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Paramount Pictures and Dreamworks drop Bluray – Both go HD DVD Exclusive!

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This news comes from Campaignhd.com I’m not a proponent of either format.? I think that having two formats hurts consumers in a major way.? If you are on the fence, stay on it and grasp internet delivered HD content via iTunes or Xbox Live.

The High Definition DVD Studio Support Petition Campaign

August 29th, 2007

Bluray camp in trouble – water finding its level?

In news that has rocked the industry this week, Paramount Pictures and Dreamworks have both decided that it is time to give up on the Bluray format. They have announced that they have dropped Bluray support completely and have decided to publish their films ONLY to the HD DVD format, including the upcoming “Shrek The Third”!

They have also said they will not be re-printing or re-stocking any titles they have previously released on Bluray, meaning that there are suddenly substantially fewer titles available on the Bluray format – and they also announced some new titles for HD DVD this year. A summary of the movies specifics can be found in our update here…

Citing the lower costs of the HD DVD format, as well as the fact that HD DVD players are available in the $200’s range at retail channels, Paramount’s and Dreamworks’ decisions have confirmed what we have been saying all along. And will Warner feel the same way?

This blow to the Bluray format is FAR more significant than Blockbuster Video’s decision earlier this year to favour the Bluray format in their stores. If more studios continue to abandon the Bluray format, Blockbuster would have very little to carry for it’s customers and their decision would be rendered almost meaningless – not to mention, ill-conceived.

The immediate reaction by the Bluray Hydra-Smurf PR activists was to start spreading rumours that Microsoft had paid the studios hundreds of millions of dollars to make this decision. Unfortunately these reports were timed to get the attention of the press and a couple of papers included this erroneous information, which was categorically disproven by Microsoft within hours.

Now that the initial Hydra “misinformation” campaign is subsiding, the decisions by both Paramount and Dreamworks are being analyzed by the industry and the media to determine what really was behind the decisions.

So, what drove these decisions, and what does it mean?

In a statement to the press, Viacom, the parent company of both, stated its studios’ mutual decision “resulted from an extensive evaluation of current market offerings, which confirmed the clear benefits of HD DVD, particularly its market-ready technology and lower manufacturing costs.” (BTW – the same article cited a senior AVS Forum member who also believes that Warner is about to go HD DVD exclusive too).

In an interview with PC World, the Chief Technical Officer of Paramount gave some very good, and interesting, analysis of Paramount’s reasons for the big shift. This is a VERY interesting read that you should not miss. Also, there is a nice little story by The Economist here.

This clearly underlines some of the key HD DVD advantages we have been talking about all along. You can find much of this information here on this site, as well as in various forums online, such as AVSForum.com. Respected publication Ultimate A/V has also written a commentary on the subject.

Even Blockbuster may be prepared to review their expansion of Bluray titles over HD DVD. In a recent article in Video Business magazine, Blockbuster executive, Randy Hargrove said: ?Our announcement with Blu-ray was not a format endorsement. We?re going to follow the demands of our customers, and if in the future that means adding more HD DVD titles in our stores, then we?ll do so.? (Go to the “ACTION page and send them your email!)

Our Analysis

HD DVD discs can be mass produced with relatively inexpensive upgrades to existing DVD production lines. This is in contrast to Bluray, which requires massive investments in new production facilities. As a result of these differences, there are more HD DVD production facilities available today.

The Bluray technology was not ready for launch. Yes, we all know this is the case – but this doesn’t just apply to all the first gen Bluray players that were shipped with the “interim” BD 1.0 spec and which will never be able to handle the 1.1 and 2.0 features that supposedly will ship on future movies when the 1.0 spec is retired in November. Early adopters be damned – you are out of luck with those early BD players (which seem to be still most of what is on sale till next year).

This “un-ready technology” factor also applies to the production of Bluray discs. The massive investment required for Bluray production made the discs inherently more expensive to produce – sparking rumours about Sony “subsidizing” costs for some of the studios. But Sony also owns Sony Pictures, which is a direct competitor to the other studios playing in the BR game. Would it really be wise to base your business model on a subsidy handout from a competitor – a subsidy that may be denied at any moment that they feel they have won the “format war”? Particularly, when the true costs of production for BD releases might be up to $20 per disc? Replication alone of BD50 is estimated at between $6 and $6.50 per disc, based on a $5 differential between BD25 and BD50.

