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Wednesday, 05 December 2007 12:20

Blu-ray vs HD DVD: just say no

If you've bought a Blu-ray player or a PS3, you might be feeling smug about the news that the format took a 95 percent market share in October. But don't get too comfortable.
While Blu-ray enjoys a considerable margin in Australia - 26:1 on hardware and 9:1 on discs, that could change very quickly.

Firstly, the numbers are very small. Sony says there is an installed base of over 100,000 PS3s in Australia, and someone must be buying the Blu-ray players I keep seeing advertised by the major retailers.

Yet only 18,000 Blu-ray discs were sold in October, according to market researcher GfK. That's significantly less than one disc for every five players, which I don't consider clear evidence of success.

Why are the numbers so small? Frankly, I don't believe many people are buying PS3s as Blu-ray players, and it doesn't sound like PS3 owners are taking much advantage of that capability.

Since high-def movies command a significant price premium over DVD equivalents, you'd need a good reason to buy them.

Unless you're using a real HD TV (at least 1080i), you're just not going to see any real difference between DVD and HD DVD or Blu-ray. Sure, plenty of so-called HD TVs have been leaving the shops, but a lot of them - especially the cheaper models that normal people can afford - only have 768 pixels vertically.

I've seen Pioneer demonstrate Blu-ray side by side with DVD on large and expensive screens, and while the difference was visible, it's very hard to say that it could be cost-justified. 

It seems to me that there is a 'breakthrough' price for consumer electronics. With CD players it was $A200, with DVD players it was $A100. Once those prices were reached, there was a seemingly immediate move to the corresponding format.

With HD movies, there are two considerations: the price of a real HD TV, and the price of the players. Both will need to fall below the critical level (whatever that turns out to be) before disc sales will boom.

The problem facing the local Blu-ray camp is that even if it does maintain a significant lead in Australia, this is a tiny market. If consumers in the US and Europe settle on HD DVD, our preference will count for little.

And what about China and India? Massive markets that will want low-cost solutions. If you spent your working days cranking out hi-def hardware for westerners, would you be happy with low-def home entertainment?

China is beginning to use its favourable trade imbalance to buy overseas assets. Could it follow Sony's example and buy a US studio to ensure a supply of content for a home-grown hardware standard aimed at the export market?

If a next-gen video standard appears before the Blu-ray vs HD DVD war is settled, I'd say it would serve the industry right.

My colleague Alex Zaharov-Reutt is confident prices will drop to affordable levels by this time next year, but I think he's being too optimistic. Player prices will almost certainly fall significantly and I'd like to see some of the disc premium disappear too, but people will still be reluctant to buy HD DVD or Blu-ray players because the large, real HD TVs that are needed to make hi-def movies worthwhile will still be out of the reach of the mainstream market.

Despite Mr Everage's penchant for gadgets, Ms Everage - as much as she likes a good movie - is going to say "You want to spend hundreds of dollars on a new player, the discs will cost more, and we won't be able to see any difference on our TV? I don't think so!" (If the dynamics are different in your household, feel free to assign the dialog appropriately.)

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Stephen Withers

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Stephen Withers is one of Australia¹s most experienced IT journalists, having begun his career in the days of 8-bit 'microcomputers'. He covers the gamut from gadgets to enterprise systems. In previous lives he has been an academic, a systems programmer, an IT support manager, and an online services manager. Stephen holds an honours degree in Management Sciences and a PhD in Industrial and Business Studies.

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