HD DVD: the format that nearly beat Blu-ray

Next year marks the 10th birthday of Blu-ray - a format that cost Sony heavily to get it to emerge victorious...

Next year, the latest attempt to get us to upgrade our optical disc players arrives in the form of Ultra HD Blu-ray. The format promises four times the visual resolution of existing Blu-rays, and improved sound too. The bottom line is that Ultra HD Blu-ray will offer far more capacity per disc, and thus more data can fit on it.

It’s a simple format succession, but one that comes while memories of the last disc war are still not fully faded. After all, it’s nearly ten years since the bloody high definition format war that ultimately saw Blu-ray emerge as a successor to DVD. And that’s even though lots of people have stuck with DVD, and remain quite happy with it.

But still: there’s consumer demand and enthusiasm for collecting films, and as 4K televisions come down in price, consumer electronics firms are going to try and lure us to buy another new format (this one will be backwards compatible with existing Blu-ray discs, thankfully).

Mind you, accepting that more and more people are moving away from physical disc formats and towards downloading and streaming (and disc decline is accelerating), the high definition format of the last decade was seen to be the battle for the last optical disc standard. In some ways, it’s proven to be, given that Ultra HD Blu-ray is an extension of what ultimately won.

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Yet for a long time, Blu-ray wasn’t the heir apparent. Quite the opposite, in fact.

HD DVD

As high definition televisions started becoming affordable, Hollywood money people firmly had their eyes open as to what possibilities that offered. DVD had been an unexpected injection of an awful lot of money for movie companies (and that’s some understatement), and it was a bubble they didn’t want to burst.

The idea of having a further technology to get people to ‘upgrade’ to, thus getting them to buy Die Hard again on another format, held appeal.

The problem was this wouldn’t be a smooth transition, as the migration from VHS to DVD had been. Whilst there had been Super VHS and Laserdiscs, DVD was a single standard that quickly united film lovers and casual movie fans (save for a US-only DivX standard, which has since given its name to a digital film file format). People, after all, had long become accustomed to CDs for music. DVDs looked the same, and swiftly became the equivalent for movies. A silver disc with a film on it was very easy to sell.

Money talked, though, and a further format was sought. Toshiba, for one, continued to make sizeable revenues from the licensing of the DVD format, and other consumer electronics companies wanted a piece of that pie. The inevitable end result was competing formats, with potentially a huge prize at the end.

These formats were mooted in the early 2000s, finally arriving in stores in 2006. But for those wanting to move to a high definition disc format, the worse end result had emerged. There were two formats to pick from on shop shelves, and many titles that were exclusive to each.

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On the HD DVD side of the proverbial fence, Toshiba, Microsoft and Pioneer were driving the format. Blu-ray, meanwhile, was spearheaded by Sony and a union of manufacturers.

Let Battle Commence

Different companies and – crucially – movie studios lined up on differing sides of the divide. Whilst some movie studios were format agnostic, and would release titles on both formats (Paramount in the early days, Warner Bros until the end), others would exclusively just support one of the other (Blu-ray would have Fox, Sony and Disney, whilst HD DVD would have Universal).

Neither format had an exclusive title akin to The Matrix, which was credited with helping DVD break through. And whilst each side had compelling exclusives (Casino Royale on Blu-ray, The Bourne Ultimatum on HD DVD, for instance), the impasse continued and would continue for a couple of years. You’d walk into a store, and both HD DVD and Blu-ray players would be side by side.

This period is widely held responsible for holding high definition optical disc take-up back. Nobody, after all, fondly remembers the Betamax vs VHS format battle (in that case, the technically superior format lost, of course) – the last equivalent of its like – and consumers were reticent to pick a side until a winner had been declared.

HD DVD took an early lead, but in truth both formats were requiring heavy, heavy investment from their respective backers, and making nobody any sign of a profit. Toshiba would eventually be $1bn out of pocket at least once it called time on the project. Sony’s coffers would be pillaged too.

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But it did have a major card to play. In short, it was willing to gamble the future of the PlayStation on the success of Blu-ray. It would prove to be a pivotal, yet costly, endeavour.

Console Wars

Given the ongoing battle between the PlayStation, Xbox and, to a lesser extent, Nintendo formats, it’s easy to sometimes forget how one-sided the console battle was for some time.

The PlayStation 2 went head to head against the first Xbox and the Nintendo GameCube, and it comfortably beat the competition. It was the most one-sided round of the console battle since, well, the PlayStation outsmarted the Nintendo 64. It was Sony’s game to lose.

Microsoft was more battle ready this time, though. It decided to get to market early with its Xbox 360 machine, selling the machine at a loss-leading price to try and stop itself being convincingly thrashed by the PlayStation 3.

The PlayStation 3 was still expected to be a comfortable winner of the battle on paper, but it would turn out to be Microsoft’s round (just). And Sony’s fumblings with Blu-ray in the early days would be a key reason why.

