Latest CES developments regarding the format wars

[zuludelta]

Hey Steve, what do you think of the latest news coming out of the Las Vegas CES:
- Paramount Pictures poised to drop HD-DVD support in wake of Warner's move (http://uk.reuters.com/article/internetNews/idUKMOL83143820080108)
- Microsoft developing Blu-Ray add-on drive for XBox360 (http://xbox360.gamespy.com/articles/844/844523p1.html)

And just to refresh your memories:
- Warner Bros. Pictures drops HD-DVD (http://www.electronista.com/articles/08/01/04/warner.blu.ray.exclusive/)

Right now, the studio share between the formats looks like this (shamefully adapted from the HD-DVD/Blu-ray Wiki entry):
http://img522.imageshack.us/img522/2665/300pxhighdefsharesvgcopiq2.jpg

Personally, I don't think it's as significant a victory for Sony (and friends) as VHS was for JVC and Panasonic... a lot of HD video content will probably be streamed/downloadable in the future anyway, and even console games are headed towards the downloadable route. Considering how very few people at this point have even decided if they want (much less need) HD-format video media (I know the largest markets out there-- India, China, and Southeast Asia-- are still happily content with their piracy-friendly DVDs and VCDs), is this even that much of a noteworthy win for the Blu-Ray group?

[bartl]

RE: new DVD technology. The scariest piece of technology I've seen lately is DVD's with an apparent shelf life. According to the instructions, you open the seal, and the DVD is playable for 72 hours, then stops working.

RE: Shows at tech events. You can thank Gary Saxer of the now-defunct Quarterdeck Corporation for starting the trend. He was an actor-turned-customer support guy, and he had to generate interest in a product which, frankly, was pretty boring (a memory extender) at PC-EXPO. So he turned it into a show; a notable feature was that the giveaways were to people who responded to his cues, first, which meant that when he would say, "Now, how do we do it, you may ask." the audience would all shout out, "How do you do it?", the first person to do so getting a prize. It worked, and the other companies noticed and started putting on their own shows, until they grew to the current level (I attended every PC-EXPO from the first one until about 2002 or so, and watched these trends forming over the years).

[zuludelta]

RE: new DVD technology. The scariest piece of technology I've seen lately is DVD's with an apparent shelf life. According to the instructions, you open the seal, and the DVD is playable for 72 hours, then stops working.

I remember reading about something like that a couple of years ago (I think it was in Steven's column, in fact), it was basically being floated to rental places like Blockbuster. It's supposed to discourage piracy, but wow, just imagine how quick long it would be before landfills would overflow with those things.

[NatGertler]

Except places like Blockbuster don't want the dissolvable DVD -- they want customers to return to the rental place, because then they can rent to 'em again. It would be more sensible in video vending machines, but that market seems to be getting nicely established anyway without that feature.

Really, any advance in temporary physical media delivery seems horribly, well, temporary at this point, a stopgap that could be used for a couple years at best.

[Steven Grant]

RE: new DVD technology. The scariest piece of technology I've seen lately is DVD's with an apparent shelf life. According to the instructions, you open the seal, and the DVD is playable for 72 hours, then stops working.

They've been trying that gimmick on and off for over 10 years now. The audience never buys into it and it goes away. As far as I'm concerned, they're more than welcome to piss away tons of money on it and come up a cropper, but the only downside is then they'll moan even louder about Internet piracy killing their business. 'Cause, you know, obviously the fault lies in their stars and not in themselves...

- Grant

[Steven Grant]

Personally, I don't think it's as significant a victory for Sony (and friends) as VHS was for JVC and Panasonic... a lot of HD video content will probably be streamed/downloadable in the future anyway, and even console games are headed towards the downloadable route. Considering how very few people at this point have even decided if they want (much less need) HD-format video media (I know the largest markets out there-- India, China, and Southeast Asia-- are still happily content with their piracy-friendly DVDs and VCDs), is this even that much of a noteworthy win for the Blu-Ray group?

