The real reason for the delay of both Blu-ray and HD-DVD

For several years I was employed with one of the largest media distribution companies in the US. Up until recently, that is. Perhaps the membership here would be interested in knowing what the industry has in mind for your future. :a

Over the past several months in closed door session, several of the major studios have “suggested” to both blue laser camps, the creation of a hybrid disc that contains blue laser high def content (either camp) but also a standard CSS encrypted “DVD” version. You have heard this already, but the difference in what you read and what is being negotiated, is what is really causing the delay. The DVD must be phased out quickly as part of the concept. In the meantime, studios are dragging their feet with content as a means to pressure the hardware manufacturers.

Put simply, the companies behind the Blu-ray disc oppose the move as the production of their discs differs significantly from HD-DVD and those DVD lines can be easily modified within the time frame suggested, in a cost effective manner when compared to tooling up for the Blu-ray disc lines, thus putting Blu-ray at a distinct disadvantage at the onset, maybe even killing the Blu-ray format. Due to this and the influence of Sony, the idea was scrapped and the rollout was as stated in the press. But there is more.

As time went on, more studios and distributors began warming up to the idea, as they only have to produce a single disc from the get go for all upcoming films. This saves them money and at the same time “benefits” the consumer, as they are not forced to purchase a second HD version of the same movie in the future. Plus, they can set a new price schedule.

They also feel this helps to offset the losses from piracy due to the easily defeated CSS encryption, which has cost them dearly for nearly a decade. In fact, they are salivating at the thought of dropping this encryption for the new more sophisticated AACS. Rental firms such as Netflix and Blockbuster are a “problem” as well. With the new discs, any ripping of rentals would absolutely carry a cost to the renter and easily implemented. Even timeouts can be added etc for a tiered pricing scheme. Getting complicated now! Many may not realize that discs supplied to Blockbuster, Netflix etc., are not the same as retail. Take a look in the DVD jacket next time you rent a film. Even the covers are custom made for each client.

On the retail scene, this hybrid disc builds a blue laser library for the consumer, and the thinking is as the costs come into alignment for individuals, they can more easily make the switch, as they already have several films they can play. In the meantime, they are happy to buy the hybrid disc as it is still a “good value” as it is “future proof”. Blue laser manufacturers should be pleased as the consumer is purchasing a product that eases migration.

Having said that, the discs will be anywhere from 25-30 dollars each and the studios intend to “phase out” the standard DVD by the holiday season of 2008! This is a major drawback to negotiations.

A forced situation if you think about it. But, several studies show that the consumer is not that fired up about HD. Coupled with the confusion of a blue laser format war and the fear of needing an expensive new television, and the whole concept is in danger of collapse. More pressure.

Another interesting facet is, all major studios have tentively agreed to discontinue the practice of region coding due to world market pressures and rampant piracy abroad especially in China and Russia. Not only that, but Japan and other WTO countries have already negotiated the dropping of ICT. Leaving only China and Russia out. The first manufacturer is confident enough to release a player there.

For the same reason, piracy, elimination of the delay from theater release to disc is coming. As a concession to theater owners who are already up in arms about the shrinking delay between box office release and DVD, the studios will allow the sales of the new Hybrid discs in theaters to ticket buying customers and these discs will be discounted to the theaters 25% and they can keep the difference. The promotion will be on the theater stub.

Theater sales can and probably will hit in September when the new Blue laser players will be debuted. This concept was quite popular with most of the theater chains as revenues are falling regardless, in part due to the home theater. In addition, each theater that offers the Hybrid discs, will show HD trailers of the films on large screens that show off the new optical discs definition at 1080p. The screens can even show ads for different promotions on Pepsi etc.

Very interesting. :iagree: