Lessons Learned From the Format War

Posted by junger - 03/06/08 at 11:03:06 am

Image by John Brillon

Freakonomics, one of my favorite blogs (and a great book, too), has gathered up a group of "smart people" — as they say — to discuss what the technology industry and consumers can learn from the Blu-ray/HD DVD format war.

What Are the Lessons of the Blu-Ray/HD-DVD Battle? A Freakonomics Quorum

So what are we to make of this format skirmish? We gathered up a group of smart people who think about such things — Shane Greenstein, Andrei Hagiu, Michael Santo, and Pai-Ling Yin — and asked them the following:

Is the battle between HD-DVD and Blu-ray really over? What can we learn from it?

Honestly, there's nothing really ground-breaking in this analysis. Warner's decision was the tipping point, Toshiba and Sony should have come to an agreement back in 2005, and digital downloads are still on the horizon.

Greenstein is the only one who really takes the Freakonomics view of the format war.

Indeed, it looks as if patient buyers benefited from waiting out this format war, and will soon experience lower prices, larger libraries, more convenience, and reduced uncertainty. Yet, as in prior wars, waiting has its risk. Patient buyers ceded control over the format choice to impatient buyers and sellers. Did earlier market participants make a choice that serves the interests of later market participants? It is difficult to say at this point.

I waited. It may have cost me some tech-cred (I'm looking at you, Ben), but in the end, I'm not stuck with an HD DVD player that I'd only use to play DVDs on.

Blu-ray vs. Digital Downloads

So much has been made about the future of high-definition media. Will Blu-ray even get a chance to become the standard? Or will digital downloads prevail?

The answer is not as black and white as it seems. Both standards will prosper, and here's why:

1. The pipes aren't ready yet. Until everyone has FiOS or beyond, downloading high-def movies is still a pain. (Even though cable is already in our homes, but that's another story.)

2. The space isn't there. The 50GB you can fit onto a Blu-ray disc will take up a chunk of space on your hard drive, even if you have a TB of storage.

3. Quality doesn't always matter. We've learned that from the digital music revolution — quality doesn't matter for a large segment of the population. A 720p download from the Xbox Live Marketplace does make some people happy, even if a true HD fan wouldn't do it.

4. Convenience is important. Again, learned from digital music — if it's easier to start watching something on VUDU then it is to drive to Best Buy and pick up a Blu-ray disc, people will do it.

The trendy argument is to match Blu-ray discs vs. digital downloads like Blu-ray vs. HD DVD. But it's apples and oranges.

You can get the same content either way — you're not locked in to one studio's movies. (Assume for the moment that, at some point, all studios will be publishing their content digitally. Which will happen.)

The format war is over. There's not another one coming.

March 6, 2008 | In Tech | 2 Comments

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Don't compare audio to video, just don't.
If there were as many $5k surround sound systems sold in the US as there were $5k HDTVs, then you could, but there aren't.

It's true that quality doesn't always matter, but it's also true that there doesn't always have to be a difference for people to think there is. Take my favorite example; HDMI vs Component. On a good HDTV, there is no difference for sending 1080i, and yet so many wouldn't think of connecting their POS over-compressed cable TV to their HDTV with component.

Owning something physical can be more important than convenience. Most won't spend $300 just for the convenience of renting movies, only to have to pay $50 to their ISP to even use the service. When at the same time they could pay $50 to their cable co' for 200+ channels and access to the same movies.

Again, this model only works for rentals, when it comes to buying a movie, people want a disc that they can feel confident will actually work wherever they take it.

Downloads will be a reality eventually, but in the meantime, enjoy Blu-ray discs. But of course I know you'd rather watch scripted TV, so good luck with that.

Comment by Ben Drawbaugh — March 6, 2008 #
Of course audio and video can be compared. You've never watched a video on your iPhone before?

It's portable, it's convenient, and the quality ranges.

PS – I saw that Weeds in on Blu-ray. I haven't seen the show, but heard it is good. Might be a worthy pickup.

Comment by junger — March 6, 2008 #

Jason Unger