Consumer electronics
And in the Blu corner...
Sep 9th 2007 | BERLIN
From The Economist print edition
The fight between two high-definition video-disc formats
ARE consumer electronics from Venus or Mars? Visitors this week to IFA, a big industry trade show being held in Berlin, might have been forgiven for thinking that gadgets are increasingly from the female planet, given the round forms, soft light and muted colours that dominated the scene. Philips, a Dutch electronics firm, is even moving into the field of jewellery, with a collection of headphones and memory sticks decorated with crystals.
Yet backstage the goings-on were still distinctly masculine. Dark suits rushing through corridors, posturing at packed press conferences, aggressive product announcements: the show was the staging ground for the latest battle in the war between two rival formats, HD DVD and Blu-ray, which are vying to become the standard for high-definition video-discs.
Format wars have been around for decades: Thomas Edison favoured phonograph cylinders, but lost out to discs. Most famously there was the fight between VHS and Betamax video-cassette formats in the 1980s, in which VHS prevailed. Even when firms agree on a common standard before going to market, negotiations can be difficult. With the compact disc, which recently turned 25, Ludwig van Beethoven was enlisted to create the necessary harmony. Sony, a Japanese electronics giant, insisted that the composer's ninth symphony had to fit on the new disc. This meant making it slightly larger, which is said to have neutralised a manufacturing advantage Philips would otherwise have had.
For the digital versatile disc (DVD), the industry also managed, in 1995, to agree on a common format that was a compromise between two rival proposals. But when it came to the DVD's high-definition successor, two camps emerged once again, and attempts to broker a compromise failed. Many Hollywood studios backed Blu-ray, developed by Sony, because of its larger capacity. But Toshiba, which had spent large sums developing the HD DVD format, refused to give in.
For a long time Blu-ray has looked like the most likely winner, even though the discs are slightly more expensive to produce and the players cost more. That is because it has broader industry support, including the backing of four of the biggest Hollywood studios. But on August 20th two studios, Paramount Pictures and DreamWorks Animation, said they would no longer support Blu-ray and would henceforth release films (such as “Transformers”
exclusively on HD DVD.
Those in the Blu-ray camp claim this is a sign of impending victory: Paramount defected, they claim, in return for a payment of $150m from the Toshiba camp, which shows how desperate it has become. Whether or not this is true, the move broke Blu-ray's lock on blockbuster content, so the price of players will now become more of an issue, argues J.P. Gownder of Forrester, a consultancy. Consumers do not want to pay much more than $200, he says, a level HD DVD players will soon reach; Blu-ray players still cost twice as much.
It is difficult to draw conclusions from sales figures so far, which allow both sides to claim leadership. Blu-ray discs outsell HD DVD discs by two to one in America, but the ratio is reversed when it comes to standalone players. (That may be because Blu-ray discs can also be played on Sony's PlayStation 3 games console, which doubles as a Blu-ray player.) Even so, the Blu-ray camp is still confident that it will win. “I think the war is virtually over,” says Sir Howard Stringer, Sony's chief executive.
Yet the rise of video-on-demand and download services may mean that neither standard will achieve critical mass. That would not mean an end to standards wars: even if discs are replaced by downloads, the focus may simply shift to rivalry between software standards. “I cannot imagine a world without such battles,” says Rudy Provoost, the boss of Philips' consumer-electronics division. But if they were not fighting over formats, says Mr Provoost, companies would be able to devote more effort to making their products attractive and easy to use: less Martian and more Venusian, in other words.
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