No Choice 2 - Remembering HD DVD

Back in August '07 I wrote a lengthy article about the format war, and how essentially the whole thing was about not giving customers a real choice.

On February 19th 2008, Toshiba announced they'd discontinue HD DVD, which is considered by most to be the end of the format war (if you don't agree, I'll come to that in a second).

Now that things are over, I feel the looser at least deserves to be remembered for what it was, what it brought to the market, and what we can look forward to in the high definition area.

What has happened since August 07

The following is a brief attempt at a timeline since my last article - it is by no means complete but should give you an idea as to what happened.

September 2007

• In a formidable PR move, the Blu-ray camp countered Paramount's defection by bringing Fox back to the table immediately after Paramount left the Blu camp.
• New Line finally joined the HD market, but surprised HD DVD fans by releasing the Blu-ray version day and date with the DVD, but delaying the HD DVD by months, citing the lack of region coding (and no such title ever appeared on HD DVD).
• The first BD+ titles were problematic on various Blu-ray players, requiring a firmware update on various players.
• Triple layer HD DVD disc weighing 51GB were officially finalized (and no disc was ever seen until this date, nor were any details given as to the compatibility with existing players or if there'd been any change in the maximum bandwidth available).
• Warner was reported to consider changing their high def strategy but announces there'd be no change.

October 2007

• Sony lowered the price of the PS3 to $399, making it the cheapest Blu-ray player on the market.
• The release of Transformers on HD DVD marked the most successful HD disc release so far, but the reported numbers varied wildly, and despite everything, HD DVD did not manage to sell more discs in that week than Blu-ray (the number was 49% against 51%, and the Blu-ray camp had a massive BOGO (that's buy one get one for free) offer both online and in brick and mortar stores, which certainly didn't hurt Blu-ray sales numbers)
• Toshiba's second generation entry level player the HD-A2 was discounted to $198 at various retailers (both online and brick and mortar stores).
• The Blu-ray profile 1.1 got a fancier name: Bonus View, and the first profile 1.1 players were announced (notably Panasonic's DMP-BD30K and LG's BDH200)
• Warner was reported to consider changing their high def strategy but announces there'd be no change.

November 2007

• Toshiba's HD-A2 went on a massive sale for $98, and during that sale, Toshiba sold 90'000 players in a single weekend.
• Warner was reported to consider changing their high def strategy but announces there'd be no change.
• The 500'000th HD DVD standalone player was sold.
• Warner canned their plans for the combo HD DVD / Blu-ray disc format Total HD.
• On Black Friday, standalone Blu-ray prices dropped below $400 for the first time (excluding the PS3)
• One Million BD discs were sold in Europe (that number was reached in April in the US)
• The total of HD DVD players sold topped 750k (including the Xbox 360 add-on)
• The Venturer HD DVD player, once touted as the cheapest HD DVD player, finally makes its appearance but at $199, it is no cheaper than Toshiba's 2nd generation at its regular price.
• We see various BOGO offers on Blu-ray titles.

December 2007

• Warner was reported to consider changing their high def strategy but announces there'd be no change.
• Toshiba's 3rd generation entry level player, the HD-A3 gets discounted to $225 (list price $298).
• A temporary price reduction makes Samsung's BD-P1400 the cheapest Blu-ray player at $269.
• LG's second dual format player, the BH200, hits the market at $999. It is the second player to support Blu-ray's profile 1.1
• Sony's Playstation 3 receives a firmware update to make it profile 1.1 compatible.
• Sony's Blu-ray standalone drops below $299.
• We see various BOGO offers on Blu-ray titles.
• The 269'000th Xbox 360 HD DVD add-on is sold in the US.