But mastering and authoring costs were also rumoured to be far higher for Bluray, not to mention testing. In fact, it was mentioned, repeatedly, without doubt, by a Sony insider that temporary changes were made to the Bluray player specs earlier this year, to “allow” playback of BDMV-formatted BD-R/RE recordable discs JUST so that the studios could more easily and cheaply test titles they were planning to release on the format. We have a separate story on this issue this week, but the long and the short of it, is that the consumers may again be being “shafted” by the BD specs, as this program has now ended, and new BD players seem to be refusing to play BD-R/RE BDMV content. (Please ignore the posts there by someone called “Talkstr8t”, as some of his information was wrong and simply confused the conversation until he was later proven incorrect).

But let’s talk about Dual Layer BD50 discs. We covered the apparent lack of BD50 production last year, but the situation has not gotten much better, it seems. Because the technology is STILL said to be incomplete, the manufacturing yields for BD50 discs are apparently still POOR, meaning that a significant percentage of the discs produced have to be thrown away. According to insiders, many BD50 replication plants are still having yields of only 10% – a shocking result that means that 90% of the production run is discarded. And that maybe even the best Sony yields are still only 40%? For this reason, big name replication companies still have not upgraded their facilities to handle Bluray BD50 production. And EVEN of those companies that have spent money adding Bluray production capacity, it seems that many only are able to produce BD25 Single Layer discs, because the BD50 production is still so flawed. According to insiders, Sony is one of the few companies that can do BD50 production today. Even some that say they can, actually farm it out to others. And this does not include the higher setup and mastering costs that seem to be typical for the Bluray format compared to HD DVD.

Furthermore, we have covered the apparent problems being encountered by the Bluray camp in attempting to resolve the issues with their standards and, in particular, their woes in getting BD-J working properly. But evidence is mounting that this continues to present MAJOR challenges to the studios and to producers of content. It may well have been part of Paramount’s consideration. However, the BD-J issue appears to get more and more serious with each passing day. reports from the field, and from insiders, are that BD-J is far more complex than the HDi language used by HD DVD. In an article from esteemed magazine “The Economist”, the following quote should send shudders down the backs of those looking to support both formats:

“Engineers who?ve worked with both formats say Blu-ray is a pig to program. While extremely flexible, its programming language, BD-Java, requires lots of low-level code for even the simplest of instructions. The highly skilled programmers needed to do the job don?t exactly grow on trees. And because of the program?s complexity, even the best produce their share of bug-ridden software.

“By comparison, writing software for HD DVD using Microsoft?s HDi interactive technology is a doddle?with one simple command doing the task of scores of lines of BD-Java. More importantly, HDi is the key to HD DVD?s better navigation around menus, and its instinctive ability to interact with the outside world.”

BD-J seems to be forcing a Studio supporting the Bluray format to become a computer software, hiring hard-to-find Java programmers – whereas HD DVD’s HDi language lets them focus on their primary mission, providing great films to families across the world in High Definition. Even programmers seem to dislike the choice of BD-J made by the Bluray camp. And insiders from studios trying to work with BD-J still apear to be mystified by their difficulties in getting it to work properly.

As we have covered in previous commentary pieces here, the BD 1.1 player profiles have been repeatedly put off by the BDA camp. The BD 1.1 player spec is supposed to replace the 1.0 interim player spec that Bluray launched with last year, but has had repeated delays due to various issues.

The last compliance date that was missed was May of 2007. But this was shifted to the latest date, which was SUPPOSED to be November 1st 2007, and all new players introduced after that date were mandated to be 1.1 compliant, which would allow them to match some (but not all) features of HD DVD players (BD 1.1 still does not require Network support, like HD DVD players do). This issue is quite well described in an article from well-respected publication Ultimate A/V here.

There have been announcements of Bluray players shipping before November 1st, which means they do not have to comply with 1.1 – but the only player announced to date that was confirmed to be 1.1 compliant was a new $2,000 Denon player. However, in a dramatic late-breaking twist, Denon has apparently delayed their launch of this player till Q2 2008 – a full 6 to 9 months more!

