Blu-ray triumphs in high-def DVD war
By David Lieberman, USA TODAY
NEW YORK — The future of high-def DVDs became a lot clearer Tuesday after Toshiba said that by March it will stop making players for its HD DVD format, leaving Sony's (SNE) Blu-ray as the champion of the three-year format war.
But while that eliminates a big source of confusion for some consumers, others will still struggle to see how the change benefits them. "Consumers are the losers in the short term," ABI Research said in a report. Reasons include:
•Price cuts for Blu-ray players may become less frequent and steep without competition from HD DVD. The cheapest Blu-ray player costs more than $300.
•Different kinds of Blu-ray players will confuse some. For example, only upcoming models have the Internet ports needed for interactive bonus features on some new discs.
•Limited capacity to produce Blu-ray discs could frustrate consumers who expect to see a flood of titles from all studios.
"We definitely need to see more manufacturing capacity out there if we're really going to make a go of this," says Lionsgate (LGF) President Steve Beeks.
Universal and Paramount, which supported HD DVD, may have the hardest time. Their disc orders likely would come behind those of Blu-ray supporters Disney (DIS), Fox, Lionsgate, Sony and Warner Bros. (TWX).
Warner's decision last month to stop offering HD DVD led Best Buy (BBY), Netflix (NFLX) and Wal-Mart (WMT) to follow suit, effectively making it unviable.
"It wasn't consumers who chose Blu-ray over HD DVD. It was the industry," says Toshiba's Jodi Sally.
Even without these problems, retailers might find it hard to persuade consumers to buy Blu-ray.
Toshiba said it might try to offer high-def videos without discs, for example on flash memory and wireless technologies.
Meanwhile, "A lot of consumers are still satisfied with their current DVD player and plan to continue using it until it breaks," says Ross Rubin, director of industry analysis for The NPD Group.
That's one reason Blu-ray backers and retailers are weighing deals to help HD DVD buyers switch.
"You don't want consumers to feel like they were burned by making the wrong choice," Beeks says. "I'd expect to see some programs announced."
It may take a lot to ease consumers' hurt feelings. Surveys of electronics buyers by The Envisioneering Group found that "only one consumer in 10 didn't feel betrayed" by the format war, says research firm director Richard Doherty. "This may leave a sour taste with consumers for some time to come with other devices."