January 2008

• January started with another Blu-ray BOGO offer.
• Warner announces that at the end of May, they'd go Blu-ray exclusive.
• Various manufacturer announce Blu-ray 1.1. and 2.0 (BD Live) profile players - most of them are still only 1.1. players though.
• The PS3 was sold over 1.2 million times over the holiday season in the US.
• The BDA announces that 500'000 standalone Blu-ray players had been sold in the US (and 3 million PS3s)
• In response to Warner's defection, Toshiba launches a new marketing campaign and drops prices of the HD-A3 to $149, the HD-A30 to $199 and the HD-A35 to $299.
• HD DVD sees its first BOGO (at least at Amazon iirc).
• Universal and Paramount/Dreamworks reaffirm their support for HD DVD.
• Warner announces that their move to blu would go with a 3 week delay for any future HD DVD release, meaning HD DVD is released 3 weeks later than the corresponding DVD and Blu-ray release.
• Sale numbers shift dramatically in the wake of Warner's announcement, both on the hardware and software side (surpassing a 4:2 lead, where much of 2007 the number had been less than 2:1).
• Various smaller distributors in Europe move to Blu-ray.
• Cyberlink released a new version of PowerDVD with support for Blu-ray profile 1.1

February 2008

• In February, Toshiba aired an HD DVD commercial during the Super Bowl (that's the American Football championship for those that don't know) - the ad didn't air nationally though but it's an expensive move nonetheless.
• Microsoft drops the price for the Xbox360 HD DVD add-on to $129.
• Plextor announced two dual format drives for PCs (the more expensive one writing Blu-ray discs but no HD DVDs)
• Then in a single week, Netflix, the largest online rental store in the US, drops HD DVD, citing customer demand (interestingly though, back in October they reported that their users preferred HD DVD). This is followed by Best Buy announcing they'd recommend Blu-ray over HD DVD and the first rumors that Toshiba would drop the format and finally Wal Mart announcing they'd go Blu-ray exclusive.
• Then on February 19th, Toshiba announced they'd stop making HD DVD hardware, but wouldn't support Blu-ray for now.
• LG announced no plans in their dual format approach, while Samsung announced they'd focus on Blu-ray (thus probably no more dual format players)
• Universal and Paramount announce they'd start releasing titles on Blu-ray, but give no timeline and do not mention what will happen HD DVD wise, while Warner announced that they'd continue to release HD DVD discs until May 31st.
• The HD-A3 now sells for $99, as does the Xbox 360 HD DVD add-on

Is it really over?

• Large parts of the industry seems to think so. If you walked into a brick and mortar store, even before all the bad news for HD DVD, most salespeople would actually recommend HD DVD. And today, they'd ask you if you knew that Toshiba will discontinue HD DVD when you try to pick up an HD DVD player. Online stores, which have an optimized distribution structure and don't need to devote shelf space, are more flexible and are likely to continue charring HD DVD as long as there's some demand (and as long as the supply doesn't run out).
• All major Hollywood studios are either actively releasing movies on Blu-ray or have announced plans to do so
• Toshiba is the only important HD DVD manufacturer. To my knowledge, every dedicated HD DVD player sold was made by Toshiba, including various rebadged player (e.g. Onkyo, RCA and Venturer), and the Xbox 360 HD DVD add-on also contains a drive made by Toshiba (that should tell us something about the future of that device.. if Toshiba no longer makes them, Microsoft can't sell them either). According to the numbers Toshiba presented at CES, the HD DVD market share of Samsung and LG is insignificant, plus Samsung has already announced that they'd focus on Blu-ray. So, that leaves us with the LG dual format player, and each a dual format HD reader /DVD/CD burner, and a Blu-ray burner + HD DVD reader and DVD/CD burner from both LG and Plextor. So if you're playing HD DVDs on your PC, you'll be covered for a while still, but there's but one standalone player to buy starting April 1st.
• Various independent studios have announced a move to Blu-ray in between Warner's announcement and today.

There are still a bunch of studios outstanding (probably for reasons I'll come to later), but I feel with Toshiba gone, the format will wither and die - regardless of how much many HD DVD supporters would like it to stick around (the author has a sizable HD DVD collection himself and no plans to give them up - well, except perhaps those titles that really deserve a better master). We can revisit the argument in 6 months or so to see where we're at once the supplies of Toshiba manufacturer players have run out, when Warner has stopped releasing HD DVDs and see how much remains.

Why I'll miss HD DVD

The reasons in my previous editorial still all very much apply. Let's start with size yet again. I figured besides looking at the technical reasons why more size and theoretical bandwidth (I still haven't found any numbers as to VBV buffer sizes), I'd give the real thing a shot.

