Why Blu-ray is the new black in high-tech homes

Published on Monday 18 February 2008 21:00

All eyes are on Sony as the victor in the battle for the next generation in DVD format, writes ALASTAIR JAMIESON

IT WAS the 21st-century equivalent of the fight between Betamax and VHS. But Toshiba looks to have lost its bitter fight with fellow Japanese firm Sony to decide the format for the next generation of high-definition DVDs to be used by the 12 billion home-viewing market.

The year-long war for control of our living rooms seems certain to be won by Sony's Blu-ray. Toshiba's rival HD-DVD design will be buried in the consumer technology graveyard alongside audio cassettes and cathode-ray televisions.

But the biggest victors will be ordinary shoppers. After more than a year of being caught in the middle of a tussle between corporate giants, consumers can now choose a new high-definition DVD player without running the risk of being left with an obsolete plastic box.

Experts say the resolution of the Blu-ray versus HD-DVD debate should also stimulate sales of both DVDs and DVD players, and lead to a drop in prices.

"This has been a long overdue end to the format war that has frustrated and confused consumers, and will allow retailers to focus resources on the Blu-ray technology," said Claudio Checchia, an analyst with research firm IDC.

"I would expect a more aggressive push towards Blu-ray in the second half of this year, resulting in more film content, more stand-alone DVD players, and prices for these players falling to attractive levels by Christmas."

It has been clear for several years that the future of home viewing is on a flat screen and it's the new high-definition format which offers cinema-quality sound and pictures.

But there has been a problem. While high-definition televisions have been flying off the shelves, the matching DVD players have not.

Manufacturers and Hollywood studios have been pushing two different formats. Sony led the fight for Blu-ray DVD players, so-called because they use a blue laser instead of the red beam in standard players. Toshiba and Microsoft were among the big names promoting HD-DVD. Amid the confusion, consumers refrained from buying either format and the market for both remained stagnant. Fewer than one and a half million high-definition DVD players have been sold – a fraction of the number of high-definition- capable televisions.

The war of nerves has been fought in boardrooms, rather than high-street shops. The decisions of the major film studios have come well before those of customers, with Sony given the final edge last month when Warner Bros announced it was backing Blu-ray. Despite being supported by Universal and Paramount, Toshiba is now reviewing the future of its HD-DVD technology – waving a white flag to its Japanese rivals.

"They must have realised the writing was on the wall," said Robin Williams, of the Institute for the Study of Science, Technology and Innovation at the University of Edinburgh. "It was obvious that whoever gained the slightest advantage was going to win the whole game. There was no room for two formats.

"It is perhaps surprising that the battle went on this long. The lesson from the Betamax versus VHS battle was that a protracted fight simply slows down the process of introducing new technology to the marketplace. Consumers have been waiting rather than buying."

Apart from being a sweet victory for Sony, which lost the 1980s Betamax-VHS format battle, Blu-ray's win could boost sales of its games console PlayStation 3, which is Blu-ray compatible. In a bid to thwart this, Microsoft is likely to update its rival Xbox 360 to become Blu-ray compatible by summer.

The defection from HD-DVD in January of Warner Brothers and its huge film library brought the tally of Hollywood movies in the Blu-ray camp to a commanding 70 per cent.

Recent sales figures show many consumers had already written off HD-DVD. Blu-ray has accounted for 93 per cent of next-generation DVD hardware sales since Warner's announcement last month.

Toshiba said it has sold just over one million HD-DVD players – all of which will eventually become obsolete, although it will be at least a year before HD-DVD format films and games disappear from the shop shelves.

Toshiba had billed its format as more cost-effective for the industry as it allowed some existing DVD-making equipment to be reused, but Blu-ray discs had space for more content to be packed in.

Although Toshiba has lost the corporate battle, the news of its defeat sent its shares rising nearly 7 per cent as analysts calculated the firm will have cut its losses by quitting now rather than fighting to the end.

Toshiba is expected to focus its resources on its other businesses, including computer-chip production, such as "flash-memory" used in digital cameras and mobile phones.

"It doesn't make sense for Toshiba to continue putting effort into this," said Koichi Ogawa, a chief portfolio manager at Daiwa SB Investments.

"It needs to cut its losses and focus its resources on promising businesses."

Q & A: WHAT BLU-RAY MEANS FOR YOU

I recently bought a HD DVD player. Will it now be useless?

Eventually, yes. But it will be several months before the Blu-ray format takes over completely and plenty of films and games will still be available in HD DVD format. Looking on the bright side: consumer group Which? predicts the price of films and games in HD DVD will fall to bargain-basement levels.

Do I have to change my DVD player?

No, there is no immediate need to buy a high-definition player. This is unlike the need to switch to digital television – a necessary move, since the analogue signal will disappear within four years.

Why should I care whether something is Blu-Ray or HD DVD?

You don't have to any more, which is why sales of high-definition DVDs and DVD players are set to soar. "Consumers have been held back by a quite understandable fear of obsolescence," says Robin Williams, director of the research centre for social sciences at the Institute for the Study of Science, Technology and Innovation at Edinburgh University. "They will no longer have to take a risk when buying."

Will it cost more?

At the moment, yes. The cheapest Blu-ray DVD player on sale at Comet yesterday was 299 – about ten times the price of the cheapest basic player. Many buyers are expected to save money by choosing a games console, such as the PlayStation 3, which is Blu-ray compatible.

How many consumers are stuck with obsolete technology?

Toshiba recently said just over one million of its HD DVD players had been sold worldwide – a relatively tiny number.

How do I know which DVD player has the right format?

High-definition DVD players are clearly labelled as Blu-ray or HD DVD. Some costly versions are capable of playing both. But the decision by Toshiba means it is unlikely most shoppers will have a choice. Following the lead of American grocery giant Wal-Mart, which owns Asda, most retailers are likely to stop selling HD DVD products as soon as possible.

What happen to laptops?

Millions of laptop PCs have been sold with HD DVD-capable DVD drives which will eventually be obsolete, but Dell is among the big names which chose Blu-ray technology for its computers.