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High-Def Mess Needs to be Cleaned Up in Time to Bail Out Q4

30 Jun, 2005 By: Thomas K. Arnold

Our Fourth Annual Home Entertainment Summit: DVD Magic 8, the annual pow-wow for DVD's power brokers, was a sobering experience for all of us. The Cliffs Notes take: The incredible double-digit growth we've been experiencing these past few years won't be happening in '05, and that means everyone has to work a little harder, broadening beyond the big theatricals as well as mainstream audiences.

It also means we as an industry have to continue to search for potentially lucrative incremental revenue sources, which most of the major studios and several savvy indies have done recently by releasing movies and other content for Sony's PlayStation Portable (PSP). One studio chief confided in me that “we have no idea whether it's going to work,” but at least they're making an effort and not hemming and hawing until the opportunity passes.

Our industry also must settle the next-generation format issue, once and for all. Everyone agrees that the best way to get our business steamrolling again is a new format that will get consumers excited and ready to replace their existing libraries with new high-definition discs.

We saw it happen with CDs, which rescued the record industry in the middle 1980s, and we saw it again with DVD, which came along just as the video industry was showing signs of aging and consumer spending on videocassettes — at the time, mostly rental — was flattening.

But consider our position, today: Buy rates are finally coming down, the theatrical pipeline is weak, the proliferation of titles has created a severe shelf-space crisis at retail, and the early adopters of DVD are running out of space in their homes and are beginning to be more selective about what they buy.

As recently as the beginning of this year, as both the Blu-ray Disc and HD DVD camps held press conferences during the Consumer Electronics Show, each predicted a rosy future, and I was sold. The sabers were being rattled, but not for one moment did I doubt that before hostilities escalated members of both sides would become brothers in arms.

That hasn't happened, and now I'm being told that the studios supporting HD DVD are already gearing up for the promised fourth-quarter product launch, while Blu-ray supporters are looking at the first quarter of 2006.

So we've got a fragmented high-def launch plan, coming right in the middle of a pivotal fourth quarter that may need some extra product, and marketing, muscle on the DVD side.

I don't want to sound pessimistic, but the whole thing sounds like a mess to me — a mess someone had better figure out a way to clean up, and soon.

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