Toshiba rues missed opportunities for HD-DVD
Published by Admin on 19.2.08 at 2/19/2008 09:08:00 PM.
It has taken Sony two decades to shake off the memory of defeat in the format wars that heralded the start of the VCR era, so Tuesday’s confirmation that its Blu-ray technology had won the high-definition DVD battle was a moment to savour.
Many of Sony’s engineer-executives could never quite comprehend why their technologically superior Betamax technology was defeated by Panasonic’s VHS in the 1980s.
EDITOR’S CHOICE
Lex: Toshiba quits HD-DVD - Feb-19
Toshiba set to pull plug on HD-DVD - Feb-17
Toshiba’s withdrawal from costly battle welcomed - Feb-19
Last showing for Toshiba’s DVD format - Feb-17
Wal-Mart puts Blu-ray on brink of victory - Feb-15
Toshiba slashes prices in HD war - Jan-14
So when the group began touting the advanced but expensive Blu-ray as its answer for the next-generation of home video technology, analysts feared a repeat of its old mistakes.
Tuesday’s defeat for Toshiba’s HD-DVD standard does more for Sony than vindicating the convictions of its technologists, however. Most clearly, it will give momentum to the PlayStation3, which Sony hopes to be more of a home entertainment hub than previous generations of the games console.
The device has suffered from comparisons to Nintendo’s family-friendly Wii machine. But Sony has promoted its dual role from the start, bundling Blu-ray discs in with the hardware, typically of Sony Pictures films.
Price cuts to the PS3, Sony believes, have now made it more accessible to those who may not be hardened gamers but who are interested in a competitively-priced Blu-ray player.
The hope that competition between the two formats would drive down hardware prices was the reason given by Warner Bros, the studio which cast the deciding vote for Blu-ray, for allowing the war to go on as long as it did.
Some of that price pressure on Sony may now ease, although analysts doubt that the technology will become mainstream while players still cost over €300 ($440), more than 50 per cent above the price most consumers will pay for DVD players.
The end of the format war also reduces the risk that consumer confusion could kill off the chances of the new format altogether, prompting customers to skip a technological generation and turn their attention to new home entertainment formats such as online video downloads.
“The risk was that consumers would have said they didn’t need HD – either because they were moving to downloading movies direct to their televisions, or because they were sticking with DVD,” said Jim Bottoms, managing director of Understanding and Solutions.
Speaking at the World Economic Forum in Davos last month, Sir Howard Stringer, Sony’s chairman, dismissed such concerns. “Downloads are five years away. The world is going to be in packaged goods for at least another five to seven years,” he told the FT.
If so, seeing off HD-DVD has given Sony a five to seven-year run at a market that other studios are determined to make as lucrative as the DVD business was until recently.
According to Carl Gressum, analyst at Ovum, there are other less obvious benefits of winning the format war.
The real benefit, he argues, comes not from making Blu-ray players, where prices and profit margins will inevitably be driven down over time, but from owning the intellectual property rights to the winning standard.
Other manufacturers, from established consumer electronic brands to cheap white label challengers, will all have to pay royalties, giving the owners of the IP rights a profitable revenue stream long into the future. Sony and Panasonic could see similar benefits to the windfall Philips made from the CD standard, he argued.
It is now Toshiba’s turn to reflect on the lessons of defeat.
Sony’s victory was due as much to its rivals’ mistakes as to the virtues of its product, such as tight security features, analysts believe.
First, Mr Gressum said, Toshiba failed in its promise to bring in Chinese consumer electronics vendors who could have brought HD-DVD players to a mass market price much more quickly.
While the Blu-ray camp was able to clinch more Hollywood deals, he added, HD-DVD could have done more to reach out to studios in India, Hong Kong and Europe.
“It might have been a long shot, but Bollywood could have been a swing factor, considering its large domestic and expat market,” he said.
Many smaller content owners instead ended up taking a “wait-and-see” approach, feeling no need to commit themselves to a format which had yet to gain a meaningful share of the market. Similarly, other analysts say, the HD-DVD consortium could have brought more PC manufacturers on board.
Some analysts believe that the next format war has begun, with the rapid roll-out of 3D cinema technology, backed by more Hollywood movies being made in 3D.