Honestly, I do think Blu-Ray is the marginally better technology. On the other hand, I don't underestimate Sony's capacity for snatching defeat from the jaws of victory; they've become absolutely terrible about marketing tech. And I imagine that if HD-DVD truly seems on the ropes they'll announce for the third or fourth time that they won't allow Blu-Ray tech to be used for porn films (which they inevitably then deny they said) and HD-DVD will make a miraculous comeback. (Except adult video sales have dropped considerably with being able to access the movies via pay per view and Internet porn sites, so it's not that big a question.)

But the tragicomedy here is that both HD-DVD and Blu-Ray are already defunct technologies. Right around the corner: solid state digital drives. I expect that within five years all computer hard drives will be solid state, and most films and TV shows will come not on disk but on flash drive or digital card, and your TV will come equipped with a card/drive reader. I already saw some of that at CES this year (on Thursday... when it turned out the giveaways were much, much better... including thumb drives, coolers, mp3 player cases with built-in speakers and lots more...) and I don't see anything on the tech front that's going to stop it. The drives and cards are smaller, more rugged and easier to use than DVD disks, etc.

So it really doesn't matter who wins the HD/Blu-Ray format wars, because they're basically this year's 8 track tape...

- Grant

[Steven Grant]

Except places like Blockbuster don't want the dissolvable DVD -- they want customers to return to the rental place, because then they can rent to 'em again. It would be more sensible in video vending machines, but that market seems to be getting nicely established anyway without that feature.

Really, any advance in temporary physical media delivery seems horribly, well, temporary at this point, a stopgap that could be used for a couple years at best.

What Blockbuster discovered was that the customers didn't want it in any case, but, yeah, it was in their best interest to get customers returning to the shops, and the format played against that. I know the idea appeals to movie studios because they're essentially making everyone buy another ticket instead of being able to return to the theater unlimited times with a single admission, but the DVD market ain't the cinema market and trying to equate the two is flawed thinking.

Don't know how things are around you, but Blockbusters have been dropping like flies around here. Hollywood Video is still doing okay, from the looks of it...

- Grant

[Sabrina_Fried]

What Blockbuster discovered was that the customers didn't want it in any case, but, yeah, it was in their best interest to get customers returning to the shops, and the format played against that. I know the idea appeals to movie studios because they're essentially making everyone buy another ticket instead of being able to return to the theater unlimited times with a single admission, but the DVD market ain't the cinema market and trying to equate the two is flawed thinking.

Don't know how things are around you, but Blockbusters have been dropping like flies around here. Hollywood Video is still doing okay, from the looks of it...

- Grant

I remember an article linked to Slashdot a few years back that pegged these "shelf-life" DVDs as something Wal-Mart and similar places wanted to stock in their impulse aisles. Problem was, the price points were so close to their "low, low prices" on real DVDs that people just ponied up the extra few dollars and left the disposables in the store (now why can't we get people to do that with other things?)

The Blockbusters seem to be doing just fine around here, except that I very rarely see anyone actually renting anything from them anymore and they have more and more copies of fewer movies/games/etc available every time I go and visit. Good luck finding anything there that is not a new release or a forerunner in the new release's franchise. They seem to be surviving by selling their overpriced candy, and their overpriced NEW DVDs/games/etc which one could have for, on average, 20% or more less if they just went to the DVD shop at the end of the street.

Sabrina

[zuludelta]

Honestly, I do think Blu-Ray is the marginally better technology.

I always thought Blu-ray's biggest advantage was the Java-based software platform found in the players themselves. Opens up the hardware and software to open source development and homebrews. Of course, Sun Microsystems is probably the Sony of the software world with the way they've practically botched Java adoption (wasn't it just 5 years ago when we were being told that Java would redefine the computing world? I still have the textbooks that paint a future built on Java computing... funny how that turned out).


