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HD DVD vs Blu-ray – honours even?

17 August 2006

A new report from Screen Digest predicts the outcome in the battle between HD DVD and Blu-ray Disc, with it being increasingly likely that the two formats will reach a stalemate. Titled ‘HD DVD, Blu-ray Disc and the future of home entertainment: A strategic analysis’, Screen Digest says the report is the first major study to look at the background to the current video format battle and to assess the potential outcomes.

Broadly speaking, Screen Digest believes that there are four possible outcomes to the format battle:

  1. The HD DVD format achieves a dominant market position and supporters of the Blu-ray Disc format switch their allegiance to that format.
  2. The reverse: that Blu-ray Disc format achieves a dominant market position and supporters of the HD DVD format switch their allegiance to that format.
  3. Neither format achieves a ‘knock-out’ position of market dominance and both coexist until combi-format solutions become cost-effective and eventually dominate, mirroring the current market for recordable DVDs
  4. Both formats ‘lose’ in the sense that neither is successful enough to achieve mass consumer adoption, resulting in a situation comparable to that of the battle between ‘next generation’ audio formats SACD and DVD Audio.

Ben Keen, Screen Digest Chief Analyst states: “Given the vested interests on either side, we believe that the most likely outcome at present is Scenario 3, ie that the two formats will coexist until they give way to affordable dual-format solutions but none of the other three scenarios can be completely ruled out. Overall though, the net result of the format war and the publicity it has generated will be to dampen consumer appetite for the whole high definition disc category.”

Graham Sharpless, author of the report comments: “The success of DVD was due to a single format that offered better quality and greater convenience than the VHS format that it replaced. This time both formats support similar features. Blu-ray discs offer capacities of up to 50GB compared with HD DVD’s 30GB. But Blu-ray is a revolutionary format that is more difficult and expensive to produce than HD DVD discs, which can be produced using modified DVD equipment.”

By 2010, Screen Digest believes that just under one-third of total spending on buying video discs in the three key regions of US, Japan and Europe will be generated by sales of high definition formats – $11bn out of a total spend of $39bn.

Screen Digest predicts that few households will opt to replace their existing DVD libraries. Instead, market value growth will come primarily from the premium prices charged for the new formats. This could mean that by 2010 total revenues from packaged media will be 15-20% higher than would have been the case without HD.

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