Does this mean that BD 1.1 is stillborn YET AGAIN? You will all remember that Warner has been forced to put off some Bluray releases – like The Matrix Trilogy – because there are no BD 1.1 player on which to test the advanced BD-J interactivity which they have already used on HD DVD with HDi. Could this delay in BD 1.1 have been another “last straw” for Paramount? Could it also cause Warner to finally lose faith in the Bluray format? I think it is a very significant development. See our followup piece here on this site.

Let’s talk about the consumers!

In Paramount’s official statement on the matter, they stated the following:

“We decided to release ‘Shrek the Third’ and other DreamWorks Animation titles exclusively on HD DVD because we believe it is the best format to bring high quality home entertainment to a key segment of our audience — families,” stated DreamWorks Animation CEO, Jeffrey Katzenberg. “We believe the combination of this year’s low-priced HD DVD players and the commitment to release a significant number of hit titles in the fall makes HD DVD the best way to view movies at home.”

The studios said, “With the rapid increase of HD TV screens in households, and audiences wanting to enjoy the total entertainment experience, HD DVD has emerged as the most affordable way for consumers to watch their movies in high definition. In addition to pristine quality, HD DVD also offers consumers the chance to personalize the movie-watching experience, to interact with their movies and even to connect with a community of other fans.”

But what about the PS3, Sony’s fabled response to anyone who says that HD DVD is the true consumers format, preferred by so many people because of its better price and value? AHHAAH! It so happens that THIS may be the final key to the decision by Paramount and Dreamworks.

Sony and the BDA made a great deal of bones about the ability of the PS3 to “reverse” the early HD DVD lead, and win the “format war” for the Bluray format. We have covered the PS3 issue before in the past as well, but more information keeps coming to light which demonstrates just how badly Sony seems to have missed the mark in their one big chance to claim “victory” in this battle.

In January this year, BDA entities were making predictions to observers and studios alike, claiming that Bluray would surge to a 3 to 1 movie sales adavantage over HD DVD by the end of the 1st Quarter of 2007. This never came to pass, and their brief lead in sales in the first quarter (when HD DVD releases were very slow, on the heels of the AACS crack) has dwindled significantly ever since. The lead of nearly 4 to 1 forecast by the BDA by the end of 2007 has also gone up in smoke.

A recent blog post put it thusly: “The PS3 has been a disappointment for studios who bought Sony?s sales pitch that it would sell like the PS2 did, and that would put a Blu-Ray movie player in 10 million homes practically overnight. Because of it?s enoromous price and lack of specific games, the PS3 hasn?t done nearly as well as expected in sales anyway, but a bigger issue is the small number of owners who actually use it as a Blu-Ray player. Consider this: even though thanks to the PS3 Blu-Ray enjoys a 6:1 advantage in players sold, their disks are only outselling HD-DVD?s by 2:1. Why? Obviously most of the PS3 owner?s out there use it for gaming and don?t buy or watch movies on it. Meanwhile every single HD-DVD player sold (including the XBOX 360 add-on drive) has only one purpose: to watch HD-DVD movies. Hence their buyers also buy movies. Blu-Ray also is not a ?finished technology?, meaning players sold today do not have the final specs promised by the technology. They have no internet connectivity, do not support PIP, etc. HD-DVD had all features ready hardware-wise and has completed firmware specs even with their first players. Studios are starting to look cross-eyed at Sony, and that probably had as much to do with Paramount and Dreamworks decision as the money that changed hands did.”

This very recent article makes it clear how badly the PS3 continues to fail in this regard: “Playstation 3 sales rise; but it’s still in last place”. And don’t listen to those Bluray fans who says it’s doing really well in Japan – if THAT meant anything at all, then MiniDisc would have become the big worldwide winning Sony format… it didn’t, and it doesn’t.

So, if the BDA’s argument to studios was “support Bluray because we are going to make sure that you HAVE to”, then that argument has now arguably failed. Studios must now decide which format makes the most financial sense, both for them AND for the consumers.

Paramount’s statement makes it clear WHICH decision they feel to be the correct one – and it’s the same decision so many of us consumers have already made – HD DVD! With HD DVD players still typically selling at half the price of equivalent Bluray players, and ALL HD DVD players being compatible with one consistent and “properly functioning” standard, HD DVD is the best choice for all.

Long live HD DVD – the consumer’s favourite HD Disc format.

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