The Blockbusters seem to be doing just fine around here, except that I very rarely see anyone actually renting anything from them anymore and they have more and more copies of fewer movies/games/etc available every time I go and visit. Good luck finding anything there that is not a new release or a forerunner in the new release's franchise. They seem to be surviving by selling their overpriced candy, and their overpriced NEW DVDs/games/etc which one could have for, on average, 20% or more less if they just went to the DVD shop at the end of the street.


I still go to Blockbuster every now and then, but mostly to buy used video games on the cheap. For some reason, the one down the block from where I live usually has a well-stocked "used" bin, probably not too many gamers in my area.

[NatGertler]

I know the idea appeals to movie studios because they're essentially making everyone buy another ticket instead of being able to return to the theater unlimited times with a single admission, but the DVD market ain't the cinema market and trying to equate the two is flawed thinking.And sort of pointless because such a small percentage of the folks would buy the temporary disk repeatedly for another viewing; some execs have been pushing for selling disks at something more like a rental price, and just steal away the rental market that way. I can't say that they're wrong. Sure, I can see charging $20 for the latest release, but I don't know why there's not a rack of $5 big-hits-of-the-last-decade films in cardboard sleeves at the 7-11.

Don't know how things are around you, but Blockbusters have been dropping like flies around here. Hollywood Video is still doing okay, from the looks of it...I've witnessed exactly the opposite; can't point to any Blockbuster closures recently, but a number of Hollywood Video. Their company files for bankruptcy back in October, announced closing about an eighth of their locations. Stopped in at one in mid-closure, looked like a good place to pick up cheap used DVDs, but with Netflix, there's little I feel the need to own.

[Steven Grant]

And sort of pointless because such a small percentage of the folks would buy the temporary disk repeatedly for another viewing; some execs have been pushing for selling disks at something more like a rental price, and just steal away the rental market that way. I can't say that they're wrong. Sure, I can see charging $20 for the latest release, but I don't know why there's not a rack of $5 big-hits-of-the-last-decade films in cardboard sleeves at the 7-11.

Especially when you consider all those racks and bins of DVDs at Wal-Mart and Krogers selling from 7.77-9.99 aren't remainders... which means the new DVDs that go for $20 and upwards are basically profiteering on a perceived Hotness Factor to new DVDs, and once that heat cools - anywhere from six months to a year - the price drops. That doesn't mean the DVDs go out of production, it just means they figure sales won't justify the price level and they'll sell more copies to people who didn't buy it at the new price if the prices drop. But what that means is that they could always have sold them at the lower price.

I wonder if they could make more money selling DVDs at $10 out of the gate - there'd be a lot less resistance to buying copies - rather than going through the sloped pricing system.

Of course, rental stores wouldn't like the price drop, at least at first, and one of the reasons the prices are initially high is that rental chains are actually the primary buyers of new release DVDs, not consumers. Lower prices of initial DVDs would mean rental stores would have to lower their rental prices to compete - but it would also (likely) mean lower outlay for the product. But it still might not work out economically for them. But the DVD rental store is an endangered species anyway, with films now often available On Demand pretty concurrently with their DVD release, and dollar rental kiosks going into many chain grocery stores renting new release DVDs for $1 per night and considerably less overhead. 30 years ago, this sort of store would have become an institution, but we're at a point in history where technology is outpacing and making redundant even our most respected commercial institutions, and longevity for tech-related stores (particularly those who wed to a specific sort of tech) just isn't in the cards anymore...


I've witnessed exactly the opposite; can't point to any Blockbuster closures recently, but a number of Hollywood Video. Their company files for bankruptcy back in October, announced closing about an eighth of their locations. Stopped in at one in mid-closure, looked like a good place to pick up cheap used DVDs, but with Netflix, there's little I feel the need to own.

