OPINION: Choosing sides
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Randy Magruder – 08/24/07
By Paul Sweeting -- Video Business, 8/24/2007
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According to the New York Times, the two studios will together receive $150 million in “financial incentives” to make the switch. The implication was that, but for the incentives, Paramount would not done what it did.
I doubt it. While I have no trouble believing that promotional considerations were involved, as an explanation for such a significant step at this stage, it doesn’t add up.
For one thing, there are always “considerations” involved in this business. It’s standard operating procedure. If that’s all there were to it, Paramount and DreamWorks could have had that deal months ago.
For another, both sides in the high-def format battle have been offering financial incentives to studios and retailers since the war began. For Blu-ray supporters to be aghast that such a thing would happen now smacks of Claude Raines in Casablanca: “I’m shocked! Shocked to discover that gambling is going on here!”
But it was effective in distracting the industry and the press, at least temporarily, from any deeper probing into why Paramount and DreamWorks might have made the move.
It’s not as if the move is without risk to Paramount, after all. By going with one format, Paramount is forcing consumers to make a technology choice in order to be able to watch the studios’ movies in high-def. There’s a legitimate question as to whether it’s appropriate for a studio to force that choice on its customers (although, of course, Paramount and DreamWorks are hardly alone in taking that position).
Going with only one format also leaves money on the table, at least in the short term, as Warner Home Video’s continued domination of the high-def sales charts makes clear. That’s not the sort of thing a studio would do lightly, even if someone else were offering “incentives.”
WHY TAKE those risks, if not for the incentives?
“Our real focus is on how do we jump start this [high-def] thing?” Paramount Home Entertainment president Kelley Avery said. “This is still a very small market, and we need to start moving some movies and some players.”
After a year of publishing in both formats, Paramount has as good an understanding of the relative strengths and weaknesses of each format as any studio. And from that experience, Avery said, Paramount concluded that cost is more important than capacity or any of Blu-ray’s other purported advantages.
“We need to get consumers to step up to high-def, and with HD DVD players dropping under $300, we think this fourth quarter presents an opportunity to do that,” she said. “Ultimately, we don't want this to become a niche business.”
According to Paramount chief technology officer Alan Bell, a year of publishing in both formats has also taught the studio about the relative costs of the two formats to the content owner.
“With [HD DVD’s] HDi, you can do a lot of things with a couple of lines of code. But when you’re working with [Blu-ray’s] BD-Java, a simple menu command can mean hundreds of lines of code,” he said. “It’s much more complicated to work with.”
He also stressed the consistency and stability of HD DVD’s technical specifications.
“You don’t have different profiles or a lot of optional features as you do with Blu-ray,” he said. “It’s just a very straightforward spec. We found that we were doing all of our development work on HD DVD and then trying to port it over to Blu-ray, where you weren’t sure if every feature was going to work on every player, so you had to test it against all the different players. All of that goes into the cost delta for the studio.”
If all that Avery and Bell are saying is true, of course, it was true six months ago as well, and they didn’t say anything then. But it’s still not a pretty story for Blu-ray.
No wonder the format’s supporters would rather talk about the incentives.
Paul Sweeting is editor of Content Agenda. Get more of Sweeting's analysis here.