Noting that including a DVD player in the PlayStation 2 was a major moment in generating DVD adoption, Sony wanted the PlayStation 3 to carry a Blu-ray player on-board, to try and repeat the trick. The problem was two-fold, though. The supply of the necessary parts wasn’t high enough, and the price of the technology was expensive – an expense that would have to be passed onto consumers.

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This meant two things. Firstly, Sony had limited quantities of the PlayStation 3 at launch, which would arrive in UK stores 18 months behind the Xbox 360. And secondly, the PlayStation 3 was much more expensive than both the PlayStation 2 and the Xbox 360.

Whereas Microsoft had taken a financial hit to get the Xbox 360 retail price below £300 (and would be hit further when the machines, rushed to market, started generating red ring of death errors, requiring a hugely expensive replacement programme – Microsoft paid its own price for its haste), Sony’s day one price in Britain was £425.

Day One

Console launch days were supposed to be about queues of people outside of shops, and stories of machines selling out. But the PlayStation 3’s launch day in the UK was notoriously slow. Many retailers were lumbered with an awful lot of stock, and it wasn’t selling fast. People, in the early days, were buying Xbox 360 machines instead.

Sony would, to be clear, turn the PlayStation 3 around. But it arguably lost its market dominance in return for winning the high definition format war (and the value of winning that war, given the decline of disc sales, is debatable). Even today, the PlayStation 4 and Xbox One is a more even fight. The days of one side winning so dramatically would more likely have ended anyway. But Sony hastened that.

One aside, here. Microsoft was a passionate supporter of the HD DVD format, with then-boss Bill Gates arguing that it worked better with PCs (although Blu-ray and HD DVD drives never really took off in computers, and still haven’t).

But it wouldn’t cede to including a HD DVD player in the Xbox 360, which may have turned the battle. Instead, it released a sorry compromise – an external add-on drive that loudly chugged away playing HD DVD discs (it came with a free copy of Peter Jackson’s King Kong too).

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Breaking Point

With sales of high definition players and discs depressed, however, something ultimately had to give. Blu-ray was taking over in the sales charts, and the likes of Blockbuster – back when Blockbuster was an influence – opted to stock Blu-ray only.

When Christmas 2007’s sales failed to declare a clearcut winner, other factors took hold.

It was at the annual Consumer Electronics Show in 2008 that the key turning point came. Since the advent of the format war, discussions and negotiations had been going on in order to try and settle things. Yet it was the failure of either format to really take off that led to lots of behind the scenes meetings taking place in Las Vegas in January 2008.

At one stage, 20th Century Fox was reportedly on the verge of switching support to HD DVD, which – assuming others would have followed – may have dealt Blu-ray a fatal blow. After all, Warner Bros. was also willing to declare its exclusive allegiance for HD DVD, but it wanted the format to have another studio partner before it did so. Fox would have been it, and the fight would suddenly have been balanced in HD DVD’s favour.

Yet 20th Century Fox changed its mind at the very last minute.

As Gizmodo reported, Sony reportedly gave Fox north of $100m to stay on the side of Blu-ray. Warner Bros. was adamant it wanted to focus on one format, and thus it had no choice but to lean Blu-ray’s way (in spite of its reported preference for HD DVD). A cheque from Sony for a reported $500m helped sweeten things. These amounts have never been confirmed on the record, we should note.

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Bottom line: Warner Bros. declared its exclusive support for Blu-ray on January 4th 2008. To all intents and purposes, the format war was done right there.

The Epilogue

Toshiba would pursue HD DVD for a few more weeks (and it had been heavily pushing a free disc promotion over Christmas, hoping to woo more to the format). Yet retailers followed Warner Bros.’ lead and stopped stocking both formats. The announcements came thick and fast.

Thus, after selling nearly one million players and with nearly 500 titles released, Toshiba pulled the plug on the format in February, weeks after Warner Bros had declared its Blu-ray exclusivity.

Even after that, it took some time for Blu-ray to catch on, and it’s telling that DVD still outsells the format to this day. Furthermore, Sony’s gigantic investment – and the damage taken to PlayStation sales – would take a long, long time to recoup. Just to win the format war battle had reportedly required payments of over $600m to two movie studios, and that’s on top of the heavy, heavy development costs. It would take some time for Blu-ray’s Excel spreadsheet to stop looking so red.

Was it worth it? Well, long term, Sony gets a licence fee for each Blu-ray sold, and just ask Philips how it’s benefited from authoring the CD format. It was certainly not a battle that either side could really afford to lose.

And lessons have clearly been learned. Getting consumers to switch again to the Ultra HD Blu-ray format is going to be a far tougher sell, and having duelling formats at this stage simply wasn’t an option. When the format lands next year, it’ll be take it or leave it. All investing in it will be sincerely hoping for the former…

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