Warning: Blu-ray and HD-DVD Might Both Fail [Opinion]

The battle for superiority between Toshiba’s HD-DVD and Sony’s Blu-ray is in full swing, or is it? HD-DVD announced with much bravado the defection of Paramount to its camp. Sony on the other hand parades around shouting that sales of Blu-ray are exceeding HD-DVD (thanks largely to the PS3). However, the giant troll in the room is the fact that both formats might be dead on arrival (DOA) or at the very best on life support. There seems little doubt that the victor of this battle will become the last optical media format.

The media conglomerates and consumer electronic giants have failed to realize that the means of distributing media is changing rapidly. Some people including Steve Jobs call it the digital revolution but it is really the broadband revolution. The ability to purchase and download songs, TV shows, or movies over your home internet connection has changed the game forever. Now while iTunes has already decimated CD sales, I’m not suggesting the same thing will happen as quickly or fully with movies. So that is good news for Blu-ray and HD-DVD right? Not so fast — there is a triple threat facing Blu-ray and HD-DVD.

1 - DVDs

for 90% of Americans DVD quality is simply ‘good enough’ The greatest problem for Blu-ray and HD-DVD is that for 90% of Americans DVD quality is simply ‘good enough’ and quite frankly looks fine even on HDTVs. If Blu-ray and HD-DVD are hoping to take DVD by storm then they are in for a very big surprise. The DVD format overtook VHS more quickly than most predicted for 3 major reasons:

1. Quality - The quality of DVD video was a huge leap forward over VHS. (Also the playback quality of DVDs doesn’t degrade the more you play the movie as with VHS’s fragile magnetic tape)
2. Fast-Forward/Rewind - In fact this might be one of the largest reasons for DVD’s rapid adoption. Viewers can quickly skip forward to their favorite scene and also do not have to rewind the damn movie when rushing to return it to Blockbuster. Although I still remember my mom asking me if she needed to rewind the DVD.
3. Size and Form Factor - With DVDs keeping a movie collection is much more convenient and practical than with VHS. VHS tapes were bulky and awkward while DVDs looked identical to the already popular CDs (and yes, some people, including my dad, still get them confused today).

Granted, the maximum video quality of HD formats (1080p) is substantially greater than that of DVD (480p), however, the lower-end HD resolution (720p) is much closer to DVD and honestly most people can’t tell the difference between 1080p and 720p. Combine DVD’s 480p resolution with an upconverting DVD player such as Oppo’s or Samsung’s and the urge to replace my DVD movie collection isn’t very strong.

2 - iTunes and AppleTV

Apple fired a shot across the bow of Blu-ray and HD-DVD with the introduction of the AppleTV. Whether Sony and Toshiba realize this I’m not sure. The AppleTV is admittedly a limited device and more of an experiment than a true media center. you don’t think they made AppleTV output 720p by accident do you? However, if the next version of AppleTV incorporates some new key features like DVR capabilities (or at least have the capability to support popular elgato and miglia devices), direct access to the iTunes Store (I don’t want to have to get up to go buy a movie or TV show), and larger capacity options, then it could suddenly be a real contender in the media center market. You might wonder what this has to do with Blu-ray and HD-DVD sales since iTunes videos are strictly SD (standard definition). Well, I firmly believe 720p downloads from iTunes are in the works (you don’t think they made AppleTV output 720p by accident do you?). Yes, right now HD podcasts are the only HD iTunes content for the AppleTV, and the requirements of HDCP make HD downloads a bit complicated, but there is little doubt that this is the likely direction for the AppleTV.

In short, a proper media center coupled to a distribution scheme for HD video downloads (it doesn’t necessarily have to be AppleTV and iTunes - I just think they are the most likely to pull it off) could make physical media for HD videos such as Blu-ray and HD-DVD obsolete. Yes, it is possible for them to be obsolete before they are even fully adopted.

3 - Digital Rentals and HD-Tivo

People want to own their music, not rent it (yes I’m looking at you Napster and Rhapsody, oh I’m sorry Yahoo I forgot you were even there). Movies, however, are a different situation. Sure I own a few of my favorite movies or TV shows but even those just spend time collecting dust on my shelves. Now rentals alone might be good for Blu-ray and HD-DVD since it allows Blockbuster or Netflix to offset some of the high cost of Blu-ray and HD-DVD discs for the customer. BUT, I think the same convenience factor that made iTunes so popular for music (not having to drive to Wal-mart to buy a new album) will work with movies. the current movie rental system sucks In fact, recent evidence indicates that Apple is already working on a movie rental system. Think about it — when you want to watch a new movie you have to drive to Blockbuster or whatever Joe-Schmoe video store, find the movie on the shelf, pray it is in stock, then pay a ridiculous $4-$5 for it, only to get home and find it is too scratched to play — the current movie rental system sucks (I know there is Netflix and Blockbuster Online but with those you have to wait for the USPS, ). Movie rentals (<$3) from iTunes combined with AppleTV 2.0 would deliver the ultimate in home movie viewing convenience. Combine an HD-TiVo with Amazon’s Unbox movie download service for the un-apple equivalent.

The Silver Lining

Is there hope for Blu-ray and HD-DVD? Absolutely, these formats might find their footing as computer drives. The ability to store approximately 50GB worth of data on a single disc is extremely compelling as a data storage/backup solution. To be honest I’m guessing Blu-ray will probably win out and achieve modest success thanks largely to Sony sacrificing the Playstation’s reputation to throw a much needed lifeline to Blu-ray. And just between you and me Sony has made a living of shoving crappy products (mini-discs, rootkit DRM, PS3, memory stick, UMD, connect music store, Rolly, eBook reader, Aibo, etc) down the throats of unwitting consumers.

I admit I have overlooked the crippling amount of DRM jammed onto these discs and the potential consumer nightmare created by HDCP and AACS but that’s a story for another post.

Other Opinions

• Similar conclusion from The DVD Shrink Blog.

Update - Sept 20, 2007: A new report from Screen Digest finds that the HD-DVD vs. Blu-ray war is destined not to have a winner–it’s going to end in a stalemate. (shudder)