How Gamers Won The Format War

REdBlu post

We all know who was victorious; the war was won almost a decade ago. There was a time, though, when two forces were vying for market share in what would become the next physical home media format. In the end, it all came down to movie studio support and the consumer electronic industry. What many people don’t know is how hard-fought the battle actually was, and the fact that a little black box developed by Sony Computer Entertainment dealt the most significant blow.

The seeds of the burgeoning format war began much earlier, but those seeds only began to take root in the summer of 2005. A discussion began around this time to develop a unified format, and the format war began in earnest when HD-DVD approached the BDA (the Blu-ray Disc Association) to combine efforts in developing these new technologies. When Toshiba and the HD-DVD camp insisted on too many changes to the format developed by the BDA, nascent cooperation transformed overnight into outright competition.

Paramount and Warner – two studios who had initially expressed interest in HD-DVD – were the first major entities to frustrate the competing formats by abandoning exclusivity, opting rather to release titles in both formats. Netflix also chose ambivalence over risk, announcing intentions to make titles available in both formats. At this stage, Universal Studios was the only major studio that remained solely in the HD-DVD camp.

Both formats were showcased at the 2006 Consumer Electronics Show. HD-DVD appeared to have a significant time advantage, with an earlier release date by a two-month margin, but many tech-industry insiders lauded Blu-ray’s substantial capacity advantage. At the end of this run, there were a handful of malfunctions with both formats upon their initial release. HD-DVD hardware was recalled and Blu-ray titles presented atrocious film transfers and had significant audio playback issues. Replacements were ordered and film transfers had to be re-coded and discs replaced. These seem to be minor and forgivable missteps with first-gen products, but neither format gained significant foothold.

The true game changer? Gaming consoles.

In November 2006, Sony Computer Entertainment released the Playstation 3. Consumers balked at the $499 price-tag, the highest ever seen on a gaming console. They were also skeptical about the Playstation’s abilities as a Blu-ray player. Keep in mind that playing movies on a gaming console was a new and foreign concept. Playstation’s Blu-ray player ultimately proved to be the most affordable at that time, and out-performed other hardware options. The X-Box 360 – Microsoft’s competing console – required a $199 add-on to achieve what the Playstation had accomplished at the time of its release. The Playstation 3 outsold Microsoft’s add-on five-to-one. The impact of the Playstation 3 influenced the format wars magnificently.

During the lead-up to the Consumer Electronics Show in 2008, the two formats still appeared to be somewhat evenly matched, but many rumors abounded that major studios were preparing to drop the HD-DVD format. Just before the show, Warner dropped HD-DVD. Toshiba did not fire back in defense of their flagging product, but instead canceled their showcase altogether. After the Consumer Electronics Show Netflix, Best Buy, and Wal-Mart, all within a week of one another, also dropped HD-DVD.

The Playstation 3 and its owners are responsible for Blu-ray’s victory. Playstation 3 owners were buying Blu-ray movies. Their purchases accounted for a small fraction of home movie purchases, but it was enough to convince major movie studios that the Blu-ray format had the greatest potential. Additionally, the BDA was willing to offer anti-piracy features like BD+ and region coding, industry-protecting features that were left unaddressed by Toshiba. The intent of BD+ was written specifically to prevent unauthorized copies of Blu-ray discs and the playback of Blu-ray media on unauthorized devices. This technology, even today, has proved to stem the tide of pirated high-definition media compared to older formats like DVD.

Certainly, the competition between red (HD-DVD) and blue (Blu-ray) motivated improvements on the winning format. Many pieces of hardware, and a variety of major movie studios, preferred to remain purple during the competition, but one would inevitably win-out. Toshiba mounted a noteworthy effort, and forced the BDA to focus on transfer quality and authoring, intellectual property protections, and price reduction on hardware. Gamers and home-video film geeks responded to the BDA’s improvements and adopted the Blu-ray format, eventually closing the chapter on the debate between HD-DVD and Blu-ray.

Never underestimate the power of gamers. The video game industry has surmounted Hollywood in earned revenue, and the interactivity of game-based story-telling is catching the attention of a larger and larger number of consumers. This gaming industry, at this particular point in time, isn’t just ahead of the curve. It is the curve.

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