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Is “Confusinger” a Word?

Some of this information will be duplicated in my daily links post from del.icio.us tomorrow morning, but I find it irritating enough that I should say something about it.

What an… interesting day today in the format war between HD-DVD and Blu-Ray Disc. I found out about it via a Twitter post from Microsoft’s Major Nelson , and followed the bread crumb trail to find more information on the situation, because it didn’t make much sense at first. (Major Nelson linked to this Excite News story first).

Hitting up my RSS feeds for the afternoon, I then found more information from the regular sources, including Ars Technica and High-Def Disc Digest, like these:

HD Disc Digest: Breaking: More Info in on Paramount’s Move to HD DVD

According the the press release, the studio will exclusively support HD DVD format on a worldwide basis, including all movies distributed by Paramount Pictures, DreamWorks Pictures, Paramount Vantage, Nickelodeon Movies and MTV Films, as well as movies from DreamWorks Animation, which are distributed exclusively by Paramount Home Entertainment.

My guess is that this announcement also has a few things to do with the recent delays announced to the Jack Ryan Collection and a few other Paramount HD releases. They’re pushing things back to make room for additional marketing aimed at HD-DVD exclusivity: a better build-up and more media circus means that they’ll be able to direct more attention towards the format war prior to Christmas.

The press release attributes the decision to “an extensive evaluation of current market offerings, which confirmed the clear benefits of HD DVD, particularly its market-ready technology and lower manufacturing costs.”

Funny that the market reality of Blu-Ray versions of identical releases on HD-DVD are currently being sold through 2:1 or even 3:1 in some cases in favor of Blu-Ray. This has been the primary confusion regarding Universal’s continued decision to remain HD-DVD exclusive, as well—and also reveals why Paramount announced their upcoming Star Trek: Remastered collection for HD-DVD only and remained cagey when asked about a Blu-Ray version.

Ars: Paramount adopts HD DVD, kicks Blu-ray to the curb

How smart of a choice it is remains to be seen, but it is noteworthy that Paramount-owned DreamWorks SKG will make an exception for Spielberg films. Paramount indicated that his works could be made available in either format, or both.

For the first half of 2007, Blu-ray discs have outsold their HD DVD counterparts by a two-to-one margin, according to figures released last week. Since the beginning of the year, consumers have snapped up 1.6 million Blu-ray discs, compared to 795,000 HD DVD discs. Since their launch last year, 1.5 million HD DVD discs and 2.2 million Blu-ray discs have been sold.

The neck-and-neck race also extends to the player market, where Blu-ray has a slight lead over HD DVD players, largely thanks to the popularity of the PlayStation 3.

This is an action made completely in defiance of market trends and the likelihood to make money. If I had been a marketer on staff, I would have not stopped making noise about this decision from minute one, as from the surface, it appears as though it’s a pretty suicidal move.

The Digital Bits editorialized later on in the day, with some opinion on exactly why this happened, and what caused Paramount to abandon the clear leader in HD disc marketshare:

Microsoft has paid DreamWorks and Paramount so much money that they’ve decided to join Universal in the HD-DVD exclusive camp. No kidding.

None of the participants in this deal are willing to openly disclose just how MUCH money was exchanged, but the L.A. Weekly is reporting (based in part on a confidential report from media analysis firm Pali Research) that it was in the neighborhood of $50 million in “promotional considerations” for Paramount and $100 million for DreamWorks. I’m sure they’re also getting lots of free or discounted VC-1 compression and HDi authoring services, along with prime placement on Xbox Live too. Is anyone else just disgusted by Microsoft’s naked, shameless financial influence in this thing? That Hollywood is a greedy place should be obvious to all by now, if it wasn’t already. The HD-DVD format can’t win any other way than for Microsoft to PAY studios off to stay exclusive. And then they have the balls to claim the Blu-ray Disc camp is involved in antitrust violations. Wow.

Microsoft’s executives have made no bones about the fact that it’s in their interest to stretch out a high-definition disc format war as long as possible in order to cement their position as a downloadable content leader – especially with HD materials, and using Xbox Live as either the primary delivery mechanism (though the marketshare is way too small for that), or as a testbed for something more insidious that they plan on releasing in the future.

It’s too early to tell, but what Bill Hunt and the Bits staff agree with me on is that the format war—as it currently stands—is potentially a mortal wound to the future of high-definition video discs.

We believe this format war is a TERRIBLE thing for consumers and for this industry. And we believe that if it continues much longer, consumers will turn away from high-def discs in droves. Something similar has happened before, and recently too, in the form of the high-definition audio format war between DVD-Audio and SACD. The comparison is a fair one, because like high-resolution audio discs, which faced stiff competition from the traditional CD and emerging downloading services, high-definition video discs must cope with the dominance of existing DVD and also new video downloading services like iTunes and Xbox Live. Like Blu-ray and HD-DVD, both DVD-Audio and SACD were great formats, which delivered basically the same thing: a much-higher quality A/V experience for enthusiasts. But because they basically only appealed to enthusiasts… and because there were two formats to choose from for at least three years… neither format gained much traction with average consumers, who preferred the lower price and convenience of downloads to higher priced discs, or who were simply happy enough with the existing CD. Believe us when we say this if nothing else: The same fate awaits both HD-DVD and Blu-ray Disc if this format war goes on for another year or more.

Currently, I don’t own either format. I was planning on getting into HD discs sometime around the holidays, which the HD-DVD camp appears to have taken into consideration. Early on in the format war (even before release), I was firmly convinced that the lower cost-to-entry and better manufacturing costs made HD-DVD a shoe-in to win the war, since when you approach that kind of disc size and density, I don’t think there’s too much difference between the formats.

Recently, however, the inevitability of Blu-Ray’s victory was looking apparent. The software gulf is too wide. Fox and MGM were poised to make an announcement about further availability of their titles (which they did apparently prepare a bit early to respond to the Paramount announcement). I’m likely to enter the format war on the side of Blu-Ray, if only because my ownership of a PS3 is just a matter of time.

My software purchases, however, are likely to be somewhat limited until this thing shakes out a bit.

Regardless, this move by Paramount and DreamWorks can only be seen as decidedly anti-consumer and potentially disastrous for the home video industry, as true high-definition movies in a compact and fully-ownable format may soon become an expensive and needlessly niche format in the vein of LaserDisc. This needs to not happen.