too Late

from the still-time-to-salvage? dept

A few weeks ago, when we noted that it really looked like HD DVD might finally be done for, we were surprised to see the number of folks in the comments insisting that we were crazy, and HD DVD had a long future ahead of it. Well, it appears that future has been cut short. In the past week, Netflix, Best Buy and Wal-Mart all said they would sell exclusively Blu-ray players and discs going forward, squeezing out whatever last minute hope there was of rescuing HD DVD. Now reports are finally coming out that Toshiba has come to terms with the inevitable and will officially kill off HD DVD in the next week or so. The thing is, this is really three years too late. There were three years where a next generation DVD standard had an open market to dominate. Yet, in those three years, the ability to deliver videos online has grown tremendously, meaning that there's even less of a reason today to upgrade than in the past. No, internet delivery of movie content isn't ideal yet. It's still much easier to use a disc -- but the gap has closed quite a bit and it's only going to get narrower -- until internet delivery systems surpass any kind of disc-based system. It's a classic "innovator's dilemma" where internet delivery mechanisms are getting better at a rate much faster than next generation DVD systems. Those three years of fighting over standards is going to come back and bite everyone who spent all this time fighting over a standard only to miss the larger picture.

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HD DVD Bets Big On Super Bowl Ad... Yeah, That'll Do It

from the great-moments-in-wasting-money dept

In the biggest standards battle most people couldn't care less about, most folks are assuming that Blu-ray has finally won the battle. However, the HD DVD folks aren't totally giving up yet. After hanging their heads and canceling a party and press conference at CES, it appears that Toshiba believes the way to revive interest in the HD DVD standard is... to spend $2.7 million on a Superbowl ad. As if that's going to make a difference. It brings to mind various dot com startups from the last bubble who put their entire marketing budget into a Super Bowl ad. In the meantime, it may be time to start watching HD DVD's other backers. Microsoft still insists it's strongly behind HD DVD but have opened the door to finally giving it up. Meanwhile, Intel has a long history of jumping ship after it realizes it backed the wrong horse in various standards battles. The company seems to have learned when to cash out and move on. Last year it moved closer to that position by supporting both standards (while still officially backing HD DVD). If the trend keeps moving towards Blu-ray, then expect to see Intel jump more fully to the other camp. Now, if only this had been worked out four years ago, before people had moved on to online video. Blu-ray can still do well, but it missed its biggest opportunity to take over the market a few years ago.

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Sony CEO Damns Blu-Ray With Faint Praise

from the better-late-than-never? dept

For months, Sony and the other members of the Blu-Ray coalition have been declaring themselves the victors in the high-def format wars, with Toshiba and the HD-DVD camp struggling to convince people that they were still in the race. More recently, after bribing Paramount to side with them, the HD-DVD camp has enjoyed a resurgence. And that shift in momentum is apparently having an effect at Sony, as Sony's Howard Stringer is now declaring the comptition a "stalemate" and claiming that it was never that important anyway. Given the overheated rhetoric Sony was using earlier this year, it sure sounds like Sony is now worried they're going to lose, as HD-DVD companies slash prices in the run-up to the Holidays. Stringer laments that his predecessors didn't work harder to come up with a compromise before the two competing formats launched. At this point, it's not clear that there's anything Sony and Toshiba could do to patch things up. There are now hundreds of thousands of HD-DVD and Blu-Ray players in peoples' living rooms, half of which will become useless junk when one format finally prevails. Or maybe they'll all lose, as consumers jump directly to more flexible digital formats that are sold over the Internet instead of on plastic discs.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

