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Economist article: Who needs Blu-ray or HD DVD anyway?

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Old 02-01-2008, 10:53 AM   #1
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Default Economist article: Who needs Blu-ray or HD DVD anyway?

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Feb 1st 2008
From Economist.com
Who needs Blu-ray or HD DVD anyway?

WITH Warner Brothers’ defection last month to the Blu-ray camp, Sony would appear to have won the battle with Toshiba over which format—Blu-ray or HD DVD—is to become the ultimate high-definition replacement for the venerable DVD.

Five of Hollywood’s eight big studios, which account for 70% of the home-video market, have now opted (or, not to put too fine a point on it, been bribed with barrow-loads of cash) to release their high-definition prints solely on Blu-ray discs. The move has sparked a fire-sale of discounted Toshiba HD DVD players, with an entry model going for less than $100.
AFP The hard sell begins

The movie studios have been in a state of panic since their DVD sales—which account for nearly half the industry’s $45 billion annual revenue—fell off a cliff last year. They are desperate to revitalise home video sales. Most are praying Blu-ray will do the trick.

But it can’t make up the lost revenue over night. Between them, Blu-ray and HD DVD sales account for only a tiny portion of the DVD market. Hence the urgency to get the format war settled quickly—so the full weight of the industry’s marketing muscle can be put behind a single standard.

Pundits have applauded Warner’s move as a crucial step towards breaking the deadlock. The thinking is that Toshiba will now go quietly into the night. But there are good reasons why it won’t.

The most obvious one is that nothing decisive can be resolved until the next big selling season gets underway, and that’s not until next Christmas. A lot of things can change between now and then.

At the moment, Blu-ray discs are outselling HD DVDs by a margin of two to one. But that’s largely because Sony included a Blu-ray player in its new PlayStation 3 (PS3) game console. Most new PS3 owners buy a couple of Blu-ray films out of curiosity. But a PS3 costs $499, not exactly cheap, and most owners have better things to do with their consoles than watch movies.

Excluding video-game machines, Toshiba has outsold the whole of the Sony camp in terms of actual players in living rooms, thanks to its lower prices. In other words, Toshiba has a bigger installed base of committed videophiles.

Retailers love them, but would prefer that one or other of the formats would just go away. The format war has left consumers confused over which to choose, with many resolving the issue by refusing to commit to either. Retailers complain that over half the people who purchase HDTV (high-definition television) sets don’t bother to buy high-definition video players to go with them. By all accounts, they are unlikely ever to do so.

That’s largely because the “upscaling” features built into today’s HDTV sets have got so much better at artificially boosting the resolution of ordinary DVDs. Apart from sprucing up the video signal more effectively to reduce the electrical noise and optical defects, upscaling is no longer limited by the native resolution of the HDTV set itself.

A year or so ago, the best you could buy was a 720p set, with the screen’s 1,280 columns and 720 rows of pixels being refreshed progressively (that is, all at once at every cycle). The alternative, 1080i, was a fudge that worked by having half the rows in a screen of 1,920 by 1,080 pixels refreshed in one cycle, and the other (interlaced) set of rows during the next cycle.

By flipping rapidly between the screen’s two alternative sets of lines, interlacing aims to trick the eye into thinking it is seeing a higher resolution than is actually present. But the price paid is a slightly jerkier image and a flickering that can cause headaches and eyestrain. That’s why computer monitors abandoned interlacing for progressive scanning years ago.

The native resolution of the vast majority of HDTV sets today is 1080p. As such, the set’s screen can now handle the highest resolution generated by its scaling electronics. To the average viewer, an ordinary DVD played on a modern HDTV is not only a huge improvement over the picture on a standard TV, but practically indistinguishable from that produced by a Blu-ray or HD DVD disc—and all for half the disc cost and no extra piece of video gear.

Hence the lack of enthusiasm for either format. And the longer mainstream consumers find upscaled DVDs good enough, the more likely it will be that some other technology will emerge to eclipse both Blu-ray and HD DVD. Already a couple of alternatives are limbering up.