Hadn't heard about Hollywood's bankruptcy filing, but that doesn't suggest good tidings for the chain in the future because their whole market is changing drastically. It won't be long before, if you want to own a DVD, you'll be able to simply buy it online and burn it to your own disk, complete with a Lightscribe label or one of the other new labeling formats coming up. But I realized awhile ago there are very few films I care to ever see again, no matter how much I like them, and virtually no films I have time to watch again, given that there are always new films and TV shows and a plethora of other interests to eat up my time. Even if I gave up sleeping altogether, and I would if I could, I don't think I'd have the time. So I only have maybe a couple dozen DVDs, with only a handful more I'd care to own...

- Grant

[NatGertler]

I wonder if they could make more money selling DVDs at $10 out of the gate - there'd be a lot less resistance to buying copies - rather than going through the sloped pricing system.Some studio execs have suggested prices more like $6, so they can basically kill the rental field, have it be a pure simple impulse-to-watch-tonight purchase.

Hadn't heard about Hollywood's bankruptcy filing, but that doesn't suggest good tidings for the chain in the future because their whole market is changing drastically.Actually, I need to correct slightly on my earlier statement. Movie Gallery, who bought out Hollywood Video in 2005, filed for bankruptcy this past October, and announced they were closing over 500 stores, which is about 1/8th of their total... but that's of a combination of Movie Gallery (a more rural chain) and Hollywood Video locations, and I'm not sure how it's divvied between the two brands.

It won't be long before, if you want to own a DVD, you'll be able to simply buy it online and burn it to your own disk, complete with a Lightscribe label or one of the other new labeling formats coming up.Apparently, sold-downloads-to-burn is already a going thing in the porn films and there are experiments with non-porn. However, again, this seems to be a very temporary measure. DVDs don't have the fetish value of, say, books. One isn't interacting with the physical object during use. What people want is rarely the DVD, it is access to the movie. We're getting ever closer to the celestial jukebox for video. If I can go to my Netflix account and watch Murphy's Romance whenever I want as part of my existing Netflix subscription, then why would I need to have the DVD? (And at this point, I can... but only if I want to watch it on a Windows machine. But TiVo and Apple and other folks are bringing us closer to that on our big screens and portable devices.)
Two years ago, we got around 20 DVDs as part of our Christmas/Hannukah haul. This year? None. And the same people we bought DVDs for two years ago and bought a Netflix subscription for last year, we bought movie gift certificates for this year... because if there's a DVD we think they should watch, we can just suggest they Netflix it.

[Sabrina_Fried]

I still go to Blockbuster every now and then, but mostly to buy used video games on the cheap. For some reason, the one down the block from where I live usually has a well-stocked "used" bin, probably not too many gamers in my area.

The ones near me sadly don't have a very good selection. They will have a zillion used copies of the games I have no interest in playing, and no copies, not even ones to rent, of the ones I am interested in. The Rogers video nearby is even worse. Their entire video game selection, for all consoles, is precisely three shelves. And all the selections are faced so that they can fill up the shelves.

Sabrina

[dancj]

I expect that within five years all computer hard drives will be solid state, and most films and TV shows will come not on disk but on flash drive or digital card, and your TV will come equipped with a card/drive reader. I already saw some of that at CES this year (on Thursday... when it turned out the giveaways were much, much better... including thumb drives, coolers, mp3 player cases with built-in speakers and lots more...) and I don't see anything on the tech front that's going to stop it. The drives and cards are smaller, more rugged and easier to use than DVD disks, etc.
Really?

I'd have thought within 5 years, all forms of physical media will be on the way out in favour of downloads.

[Steven Grant]

Not in America. Even though the technology's available, the various companies currently controlling hi-speed Internet are most likely not going to want to spend the money necessary to upgrade to those technologies and the connection speeds necessary to make easy delivery of movies and TV shows over the Internet possible. Most people are trained by TV to want their programs/on demand movies now, not in the ten or fifteen or forty or eighty minutes or whatever current American Internet connections would allow. (And, yeah, I know all about streaming media... which sometimes works, sometimes doesn't, and sometimes is like listening/watching to programs in a Cuisinart...) It's also going to take a lot more people hooking up their media systems (ie, TV sets) to their Internet connections; only a tiny fraction of the population does so far, despite all the talk in computer magazines about "media centers.") On the other hand, Sprint is back to testing a higher speed connection (I presume deliverable by fiber optic phone lines) so who knows?

