CeBIT 2007: Blu-ray chief predicts victory

16th Mar 2007 | 00:00

CeBIT 2007: Blu-ray chief predicts victory

Tells 'Blu-ray holds all the cards in format war'

Blu-ray is almost guaranteed to win the optical media format war, and a landslide victory is just around the corner. That's what Frank Simonis, the chairman of the Blu-ray Disc Association ( BDA ), said in an interview with yesterday.

Simonis was keen to dispel fears about the high prices of Blu-ray players by citing DVD as a format which started out being very expensive and came down in price as demand increased. The comments followed the announcement at the BDA press conference yesterday that the Association expects Blu-ray to be the standard optical media format within three years.

He said the two main reasons why Blu-ray will win over HD DVD are its greater capacity and the larger number of movie studios supporting the format.

"The fact that BD hardware is now outselling HD DVD for the first time, and that BD software titles are outselling HD DVD by three to one, is a very good indication of where it's going," he said.

Content is king

"If you look to Blu-ray, it's designed to cope with demand not only of today but it will last for 10 years just like DVD lasted. We did a clear round of interviews and the studios came back to us saying that what they need, above all else, is capacity. For them, capacity is what they need to showcase all the goodies they have within their movies, including the bonuses and the unique stuff which they usually don't show in a cinema.

"And having say only 30GB capacity, like HD DVD, they [the studios] clearly indicated that it's too limited; they need the extra capacity and that's why most studios chose Blu-ray, and that's why there are many more Blu-ray titles available than HD DVD."

Simonis went on to say that taking care of the PC market is also key in the battle to win the format war.

"The second point we looked for, where capacity is in demand, is in the PC space. Today, having a 500GB hard disc is not odd, and having a recordable and rewritable 50GB double layer disc is clearly in demand.

Blu-ray beta?

"And if you put all those things together, what do you need the most? Its industry support. And that's where the BDA has invested hugely. And so in our negotiations we got seven out of eight Hollywood studios; we got all the consumer electronics brands. And we got all the PC drive manufacturers behind us, so the high volume makers like Hitachi and LG, Samsung etc. Those are the companies today who supply 75 per cent of optical drives in PCs."

Simonis was eager to quell fears that the Blu-ray format was still in beta and yet to be finalised. He said that the format had been finished in 2005, and that it was only the HD DVD camp that is flirting with the idea of tweaking its format in order to increase capacity.

He was also keen to tell readers not to worry about the current high prices of Bu-ray players.

"Price roadmaps evolve over time according to the volume and the market amount. When DVD was launched the players were a similar price - around a thousand euros. And it took two years for the volume to pick up to the extent that the price significantly dropped. There is no reason to expect that Blu-ray will not go through a similar evolution.

The value proposition

"In terms of cheaper HD DVD prices, I can give you one thing to consider. Price is not the only thing that counts; it's the total offer. And for people who have bought an expensive HD-ready screen, which in most cases is around £1,500 plus, it does not really matter if is a £400 or an £800 optical media product - as long as it delivers what they expect it to deliver, including the right number of movies and including the right level of entertainment, with the right brands also.

"What we have seen in the United States is that, yes, HD DVD came to market a bit earlier and it's cheaper at the moment. And yet, the total volume of Blu-ray players equals the number of HD DVD products, which shows that price sensitivity is not there. If it were, HD DVD would be winning.

"If we talk two years form now I think it's a totally different ballgame, because we expect around 2-4 million products shipped and then price sensitivity is lower and costs will come down."

He added that when you look at the number of manufacturers making HD DVD and the number of manufacturers making Blu-ray, you cannot compare the two.

VHS vs Betamax

"The number of Blu-ray manufacturers involved is 100 times higher. And that gives you the economy of scale. And this will eventually determine the price. And it also creates competition. When there are multiple brands selling same-format players, the competition between those brands will also force prices down."

Simonis finished by promising that the BDA had learned its lessons from the VHS v Betamax war of the 1980s.

"Number one lesson we learned is that if you go to market the first thing you need is the software community behind you. The reason why VHS ultimately won the day was that the studios got behind it. Even though Betamax had better quality playback, VHS was cheaper to manufacture and that's why it was chosen. This time around Blu-ray is being chosen by the vast majority of studios, and with their support Blu-ray will win."

Simonis hinted that the BDA was preparing to launch a multi-million pound marketing campaign to coincide with the launch of the Sony PlayStation next week. He said that the media operation was designed to invoke public interest in the format and earn their trust to win them over to the Blu-ray side of the wall.

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