One candidate is the thumb drive, the non-volatile memory stick you plug into a computer’s USB port. Their storage capacity has soared over the past few years from megabytes to gigabytes. Industry insiders expect that, within a few years, a 32-gigabyte USB drive capable of holding as much as a Blu-ray disc will cost about the same as the latter does today. And it will be more portable, more rugged, easier to play and recordable to boot.

But before Moore’s Law can work its inexorable magic, the telephone companies will start pushing their own alternative. Over the past few years, firms such as Verizon and AT&T have been laying fat optical pipes over the “last mile” from their local telephone stations to people’s homes. In what they call a “triple play”, they aim to bundle television and broadband internet access along with telephone services in order to slow the inroads being made in their own business by the cable-television providers.

That’s only half of it. Verizon’s FiOS (fibre-optic service) can deliver raw data at speeds up to 50 megabits per second. That’s twice the as much as needed to deliver the video quality of a Blu-ray or HD DVD disc. AT&T’s U-verse isn’t far behind.

Both see high-definition video as the key to beating the cable providers, which can’t match the phone companies’ ability to provide massive bandwidth to individual households. The cable industry’s new DOCSIS 3.0 technology can transmit data at a whopping 160 megabits per second, but the bandwidth has to be shared by all the households on the same cable loop. As a result, few cable subscribers can get more than five or six megabits per second—nowhere near enough to pump high-definition video into the home.

What has become clear is that Blu-ray and HD DVD are both interim solutions—if even that. They are marginally better than upscaled DVDs, but neither will stand much of a chance against fibre’s ability to deliver high-definition video on demand. Meanwhile, neither comes close to giving the kind of “immersive reality” that vision engineers drool over.

The human eye can discern over 500 pixels per inch horizontally and vertically (say, 26,000 by 14,500 pixels on a 60-inch screen). To achieve true immersive reality—the “killer app” that consumer electronics makers see on the horizon—requires displays a dozen times sharper than today’s HDTV sets.

The Japanese have made a start. The Ultra-HDTV technology that NHK, Japan’s public broadcasting network, is currently investigating has 16 times more pixels (7,680 by 4,320) than an HDTV set. And that’s just the beginning. The betting is that both Blu-ray and HD DVD will go the way of the VHS tape, as ever sharper images begin to grab our attention.
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Old 02-01-2008, 11:04 AM   #2
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So, after declaring HD DVD the new betamax two weeks ago, they (Economist) are now dumping Blu-ray right into the same bin.

If i didn´t know better, i would bet that piece was written by a disgruntled HD DVD fan.....
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Old 02-01-2008, 11:04 AM   #3
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The mere mention of high capacity non volatile memory chips storing movies looks like the way to go for movie ownership. Imagine a SD or even Compact Flash card with your favorite movie on it. It could be plugged right into a tv having the appropriate interface. If chips dropped enough in price this would be feasible, but suspect that price point is a few years off. This sounds a lot better than scratched disks and unabridged dictionary sized players.

As to the fiber optics, have been waiting for this for over two decades. Now we live in Sacramento near the Sacramento river. So I suspect we would not get grain, but possibly muddy images (ok bad joke so shoot me).

ps: Was not serious about the "shoot me" I bruise easily!!!
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Old 02-01-2008, 11:06 AM   #4
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I hate these kind of articles and I would think everyone here agrees with me.

Upscaled DVD is fine if you've got a small crappy LCD but that's where it ends.
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Old 02-01-2008, 11:08 AM   #5
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The mere mention of high capacity non volatile memory chips storing movies looks like the way to go for movie ownership. Imagine a SD or even Compact Flash card with your favorite movie on it. It could be plugged right into a tv having the appropriate interface. If chips dropped enough in price this would be feasible, but suspect that price point is a few years off. This sounds a lot better than scratched disks and unabridged dictionary sized players.

