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Tuesday, March 11, 2008
CDSA President Reminds Industry Blu-ray Won Battle, But War is Not Yet Over

Although Blu-ray may have won the battle against rival format HD DVD, the war for ultimate consumer acceptance of the format has really only just begun, according to Charles Van Horn, President of the Content Delivery and Storage Association.

"The war isn't over. It has only just begun. Mark my words," Mr Van Horn told attendees at the 38th Annual Content Delivery and Storage Forum in La Quinta, California on March 7, 2008.

"That's because this format war is one unlike any other we've experienced before. No wonder it was relatively short. The window of opportunity was narrowing fast and the fate of the DVD format ? Hollywood?s cash cow no less -- was at stake. And that's something everyone -- even Toshiba -- has too much invested in to lose over a claim to the next windfall of media royalty payments,"he added.

Although Blu-ray won the trade, now it has to win the hearts and minds of the consumer. And that's going to be a much bigger battle. Especially with a range of physical media alternatives in the wings as well as the dawn of a new age of digital delivery.

"If Blu-ray won anything it was simply the right for the studios and their hardware partners to now spend many hundreds of millions of dollars more to market the benefits of a higher-definition optical disc format to a consumer who is already more than satisfied with what they already own and more preoccupied with buying their next flat screen and smart phone than anything else," Van Horn explained.

He also added that in a world of mp3s, Blu-ray market faces a new consumer. One who demands convenience over quality, wants a participatory media sensation, and also wants to make their own entertainment.

"Optical storage industry made an extremely bold move. It selected the more expensive, more complex format of the two -- one that requires a significant technical retooling at the replicator and mastering levels as well as the emergence of a scarce and extremely skilled set of software developers in order to succeed."

Van Horn described the storage capability and interactivity potential of Blu-ray as "awe-inspiring" and said that it can truly be the physical media of the next decade.

"That is if we accept the realities, roll up our sleeves, and bankroll the massive technical and creative overhaul that that this new format now requires", he said.

"Remember, we don't have the FCC mandating that consumers must upgrade from standard definition DVDs to Blu-ray. And let's not necessarily assume that the DVD is going to be able to ride on the back of the federally mandated DTV transition in the USA," he added.

At the same time as the studios and hardware manufacturers are touting the attributes of this 1080p player, they are at the same time setting up their own competition by enhancing the standard DVD?s with digital copies as well as inexpensive up-converting DVD players.

Van Horn also that NAND flash memory and small format hard disc technology could be a threat for the expansion of Blu-ray physical media since both formats portend to be cheaper to manufacture and potentially preferred because of their superior HD recording speeds.

"And while digital downloads currently show more promise than profitability, it's no surprise that apple, with its Apple-TV and its iTunes business model in place has made no commitment to an optical future," he added. "And a new upstart VUDU, meanwhile, is stirring tremendous interest for its ability to utilize peer-to-peer networks to provide buffer free, no-wait digital HD downloads."

Ending his speach, Van Horn gave a "five step formula" for Blu-ray success.

Step one: Studios, work with your replicator.

"There's a tremendous investment ahead for replicators. Understanding & Solutions estimates a quarter billion dollars investment will be needed over the next few years in new lines and test equipment. If your replicators are to be able to provide you with proper levels of supply and service you'll need to get your forecasts right, tighten your supply chain, and manage your front end mastering/authoring processes to allow your replication partners to meet your retailers? needs."

Step two: Studios note, this product deserves a premium price.

"This is the only industry that would invent gold and then decide to move tonnage by discounting prices. In packaging and product features, Blu-ray must purvey a value proposition to the consumer that will provide enough profits for your retailers, your shareholders and your supply chain partners. "

Step three: Stir the imagination of the creative community.

"This product demands the interest of the next generation Spielbergs and Lucases ? the visual storytellers of tomorrow who will embrace the technical wizardry, interactivity, storage capacity, and electronic enabling that the format can provide. Is it a film? Is it a game? Is it a web site? It's all of the above. But without a creative individual who is given the resources to create magic, to invent the next generation of interactive visual entertainment, it's going to be 'just enough hunk of playback plastic.'"

Step four: Think 3D

"We're on the brink of the next dimension of filmmaking. John Cameron?s avatar will break barriers. The NBA has already shot games in 3D. Disney has shown Hannah Montana on screen in three dimensions too. The future of theatrical films will demand a cool set of a shades. And, once that content starts to cascade, Blu-ray sales will accelerate since it will be able to deliver those 3D films into the home provided the consumer electronics manufacturers develop screens capable of delivering the 3D experience to consumers? living rooms."

Step five: Market, market and market some more.

"We're going to have to sell Blu-ray this time around. Or else. Frankly, this is a product that nobody wants -- until they experience it. And we need to take it to the streets. "

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