But I'd still say physical media will be in play in five years, just given that most people still want "a copy" (let's face it, as easy as on demand technologies are getting, there's still something to be said for having the things you want to view totally under your own control, and physical media's still the best way to do that) and media companies still think in terms of physical copies as the basic unit of distribution, as it's easier to track than, say, DVR captures and views.

Of course, once media companies figure out a way to get paid per view for online streaming, they're going to try and eliminate any other means of delivery... once they figure out that the Internet isn't really the enemy, anyway...

- Grant

[Dennis]

Comcast said they're going to start 160 mbps service this year in some places. and this is from this week's cringely:


Apple has long been a member of the Blu-ray camp when it comes to which high definition DVD standard to support, yet for some reason Apple has yet to ship ANY computers with Blu-ray drives, or HD DVD drives, for that matter. What the heck is with that? How can Apple, as the dominant maker of video creation systems, ignore both Blu-ray and HD DVD? It's because Steve Jobs sees the logical distribution format for HD as being via iTunes, not on a disc of any sort. Now that Toshiba and HD DVD appear to be on the ropes, Apple may be forced to offer a Blu-ray option on build-to-order Mac Pros, but I haven't heard any rumors to that effect. Steve would prefer that there be no optical video distribution at all and he has warped Apple to that purpose, probably at the expense of some sales.

[Drew Van T.]

He's right, at least in terms of optical storage being abandoned.

When I think about my experiences with failed optical drives, lots of coasters being burned, competing formats (plus R and minus R, anyone?), incompatibilities, DVD-players that are picky about the discs they'll accept and whose software can't be upgraded as it should...all I can say is, I'm eagerly awaiting the end of optical storage, when we can move everything to hard drives, RAID, solid-storage flash and super-high-speed internet connections.

OTOH, that doesn't mean I'll be using iTunes. It's a bloated program that is user-friendly at first but annoying when you begin to realize its limitations.

[Sabrina_Fried]

Really?

I'd have thought within 5 years, all forms of physical media will be on the way out in favour of downloads.

I don't think physical media will ever completely disappear. It may become more of a collectible or "premium" thing, but it will still be here in five years. Firstly, it is infinitely more convenient for some viewers to simply pop a CD or DVD into their player than it is for them to do a download (paid or "otherwise"), ensure their player is up to date with the proper codecs, configure the setup such that they can play the media on something other than their computer and/or upload the media to their ipod or similar player, etc etc. Computers either have to become a lot more comfortable to sit in front of, or else media has to become a lot easier to transmit between computers and home theatres before physical formats will be abandoned.

Also, some people buy things like DVD box sets to display on their shelf in order to tell others what they like to watch. Seriously. It's kind of like when people buy the complete works of Shakespeare or Jane Austin and put them on their bookshelf so that they will appear to be well read, even if they never read the books. Decor is no longer just about the bookshelf or the media shelves, it's now about what's ON those shelves too. You can't do that with a download, unless you're willing to give people carte blanche access to your HD.

Sabrina

[Dennis]

what if google wins the 700mhz spectrum? that might mean we would have free broadband access? and that would kill dsl, cable, the phone companies. everything would be on the net. all of our data would reside on google's servers, we wouldn't need to back up on flash drives or dvd or have our own home server. we would have some sort of iphone device which connects to the googlenet. if i wanted to watch a movie, i would stream it, maybe through some netflix or itunes subscription plan. comic book stores wouldn't exist, you would read comics on your iphone tablet.