As to the fiber optics, have been waiting for this for over two decades. Now we live in Sacramento near the Sacramento river. So I suspect we would not get grain, but possibly muddy images (ok bad joke so shoot me).

ps: Was not serious about the "shoot me" I bruise easily!!!
My parents live in a village, where they can´t even get cable tv today. Broadband internet "taking over the whole world" is such a joke imo. I could live with little non volatile memory chips......
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Old 02-01-2008, 11:12 AM   #6
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Seriously, sometimes I wonder if the writers research the technology they're talking about. PS3's don't start at $499, they haven't for a while now. And the claim that it's a "fire sale" of "discounted" players is way over-sensationalizing the ordeal.
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Old 02-01-2008, 11:35 AM   #7
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He took a few liberties when writing this. However a lot of what he's talking about will come true, not if but when. Both formats have until the time when internet speeds reach the magic point where it will take over. Sure there will always be places on this earth where the internet can't reach but that's not who DL movies sales are focusing on.

TBH those small towns and people like me living out in the middle of nowhere are never going to decide any trend. I really want both formats to last since I know my sat internet will never reach the speeds needed to download movies. I don't like paying for a downloaded copy of anything, from software to music. I don't even own a iPod.
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Old 02-01-2008, 11:37 AM   #8
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He took a few liberties when writing this. However a lot of what he's talking about will come true, not if but when. Both formats have until the time when internet speeds reach the magic point where it will take over. Sure there will always be places on this earth where the internet can't reach but that's not who DL movies sales are focusing on.

TBH those small towns and people like me living out in the middle of nowhere are never going to decide any trend. I really want both formats to last since I know my sat internet will never reach the speeds needed to download movies. I don't like paying for a downloaded copy of anything, from software to music. I don't even own a iPod.
I am exactly the same way. I don't own an iPod and I don't really download movies or music, unless you count a DVR as downloading.
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Old 02-01-2008, 11:51 AM   #9
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Interesting article. It prognosticates the future as many have; that HDM is a really temporary medium - just long enough to get the speeds up on the internet which is happening faster than many had thought possible.

But I am surprised that he does not mention VOD which is a large part of the future and doesn't require huge changes to the infrastructure because it is not a download. It is real time viewing and can easily replace the entire disc rental market (bye bye BBI and NF).

And the 800 lb. gorilla has always been the UP DVD player, as far as HDM is converned because Joe 6P does see a marked improvement over SD and has an average collection of 80 DVD's which he doesn't need to replace. We know that a very small percentage of people want top quality HD. Most want to see an improvement over NTSC and DVD and that is enough for them.

Winning the battle was relatively easy, as far as BD vers HD DVD. All it took was about $700 million (speculation) from the BDA (and a few billion from Sony for the loss on the PS3).

But the war is BD versus DVD and that war hasn't even started yet. Not until players go below $99 and movies are below $20 for a D/D and $10 for a Cat.

And DVD is not standing still. There are still improvements that can be made to DVD and Toshiba will be very motivated to do everything it can to stregthen DVD because they are the major patent holder for DVD.
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Old 02-01-2008, 12:04 PM   #10
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Interesting article. It prognosticates the future as many have; that HDM is a really temporary medium - just long enough to get the speeds up on the internet which is happening faster than many had thought possible.

But I am surprised that he does not mention VOD which is a large part of the future and doesn't require huge changes to the infrastructure because it is not a download. It is real time viewing and can easily replace the entire disc rental market (bye bye BBI and NF).

And the 800 lb. gorilla has always been the UP DVD player, as far as HDM is converned because Joe 6P does see a marked improvement over SD and has an average collection of 80 DVD's which he doesn't need to replace. We know that a very small percentage of people want top quality HD. Most want to see an improvement over NTSC and DVD and that is enough for them.

Winning the battle was relatively easy, as far as BD vers HD DVD. All it took was about $700 million (speculation) from the BDA (and a few billion from Sony for the loss on the PS3).

But the war is BD versus DVD and that war hasn't even started yet. Not until players go below $99 and movies are below $20 for a D/D and $10 for a Cat.

