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Blu-ray vs. HD DVD: The High-Definition Format War Explained

In the battle for supremacy in high-definition optical discs, two technologies emerged: Blu-ray, developed by Sony/Philips, and HD DVD, created by Toshiba. Both offer similar performance metrics, yet Blu-ray boasts a larger storage capacity by 66%. This article explores the ongoing format war, historical context, and potential futures, including dual-format players and the impact of digital distribution. We also examine market trends and key players involved, highlighting the marketing strategies and content support that may dictate the victor in this clash of technologies.

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Blu-ray vs. HD DVD: The High-Definition Format War Explained

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  1. Strategic Computing High-definition DVD Format Wars March 14, 2007 Saud Al Shamsi Vikas Bhargava Karen Hsu Josh Palmer Mark Schelbert Edmund Wong

  2. Introduction Blu-ray vs. HD DVD • In recent years, high-definition (HD) television and HD optical discs entered the market • Two HD formats have appeared in the DVD market, both claiming to be the rightful successor to the DVD throne: • Blu-ray (developed by Sony/Phillips) • HD DVD (developed by Toshiba) • Measured by most performance metrics these two technologies are the same, except that Blu-ray has significantly larger capacity (66%). • However, Blu-ray appears to have greater network support Strategic Computing

  3. Blu-ray vs. HD DVD Future • While the format war rages on, entirely different outcomes are possible: • LG has introduced a dual-format player and drive • Internet may replace the DVD as a movie delivery vehicle • International view: Japan (96% Blu-ray), Europe (pushing for open licensing of both formats), China (proprietary HD format), India (small $ market), South America (unknown); Xbox 360 but still no PS3) Strategic Computing

  4. History of Format Wars • Before HD, IBM arbitrated a standard DVD format intended to avoid a format war, but the outcome favored Toshiba regarding royalties, leaving Sony unhappy • In response, Sony began developing the next generation of high-definition optical media • Toshiba followed suit with its own HD technology • While there were many “peace talks”, neither party reached agreement • Comparison: VHS vs. Betamax War • Despite Beta’s superior quality, VHS won the war because of its strong “content” network Strategic Computing

  5. Outcomes of Similar Format Wars • Certain format wars were never won, but instead compromised with the introduction of multi-format technology • DVD-R vs. DVD+R • Multi-format DVD drives accommodate both • CDMA vs. GSM • Can make/receive calls regardless of technology • Both prevalent around the world • Flash Memory Formats • Over 50 different kinds of flash memory • All-in-one readers handle most types Strategic Computing

  6. Tech Comparison • Most performance metrics of these two technologies are the same • Blu-ray storage capacity is more practical for HD movies • One high-definition movie (~20GB) fits on just one Blu-ray layer (25GB); while HD DVD requires two layers (2x 15GB) * Sources: ProActionMedia, WesleyTech; single layer. Strategic Computing

  7. Network Comparison • While both formats have support from various large companies, Blu-ray has greater support from content providers that are critical to achieving a network effect • Consumers will follow the format of the CONTENT providers Strategic Computing

  8. Security, Durability & Other • Digital Rights Management • Blu-ray promises BD+, which allows encryption keys to be modified when they are hacked • AACS is the copy protection scheme used by both HD DVD & Blu-ray. Took years to develop, but broken in weeks Disc Aperture Settings • Blu-ray more prone to error due to high aperture • Without protective hard-coating, Blu-ray is easier to scratch (data layer is closer to surface) DVD 0.6 HD DVD 0.65 Blu-ray 0.85 Strategic Computing

  9. Current Market Share • Sales trends illustrate Blu-ray gaining dominant market share Strategic Computing

  10. Availability of Hardware (players) Blu-ray (with PS3) : HD DVD = 5 : 1 Blu-ray sales up 700% since the launch of PS3 and other players 687,000 PS3 sold in US Availability of Content 19 of the “Top 20” DVDs in 2006 were released by studios supporting Blu-ray Why Blu-ray is On the Rise? Strategic Computing

  11. Business Model • There are several players in determining a dominant network • However “Content is King” and will largely determine the victor Customers Consumers Retailers / Distributors Licensees Competitors Complementors HD Optical Disc Format Internet VHS TV On Demand (VOD) Flash Memory HDTV Media Players Game Consoles Suppliers Disc Replicators / Factories Machinery Providers Entertainment Industry Strategic Computing

  12. Film Industry Adult Film Industry XXX Video Game Industry Current Marketing Strategies • Key players with influence in the format war between HD DVD and Blu-ray: the film industry, the adult film industry, and the video game industry ESTIMATED ANNUAL REVENUE 2006 IN U.S. $35 Billion $3.6 Billion $12.5 Billion Strategic Computing

  13. Current Marketing Strategies • Blu-ray has adopted a “pre-emptive strike” marketing strategy with its “War is Over” advertising campaign HD DVD Blu-ray • “The Look and Sound of Perfect” $150M advertising campaign • Xbox 360 supports external HD DVD player • Pornography industry experimenting with HD DVD • “War is Over” advertising campaign • PS3 internal Blu-ray player • Sony cutting player prices from $1K to less than $500 • Future Blu-ray car players Strategic Computing

  14. Future Drivers • What are the drivers that will determine the future of this format war? Strategic Computing

  15. Resolution (NTSC) 640 x 480i pixels Audio – Stereo, 44kHz HD vs. Standard: is it worth the hype? • TV remains the Limiting Factor for the time being • High-definition provides far superior resolution; however, without HD televisions the improvement in quality will go unnoticed. Standard High Definition • Resolutions • 1920 x 1080p • 1920 x 1080i • 1280 x 720p • Audio - AC-3: 48 kHz sampling rate, up to 8 channels, up to 18 Mbit/s Strategic Computing

  16. HDTV Sales Trends • HD TVs expected to increase from 4M HHs in 2006 to 52M HHs in 2009 Strategic Computing

  17. Has HD Optical Media Crossed the Chasm? • With the PS3, Blu-ray is quickly approaching the chasm… …but HD-DVD is lagging behind. Strategic Computing

  18. Possible Compromises Internet / Flash • Internet/flash memory may replace DVDs as the dominant media delivery vehicle for movies • “DVD format will be irrelevant” – Bill Gates … may be replaced by flash memory or Internet Dual-disc / Dual-player • LG Super Multi Blue Player and Drive • Supports playback of both formats • Available now for $1,199 • Warner Bros. Total HD • Single disc compatible with both players • Available 3Q 2007 • Costs marginally more than current discs Strategic Computing

  19. Thank You • Blu-ray is positioned to win the format war because • Stronger sales in the US and Japan • Larger studio network providing film content (promise of superior security BD+) • PS3 integrated Blu-ray players • Larger capacity of 25GB (vs 15GB) • Questions & Answers Strategic Computing

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