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Still More Bad DRM News

from the slow-motion-train-wreck dept

As you might have gathered, we don't much like digital rights management, which doesn't stop piracy and doesn't create value for consumers, but does irritate them and create security problems. This week there are two more stories illustrating these problems. First, there's been another Blu-Ray crack. Blu-Ray discs employ two different DRM technologies. One, called AACS, was cracked back in January. The other, called BD+, was supposed to provide an added layer of "security" and differentiate the format from HD-DVD. The specifications for BD+ were released just last June, and the first discs using the technology were released a month ago. Now, to no one's surprise, a company called SlySoft has announced a BD+ crack. The second development is likely to prove even more embarrassing to DRM supporters. Macrovision, the company made famous when its anti-copying technology was incorporated into VCRs in the 1980s, also sells DRM technology called SafeDisc used by Windows computer games. Ironically, "SafeDisc" turns out not to be so safe for your computer, as Microsoft is warning that the technology opens up security vulnerabilities on Windows XP and Windows Server 2003. Malware running as an unprivileged user could use vulnerabilities in the software to gain administrative privileges. DRM is bad for everyone: technology companies, copyright holders, and their customers.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

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Blu-Ray Glitches Illustrates DRM Pitfalls

from the not-exactly-a-surprise dept

A story about flaws in two new Blu-Ray discs illustrates an important problem with digital rights management technologies beyond the fundamental flaw of treating customers like criminals. Ordinary open standards are designed to be as easy to implement as possible, and when hardware or software in an open platform detects a possible error, it makes a good-faith effort to recover from it gracefully. As a result, if one manufacturer makes a minor mistake in implementing a standard, the other components can often adapt and prevent it from bringing the entire system to a halt. Digital rights management turns this attitude on its head. The fundamental goal of a DRM scheme is to prevent unauthorized devices from working properly, which means DRM providers are required to react to any discrepancy as evidence of hacking and refuse to work with it at all. That's how we get Blu-Ray players manufactured by well-known consumer electronics companies refusing to play legitimate Blu-Ray discs from well-known Hollywood studios. And this problem is only going to get worse as Hollywood pushes for ever-more-elaborate DRM formats. Every new layer of "security" features that are added to consumer electronics devices increases the cost and complexity of the devices, and more complexity means lower performance and more ways the system can break. As we've noted before, Windows Vista has a particularly severe case of DRM bloat, as Microsoft has added "security" features demanded by Hollywood at the cost of degrading the performance of the entire operating system. Needless to say, this is a lousy business strategy. It raises the costs of products, necessitates costly recalls/firmware updates when somebody screws up, and needlessly irritates customers. Oh, and have we mentioned that DRM doesn't stop piracy?

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

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$150 Million Sure Can Inject Some Life Into A Pointless Standards Battle Over Next Generation DVDs

from the oh-that? dept

In what must be the world's most pointless standards battle over next generation DVD technology, apparently all it takes to reignite the tiny fire of interest is $150 million. If you hadn't been paying attention (and, honestly, why would you?), two separate groups have been battling it out over which technology will represent the next generation of DVDs: Blu-ray or HD DVD. Like many standards battles these days, the players believe the pot is so lucrative that they refuse to come up with a single standard -- despite the fact that competing standards basically guarantee that both sides lose. Fewer people are willing to adopt one technology if there's still a half decent chance the other one might prevail. At the same time, fewer people are willing to adopt one technology if half the content they want to view is stuck on the other technology. It's a lose-lose situation. While the HD DVD crowd would deny this, over the last few months, it had finally seemed like Blu-ray was edging ahead (for example, with thieves). However, HD DVD's backers have fought back from oblivion by giving Paramount and Dreamworks $150 million to only release movies on HD DVD, effectively ensuring that this remains a standards battle that no one cares about. The good news is that the longer this battle goes on, the more likely most folks will simply jump to alternatives that don't involve plastic discs.

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Thieves Vote For Blu-ray In DVD Standards Battle

from the good-to-know-where-they-stand dept

Frank writes in to let us know that the latest news on the next generation DVD battle that almost no one cares about. Apparently, crooks favor the Blu-ray standard. At least that's the story concerning some thieves who broke into a video store last weekend and made off with a bunch of Blu-ray DVDs, but left all the competing HD DVDs. Somehow, I doubt that Sony will use its favor among thieves as part of the marketing campaign for Blu-ray.

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