Whether that battle will be the next to play out in the living room is far from clear, but Toshiba will hope that it does not take two decades to learn the lessons of its costly defeat in the fight to determine the future of high-definition home video. Link
Many of Sony’s engineer-executives could never quite comprehend why their technologically superior Betamax technology was defeated by Panasonic’s VHS in the 1980s.
EDITOR’S CHOICE
Lex: Toshiba quits HD-DVD - Feb-19
Toshiba set to pull plug on HD-DVD - Feb-17
Toshiba’s withdrawal from costly battle welcomed - Feb-19
Last showing for Toshiba’s DVD format - Feb-17
Wal-Mart puts Blu-ray on brink of victory - Feb-15
Toshiba slashes prices in HD war - Jan-14
So when the group began touting the advanced but expensive Blu-ray as its answer for the next-generation of home video technology, analysts feared a repeat of its old mistakes.
Tuesday’s defeat for Toshiba’s HD-DVD standard does more for Sony than vindicating the convictions of its technologists, however. Most clearly, it will give momentum to the PlayStation3, which Sony hopes to be more of a home entertainment hub than previous generations of the games console.
The device has suffered from comparisons to Nintendo’s family-friendly Wii machine. But Sony has promoted its dual role from the start, bundling Blu-ray discs in with the hardware, typically of Sony Pictures films.
Price cuts to the PS3, Sony believes, have now made it more accessible to those who may not be hardened gamers but who are interested in a competitively-priced Blu-ray player.
The hope that competition between the two formats would drive down hardware prices was the reason given by Warner Bros, the studio which cast the deciding vote for Blu-ray, for allowing the war to go on as long as it did.
Some of that price pressure on Sony may now ease, although analysts doubt that the technology will become mainstream while players still cost over €300 ($440), more than 50 per cent above the price most consumers will pay for DVD players.
The end of the format war also reduces the risk that consumer confusion could kill off the chances of the new format altogether, prompting customers to skip a technological generation and turn their attention to new home entertainment formats such as online video downloads.
“The risk was that consumers would have said they didn’t need HD – either because they were moving to downloading movies direct to their televisions, or because they were sticking with DVD,” said Jim Bottoms, managing director of Understanding and Solutions.
Speaking at the World Economic Forum in Davos last month, Sir Howard Stringer, Sony’s chairman, dismissed such concerns. “Downloads are five years away. The world is going to be in packaged goods for at least another five to seven years,” he told the FT.
If so, seeing off HD-DVD has given Sony a five to seven-year run at a market that other studios are determined to make as lucrative as the DVD business was until recently.
According to Carl Gressum, analyst at Ovum, there are other less obvious benefits of winning the format war.
The real benefit, he argues, comes not from making Blu-ray players, where prices and profit margins will inevitably be driven down over time, but from owning the intellectual property rights to the winning standard.
Other manufacturers, from established consumer electronic brands to cheap white label challengers, will all have to pay royalties, giving the owners of the IP rights a profitable revenue stream long into the future. Sony and Panasonic could see similar benefits to the windfall Philips made from the CD standard, he argued.
It is now Toshiba’s turn to reflect on the lessons of defeat.
Sony’s victory was due as much to its rivals’ mistakes as to the virtues of its product, such as tight security features, analysts believe.
First, Mr Gressum said, Toshiba failed in its promise to bring in Chinese consumer electronics vendors who could have brought HD-DVD players to a mass market price much more quickly.
While the Blu-ray camp was able to clinch more Hollywood deals, he added, HD-DVD could have done more to reach out to studios in India, Hong Kong and Europe.
“It might have been a long shot, but Bollywood could have been a swing factor, considering its large domestic and expat market,” he said.
Many smaller content owners instead ended up taking a “wait-and-see” approach, feeling no need to commit themselves to a format which had yet to gain a meaningful share of the market. Similarly, other analysts say, the HD-DVD consortium could have brought more PC manufacturers on board.
Some analysts believe that the next format war has begun, with the rapid roll-out of 3D cinema technology, backed by more Hollywood movies being made in 3D.
Whether that battle will be the next to play out in the living room is far from clear, but Toshiba will hope that it does not take two decades to learn the lessons of its costly defeat in the fight to determine the future of high-definition home video. Link