During 2007 I started a collection of HD DVD discs which had amassed to 100 titles by New Year's eve. And quality widely varies. There are stellar transfers (like Matrix.. you'll be hard pressed to find a flaw while watching the movie (as mentioned many times in my codec comparisons - and yes, I have not given up on them just yet - stills can be very misleading), there are old transfers that hardly look any better than DVD (I was very underwhelmed by 12 Monkeys as an example), there are average transfers, etc.

Warner released a bunch of titles that look interlaced, due to some production fault (the same applies to the corresponding Blu-ray releases), but I also saw that from Universal with Waist Deep.

I even have a few discs that use MPEG-2 (Fantastic 4, Resident Evil & Resident Evil Apocalypse) and even a single layer disc using VC-1 (Unleashed), where the tech specs already had me wondering if that was a smart choice. Incidentally, the results were not as bad as I had expected although no such disc even gets close to the caliber of Matrix & Co.

The 3h epics I watched (Troy, King Kong) looked surprisingly good (the former even had lossless audio). I know some cite those movies as examples on how HD DVD looks soft, I recently found myself wondering about the quality of certain things I saw in the movie theatre - especially when dealing with scenes with fog I asked myself 'doesn't that look smoothed out' - and that really should serve as a wake-up call. In the end, to determine whether whatever output truly represents the source, we'd need to compare it to the source and only the source. Certain movies are very smooth, other are very gritty, or grainy. If a very grainy movie comes out very smooth with little grain, then there's something off (no matter how much I dislike the excessive use of grain we sometimes see.. ), but that goes the other way around too.. the output can be too sharp when the source wasn't so sharp, and just because a sharpener has been used, together with a codec that makes things look particularly gritty (and if you recall the codec tests, AVC is much better at that look), you might like the output, but it can also be quite far from the original.

After watching through 40 Blu-ray titles of various age, one feeling that was always present was quite some grain. Interestingly, that varied a lot even during some movies. Take the critically lauded Pirates of the Caribbean series. The result looks spectacular during day scenes - and I didn't notice any grain that bugged me. However, during night scenes, it seemed to me that the amount of grain suddenly increased to an amount that bothered me (I could imagine that the source would have that effect too, though it's been too long since I saw these movies at the theater). That's not saying that these titles have reference quality, but that you can find something that bugs you everywhere. Or if you like to pause the movie to find flaws, take Live Free or Die Hard and look at the night scene just before the 20 minute mark, or at close-ups in the tunnel after the explosion. The title overall looks great, but you can find flaws, regardless of the format.

A whole bunch of older movies, regardless of how recent their release and the fact the they're AVC encoded BD-50 titles (e.g. Con Air, Die Hard 1-3), appeared washed out and easily matched mediocre HD DVD transfers.

And if you want to see an example of a really crappy Blu-ray disc, have a look at Fox'es BD-25 MPEG-2 Transporter 2. It looks okay until you get to a fight scene.. and then it looks like a DVD. And I already mentioned the interlacing effects, but I also found that in resident evil, if you look at the ridges of the mountains (e.g. timecode 7:51) you'll see a staircase effect that also looks like an interlacing remainder (which seems weird for a new movie).

At the end of it all, there were excellent titles and bad titles, just what I've grown accustomed to with HD DVD. I was also quite disappointed in the extras.. despite the additional space, there's hardly any 1080p extra material (that could change though, more recent titles tend to at least have parts of the extras in high definition).

Bottom line, video quality wise, if properly done (starting with a good master, and ending in a proper encode), I remain unconvinced as ever that 50GB are a necessity.

Audio wise, I doubt my equipment is up to the task of a proper blind test even - I neither tried much, nor did I notice anything (other than the sound levels being different which may give you a wrong impression) when I tried. If I recall correctly, there was a small blind test on compressed / lossless on AVS at some point which wasn't quite as conclusive as some slamming discs that contain no lossless audio had wished. To me, lossless would mostly be an argument if you want to recompress, and with BD+ there's currently no recompression (and is there a filter for DTS MA?) so it kinda is like walking into a wall at the point I'm writing this.

