OPINION: Holding a mirror up to high-def
By Russ Crupnick -- Video Business, 9/14/2007
SEPT. 14 | Everyone knows what happened when Lewis Carroll’s Alice discovered an alternate wonderland behind her looking glass. The current industry discussions surrounding high-definition DVD formats—HD DVD and Blu-ray Discs—are reminiscent of that story. Comparing consumer feedback that NPD monitors to industry pronouncements or bloggers, it appears that, like Alice, high-def has the flavor of an alternate world.
Crupnick
The standard argument goes something like this:
1. There is a fight-to-the-death format war that is freezing many consumers from jumping in to next-generation DVD.
2. Those who can afford large-screen HDTVs won’t let cost get in the way and will certainly upgrade to DVD players that provide a complete high-def experience and maximize the value of their HDTV investment.
3. Gamers, especially those with access to HD DVD or BD drives, will lead the way.
Consumers will be buying dozens of next-generation DVDs to replace their standard-def disc libraries.
There is a good deal of optimism for the long term prospects of next-generation DVD. Yet adoption has been slower than many expected. And right now, the research shows that consumers—even most HDTV owners—feel that standard-def DVD meets their needs. Apparently, the format war might not be between HD DVD and BD, but rather between standard-def and high-def. The industry seems to be slowly waking up to this reality, but there is more to the story.
The research also shows that men are important influencers for adoption of next-generation high-def technology. According to NPD’s most recent data, DVDs rank a distant fourth in the type of high-def content men with HDTVs cannot live without. The “killer app” for HDTV is sports programming. So add the initials NFL, NHL, MLB, PGA and ESPN to the HD DVD versus BD heavyweight bout.
The format war does not top the list of reasons many consumers haven’t yet embraced high-def DVD—not even close. The majority of consumers, even HDTV owners, aren’t yet interested in, or don’t yet see the benefits of next-generation DVD. Perceived price is also a barrier, which somewhat dispels the notion that HDTV customers will further open their wallets to achieve a true high-def experience. With falling unit prices, HDTV is becoming mainstream, and mainstream customers will resist high device prices, especially in the face of sub-$100 “near-HD-quality” up-converter players. Even more surprising, the research shows that current high-def owners are dissatisfied with the prices and value proposition of next-generation discs.
Don’t count on gamers to save the day. The research says high-def success will be achieved through sales of set-top boxes, rather than by selling feature-rich gaming consoles. Gamers aren’t buying consoles primarily to play next-generation DVDs. Most of them don’t even currently use the capability.
One point of promise for high-def DVD boosters is the potential consumer appetite for high-def content—at least if early adopters are any indication of what might occur down the road. Consumers who have already made the leap to HD DVD or BD are hungry for more of the same kind of content—lots more. They report that they want most of their future DVD purchases to be high-def. While these discerning consumers may not represent the rank-and-file entertainment consumer, these early adopters obviously like what they’re seeing, since they want to replace a significant part of their standard-def collections with next-generation DVDs.
So the question remains: How to move back to the real world from behind the looking glass? The industry must align its hopes for market growth against actual consumer realities. Their priority needs to be focused on creating benefits and a value proposition that will resonate with consumers. That is how DVD become the powerhouse product it is today. Maybe then there will be enough fertile territory to conduct a format war worth fighting.
Russ Crupnick is VP and senior entertainment industry analyst at The NPD Group.