Industry Must Rally Post Format War

22 Feb, 2008 By: Thomas K. Arnold

So now the great format war is over, with HD DVD developer Toshiba throwing in the towel and conceding defeat to Sony's Blu-ray Disc — a story we broke here in Home Media Magazine on Feb. 14.

But the funny thing is that what could have been a St. Valentine's Day massacre for Toshiba stock instead turned into a rallying point, with analysts praising the Japanese consumer electronics manufacturer for swiftly killing off its doomed next-generation format in the wake of overwhelming retailer rejection.

Both Toshiba and Sony saw their stock price jump as word leaked about the imminent surrender, with Toshiba shares gaining 5.7% to 829 yen on the Tokyo Stock Exchange and Sony's stock price rising 1% to 4,900 yen.

The discrepancy between the gains is telling: Toshiba is no longer going to pour good money after bad and will reportedly shift its focus back to more profitable core businesses such as semiconductors and industrial electronics.

Sony, meanwhile, may have won the format war against HD DVD, but the real fight is only beginning: getting consumers to transition from standard DVD to Blu-ray Disc. Sure, the company has a lot of allies, both in Hollywood — studios such as Disney, which last year launched an expensive mall tour to educate the masses about the benefits of Blu-ray — and in the consumer electronics realm.

Still, it's not going to be easy, or cheap. As they say in the music industry, it's not the singer, it's the song — and in this case the tune isn't radically different. Unlike the transition from VHS to DVD, there is no dramatic physical change — movies still come on a five-inch disc — nor are the visual differences nearly as pronounced. On top of that, the potential audience for DVD was everyone who owned a TV set, whereas in this case the potential audience is limited to those households that have HDTVs.

But with only one format now in the market, a clear, concise message can at last be formulated. Instead of fighting each other, we can focus all our energy on fighting the chief obstacle to widespread Blu-ray Disc acceptance: consumer indifference.

It won't happen overnight, but it's a fight that ultimately can be won — at least, that's what we all hope. The stakes, after all, are extraordinarily high: Sony and its allies aren't just betting their own futures, but also the future of home entertainment and packaged media.

Godspeed.