The fact that HD DVD is region free allowed me to gather titles from all over the world, a bunch of which from Blu-ray exclusive studios. While having case art and sometimes even menus in another language is not everybody's thing, I really appreciated the hasslefree use of discs from all over the world.

At this point, every single HD DVD I have can be copies to any other format I like - thanks to the lack of the still undefeated BD+.

Once I had the GFX card driver issue sorted (HDCP and such), I was basically able to stick to one PowerDVD release - with final specs, new keys are the only reason to update your software player.

I also feel that specs further translate into the much more consistent user experience when it comes to navigating menus. Put in a recent HD DVD disc, and after the studio logo you're in the main menu, and every main menu can be navigated the same (there are exceptions to the rule though.. I recall one disc where using the arrow keys I could enter one menu and only get out of it again by using the right click menu and navigating to another title) way. When looking at Blu-ray, you have studios that put trailer after trailer before you even can get to the menu (and you can't press the menu button.. you have to press next time and again), and that is followed by menus that are not always easy to navigate and that differ a lot in between discs both in design and how you can navigate them (some can be navigated using arrows and allow a simple 'go back to the previous level' by using an arrow key, others require that you navigate to an X button and press enter, etc.). While I cannot blame the format as such (and on the subject of trailers I also never understood the HD DVD promotional trailers on certain HD DVDs - I bought an HD DVD disc after all so I know it's better than DVD and I need no trailer telling me so), I believe that the simplicity and toolkits that were more complete from the getgo contributed to the more consistent user experience.

Last but not least, HD DVD hardware more closely matched the price development of traditional DVD back in the day. I recall when my parents first equipped the living room with a surround sound system and a DVD player (Q2 1999 if I recall correctly, or perhaps Q1). The price we paid for the DVD player then (7 quarters after the format launched in the US), was somewhere between $200 and $230 (using the exchange ratio we had back then but no adjustment for inflation) - and that player still works today and plays current discs (more about that later). I honestly don't recall when I got my first DVD-ROM drive for my PC (I remember the manufacturer though - Toshiba - and a Toshiba DVD-ROM started going bad on my under mysterious circumstances in 2000), but at $199 in January 2007, I didn't feel like I was paying too much (buying WinDVD was a major disaster though and a waste of money).

Why smaller / independent studios (and the porn industry) will miss HD DVD

Cost, cost, cost. When you're producing smaller series (sorry, Pirates or Debbie does Dallas again don't sell as much as POTC, Spiderman or Transformers), production cost matters more and more. Take AACS as an example. For large studios it's a given - but there were DVDs and now there are HD DVDs that come without AACS. The reason is mainly the additional cost and delays that adding AACS adds. With HD DVD, AACS is optional, with Blu-ray it's mandatory.

Prior to AACS we have authoring. Basic interactivity isn't hard to achieve, but if you're comparing iHD and BD-J, the latter (while undoubtedly more powerful) is more difficult to master and that translates into cost.

Then we have replication. The now defunct insider threads at AVS contained interesting tidbits about replication costs and yields, though information is generally not so easy to come by. Last fall, it was reported by a Blu-ray insider that even with single layer discs, not only were yields not nearly where HD DVD yields are (95% for dual layer discs), but that yields also go down with size - so studios were better off not filling up a disc. With dual layer Blu-ray discs, that only gets worse. In fact, even the most recent numbers from a non Sony site, show that the numbers of the latest production lines still are nowhere near where HD DVD already was months ago. But why doesn't this translate into higher costs of Blu-ray movies? Mainly because Sony subsidizes production so major studios get the same deal on BD production as they get for HD DVD. But not every studio gets that deal. So if you end up paying $4 instead of $1.xx per disc replicated, and you're looking at small series (only few titles sold more than 100k units and that's from major studios), you either accept a lower margin or set the price higher (and HD media is already expensive as it is with suggested retail prices that end in near $40). And Sony, the first player in the replication market also reports yields of only 85% for single layer and below 80% for dual layer discs.

And what do we have to look forward to

With HD DVD folding, there's just Blu-ray remaining as high definition disc format. Well, there's HD VMD but can you take that seriously?

High definition download solutions have taken on some steam in the meantime, but they still face the same issues: incompatibilities, lack of available bandwidth into people's homes, ISPs throttling traffic, and so far those services are only 720p.