And DVD is not standing still. There are still improvements that can be made to DVD and Toshiba will be very motivated to do everything it can to stregthen DVD because they are the major patent holder for DVD.
Good to see you LEE,
I know that all of us are always talking about movie prices getting cheaper but isnt this the problem the studios are facing to begin with? DVD's getting too cheap too fast?
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Old 02-01-2008, 12:12 PM   #11
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The author didn't even know that the PS3 is $399 (not $499 like he thinks) now. Impressive....
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Old 02-01-2008, 12:20 PM   #12
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I don't understand this notion lately that dowloaded or streaming media is going to kill HDM once the networks are there...

The networks are there now for SD-DVD and it certainly hasn't killed that market (albiet it is in decline according to this article). Just like people want hard copies of SD titles now, people will still want hard copies of HDM as well.

Also, this article tries to insinuate that once compact flash costs are down far enough they will be the logical alternative to optical media. While it sounds great in theory, it could be happening right now with music, and for whatever reason, it's not...

You can buy a thumbDrive capable of holding a cd for next to nothing these days, but it isn't making that format take off. Just like everyone has a dvd player, most everyone has a CD player too, but very few people outside of technophiles have a stereo or television capable of reading directly from a CF card.

So, for the same reasons he is touting HDM for not taking off (people not wanting to shell out for new hardware when the end result is "the same"), why would j6P buy a CF movieplayer/Tv rather then just play DVDs in the players they already have?

It's not like CF movies would be so cost effective that you couldn't resist. Much like HDM they will not pass the savings on to consumers and it will still be a matter of only people who understand the benefits of the new technology adopting it.
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Old 02-01-2008, 12:26 PM   #13
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This article is spot on. I've been saying for over a year now that optical media is in its death throes... flash drives are the future, with digital downloads supplanting the rental market.

HD-DVD and BD are just vying to be the next laserdisc.

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Old 02-01-2008, 12:28 PM   #14
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I don't understand this notion lately that dowloaded or streaming media is going to kill HDM once the networks are there...

The networks are there now for SD-DVD and it certainly hasn't killed that market (albiet it is in decline according to this article). Just like people want hard copies of SD titles now, people will still want hard copies of HDM as well.

Also, this article tries to insinuate that once compact flash costs are down far enough they will be the logical alternative to optical media. While it sounds great in theory, it could be happening right now with music, and for whatever reason, it's not...

You can buy a thumbDrive capable of holding a cd for next to nothing these days, but it isn't making that format take off. Just like everyone has a dvd player, most everyone has a CD player too, but very few people outside of technophiles have a stereo or television capable of reading directly from a CF card.

So, for the same reasons he is touting HDM for not taking off (people not wanting to shell out for new hardware when the end result is "the same"), why would j6P buy a CF movieplayer/Tv rather then just play DVDs in the players they already have?

It's not like CF movies would be so cost effective that you couldn't resist. Much like HDM they will not pass the savings on to consumers and it will still be a matter of only people who understand the benefits of the new technology adopting it.
+1. I think he is going off the deep end with the higher resolution formats that Japan is experimenting with too...

We have a hard enough time getting people to buy into ditching SD for HD, and he seems to think people will be head over heels for Ultra HD or whatever. Heck, even distribution in 4K to theaters is growing slowly. That is probably the area where such resolutions will be utilized first. There are tremendous storage/bandwidth challenges for this formats. I think it is 10 years until a small percentage of theaters may even be able to show this, and way more to make it into the consumer's home. Unless companies come up with a new display technology that is cheap and ultra high rez, where you can replace entire walls in the house, I don't think that will happen

I'm surprised he didn't suggest HoloDecks will be the next big thing, haha
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Old 02-01-2008, 12:30 PM   #15
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This article is spot on. I've been saying for over a year now that optical media is in its death throes... flash drives are the future, with digital downloads supplanting the rental market.

HD-DVD and BD are just vying to be the next laserdisc.

Yancy
Filling up your own flashdrives with movies may be viable in not too long, but distributing on Flash will not. Prices are still WAAAAY too high, and even with rapid price reductions, it is far off.

Besides, what production facilities is going to fill up the flashdrives with the movies? It takes a lot longer to do this, than to press a disc which takes a second perhaps.

Eventually, HD downloads will be huge for rentals though. Probably 5-10 years down the line though, with OnDemand probably having a large market already in 3-5 years.
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