[Steven Grant]

Aside from only idiots will be convinced to store all their data remotely on the net (I'm sure there are those who see this as a great idea, I see it as a way to absolutely ensure you won't have access to your critical data at exactly that moment when you most need it, but any government with a backdoor key will. any old time they please) even if Google corners that spectrum, it'll still require a hell of a lot of expensive, widespread infrastructure to put what you're stating in place. I imagine even if Google were to somehow pull off the infrastructure (and even Google would need a lot of partners) various lawsuits would keep the system from being fully functional for a couple decades or so.

Besides, as soon as Google got it in place, someone else would come up with a better system...

- Grant

[Dennis]

http://www.dailywireless.org/2007/09/28/google-we-got-trouble-in-700-mhz/


Building a nation-wide, 700mhz wireless network could cost as much as $12 billion and take as long as three years to build, said Google’s Washington telecom and media counsel on Sept. 25. That would be on top of a minimum of $4.6 billion to buy the spectrum.

they've got the money.


Hillary Clinton: Broadband is the infrastructure of the 21st century. It will play an important role in everything from commerce to education to the delivery of medicine. Our relatively low broadband penetration rate is unacceptable. I believe that there is a role for private industry and for the Federal government to play in expanding access to broadband.

As President, I will strengthen tax incentives for extending broadband to underserved areas. I will support state and local broadband initiatives, from new wireless technologies to high-speed fibre optics. And I will change the FCC rules so that we finally have an accurate, detailed picture of broadband deployment and penetration rates.

At present, the FCC data is unreliable because it is based on loose estimates and outdated standards. I will also create a public-private partnership to effectively map broadband availability and broadband demand, and to extend broadband to every corner of every state in the country.

[Steven Grant]

http://www.dailywireless.org/2007/09/28/google-we-got-trouble-in-700-mhz/



they've got the money.

Yes and no. On paper, Google's got the money, but it doesn't necessarily translate to cash flow. "Value" on a corporate level, esp. in tech companies like Google that effectively have no concrete assets, is a combination of numerous factors that aren't necessarily spendable cash money. At the spending level you're talking about, much of Google's investment would have to be quid pro quo, deals, subsidies etc., rather than legal tender, as if often the case with these things.

- Grant

[SureLiesALot]

Optical storage isn't going anywhere. Withing 5 years we will have holographic storage with 2 TB per disk. I don't see anyone with any sence relying completely on remote storage, but it is an excellent solution for accessing your data from any device anywhere instead of lugging it around with you. Obviously future data storage will look much like webmastering does now. The host holds a working copy which is synced with the authors resident copy. Any webmaster would tell you that relying on your host to keep your data secure is a fools errand.
Google does indeed have a great deal of physical assets, includeing the three largest data centers (server farms) on the planet that maintain an up to date copy of the entire internet. If google was to be liquidated though, the could only expect about $3-5 billion dollars for those assets, certainly not enough to justify a market cap of $200 billion. Nonetheless, they do have a market cap of $200billion, so they could easily arrange financing for a $15-20 billion investment.

[Steven Grant]

I don't see anyone with any sence relying completely on remote storage, but it is an excellent solution for accessing your data from any device anywhere instead of lugging it around with you.

It's great for data you don't mind anyone else seeing, if you don't mind possibly not having access to it.

But thumb drives are going to be just as effective, particularly as their storage capacity rises while costs fall. Right now you can buy a 64 gig thumb drive if you want to spend the money, which is big enough to hold a hell of a lot of material. I suspect we'll start seeing the concept of "public access" computers that consist of basically an internet connection and an operating system on a solid state card, where users will just plug in their own thumb drives, the system will read and write to those, and after the thumb drive is removed, the system performs at minum a total memory dump and maybe even reboots to clear all systems, and everyone keeps all their information private. (Except from the NSA machines constantly reading all online communications, of course.) No need for online storage there...

- Grant

[NatGertler]

And just to follow up on earlier comments: Movie Gallery, the parent company of Hollywood Video, has announced that they intend to close down hundreds of additional stores (http://www.imdb.com/news/sb/#film4).