So, back to Blu-ray, I doubt anybody minds 2/3 more capacity regardless if it is put to good use as well as the improved bandwidth, regardless of whether you can really see the difference. And having movies from all major studios on the same format most definitely will not hurt. Having a more scratch resistant coating also won't hurt, especially if you're not a careful person (I'm anal about handling optical discs so I don't need scratchproof.. I just don't give out my discs to other people) or if you hand out discs to careless people.

And then there's the but that just had to come. Blu-ray may have won the war against HD DVD, but that doesn't automatically make it the successor of DVD. The reasons that were cited against Blu-ray didn't just vanish overnight.

Here's a brief rundown of what could hamper Blu-ray in the long run and as a possible replacement to DVD

• Unlike DVD, you need new equipment (at least a new TV.. I figure just like many people still watch DVDs using the speakers built into their DVD they'd continue doing that with Blu-ray) - at least a new TV. While flatscreen TVs (and thus at least 720p models) now amount for the majority of new devices sold, it will take a while to get the old equipment out.
• Price: If we leave out heavy discounts and BOGOs, high definition discs cost a bundle. Just one quarter shy of two years on the market, we have yet to see any price movement downwards, especially if brick and mortar stores are concerned (those become more important if the format becomes more mainstream - early adopters are more likely to pick online stores that offer bargain prices (even today the majority of my DVD collection comes from Amazon.. in the beginning I hardly had any locally bought titles). Some researchers also predict that with the pressure of the war gone, there's less incentive to offer bargain prices at this point in time.
• Price of hardware: When you check Blu-ray player prices at Amazon, the cheapest you can find is about $350. Right now we're one quarter short of a full two years on the market and as I previously pointed out, at a similar time in DVD's age, I was able to get a player for a little over $200 - so Blu-ray players are expensive compared to DVD players back in the day. Price is also a reason why there are comparatively few Blu-ray standalone players out there. In Europe, a meager 34'000 standalone face 3.2 million PS3s.
• Production cost needs to come down and yields have to go up significantly. Production cost are currently keeping smaller players out of Blu-ray and at some point those Sony subsidies will run out. And installing a Blu-ray production line requires a major investment (meanwhile every DVD production line installed during the last two years can be used to produce HD DVD discs).
• Profiles: Even today, there are but two profile 1.1 standalone players on the market, and the dual format player may not be the most attractive player unless you happen to have bought into HD DVD. Especially the cheaper players that being to take on steam (if the first reports coming in after Toshiba's announcement are correct and things will keep on going), are players that are basically obsolete. Sure, they will continue playing even BD-Live discs, but you lose out in features and it didn't help that Blu-ray was rushed to the market (the Blu-ray camp admitted so not too long ago, probably in a high after the news of Warner's defection) and that with discs making more use of BD-J, at some point the old player generation just won't be able to keep on.
• To continue with profiles: Even if you are one of the 'who needs an Internet connection, I just want the movie' (I never made use of those features on any HD DVD I have by the way), there's one reason why even you should be interested that only Profile 2.0 players are kept around: Since Blu-ray is still very much evolving and the use of certain BD-J features will most certainly require that you upgrade your firmware at some point, having an Ethernet point makes sense to everyone. I have a bunch of networked consumer electronics devices, and they make the whole process of upgrading seamless.. push two buttons and you're all set. This is much better than if you buy the latest movie, only to find out it doesn't work, have to call the manufacturer who sends you a CD (or tells you to download it off their website and burn it) that you have to put into your player to upgrade your firmware. You and me might not have too much trouble with that, but a lot of people who don't spend their lives around tech gadgets will be put off by that.
• The user experience needs to become more consistent. A menu that has to be navigated in a different way on every disc isn't going to win you any favors with less tech savvy people. And if you're at it, move those trailers to an extra menu and don't force them upon people.
• Having a lot of players out there is one thing, but you need to build up an attach rate. Blu-ray is lagging extremely behind DVD in terms of number of discs shipped. Just look at DVD - 5.5 million discs in 2007, the year DVD launched, and another 25 million in 1998. Blu-ray took almost a year to get to just one million. In order for the HD DVD camp to keep up with the 1:2 sales ratio, those relatively few HD DVD owners did buy a lot of discs, and in the end it's that repeat business that you need in order to make the format more popular.
• Stability of the platform: using a software player, I don't have to deal with firmware upgrades, but my Blu-ray experience wasn't flawless either. I needed to upgrade my GFX card drivers to watch any disc with AVC (HD DVDs with AVC were no problem) as the video would completely break up (like it would still be encrypted) as soon as AVC was used. Then I had two discs (even among the first 10 or so I watched) that I couldn't watch throughout - the player would freeze more and more as the movie progressed. Now what was that with the scratchproof layer and such (the discs had no scratches though)? I later managed to at least properly rip one title, but the second one was a bust and will have to go back to the store. I've had but one freeze issue - with the infamous Battlestar Galactica set that came pre-scratched and had a 30 second section I needed to skip (the rest was fine though, and I didn't try to rip the disc). And if you don't have a HDCP compliant setup, you'll face additional trouble with BD+ discs as you need an older version of PowerDVD (and for some reason the switcher didn't do the trick.. the movies remained encrypted), and then you need to switch back to make use of Profile 1.1 features.

(note that some points also apply to HD DVD but since the format is now defunct, the argument is kinda moot)

You'll see that various of these points have been taken up by analysts, e.g. ABI Research, and even industry players call for a redoubled effort to increase production capacity and bring more products to the market. And I took some perverse pleasure in seeing my favorite Blu-ray shill - Bill Hunt - effectively raising the same issues as MUST now, that prior to winning the war, only HD DVD proponents raised about Blu-ray (notably player prices and profiles). Things can go fast some time..

At this point, I think the good old 'the only thing that can Blu-ray is Blu-ray' applies.

Conclusion

Here we are again, and we didn't really have much of a choice in the end.

Warner's defection came with various stories about major payoffs, given to both Warner ($500 million was mentioned multiple time) to become exclusive, and to Fox (somewhat over a $100 million) to not switch camps. While some cast doubt on the validity of these stories (Warner denied being paid off, but you know it is with PR.. it's a matter of wording and promotional incentive != payoff), the Paramount/Dreamworks defection came with a similar story in the NY Times, and the Warner story was reported in the Washington Post - neither some kind of rumor blog.. so in all fairness I think you should either accept both or none.

Up until the end of 2007, despite massively lagging behind Blu-ray in terms of hardware sales (though still leading in standalone player sales as we now know.. 600k in the US versus 500k Blu-ray, and 100k in Europe versus 23k Blu-ray), HD DVD managed to keep up a 34 : 64 sales ratio and thus a quite impressive attach ratio. In the end, those that bought into HD DVD did so with some enthusiasm, and many a Blu-ray player owner (PS3 owner) didn't even bother to check out a Blu-ray disc. Given the price differential, I'm convinced that had things been equal (all discs available in both formats), we'd have seen a different outcome (player prices being what they were in the end).

Lacking a PS3, things would also most certainly have turned out differently (regardless of the marketing that the Blu-ray camp used really well) - but Sony was willing to plunk down unheard amounts of money to bring out the PS3 with Blu-ray, and forfeited their position in the next generation console war (the PS3 is still trailing far behind its competitors though recent Blu-ray boost appears to have given it a boost) to make Blu-ray a success. Amidst the PS3 subsidies, subsidies for disc production and payoffs/promotional incentives paid to studios and adapting the format to accommodate the most paranoid studio (BD+), Sony basically bought the way to victory.

In the end that way lead to Warner's defection which triggered a chain reaction which in turn eventually lead to Toshiba pulling the plug. And you cannot argue that paying off studios (keep in mind that I said the same thing when Paramount went HD DVD exclusive) gave us any choice.

Now we have a format that brings back region coding and prevents us from doing with the discs what we like (BD+ still uncracked despite Slysoft's best efforts), and that's considerably less choice than the other format would've offered. And the potential (viability to be determined) alternative - downloads - is just as DRM encumbered and thus choice limited.

The only choice (and not really one if you've seen the difference) would be going back to DVD (and battle the structural protections once more) - or limit your movie intake to the movie theater.