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  1. #1
    $e73n
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    PlayStation 3 Gives Blu-Ray Disc Edge in DVD Format War

    I thought this was kind of obvious myself, but her it is for the people that were not sure and wanted proof.

    As a former business reporter, I tend to believe in the value of numbers: gross revenue, profit, inventory turnover, et cetera.

    But numbers can also be misleading, as the pro-forma "profits before all the bad stuff" earnings statements proved during the height of the dot-com boom.
    Right now, the Blu-ray Disc and HD DVD next-generation DVD camps are engaged in a brutal battle for market share, where only one is expected to be the winner.

    Capturing a critical mass of consumer dollars also means capturing the consumer's faith that a particular format will be the winner. No one wants to sink money into the next Betamax.
    All this means that next-generation DVD sales numbers are becoming more critical, both as an indicator of actual sales as well as a guide to what your fellow shoppers might be thinking.

    Currently, the only real source of independent sales data on next-generation DVD sales has come from Nielsen VideoScan, a member of the well-known Nielsen family of companies that generate the ratings used to determine the popularity of TV programs.
    Nielsen has tracked sales numbers since November, and provided weekly data to industry trade publications on a week-to-week basis. However, the firm kindly sent over a spreadsheet of all of their numbers, [which clearly show Blu-ray taking a huge chunk of market share from HD DVD since November 2006.]

    Normally, this would be enough to justify a news story, as others have done. However, I think the numbers make more sense in this more informal context, primarily because Nielsen has refused to comment on or to analyze the numbers.

    That means I have to do my own analysis, which is difficult to do in an otherwise objective news story.

    Probably the most telling point is the "inception-to-date" figures, which tally up all of the sales for each format.

    Although the numbers seem to indicate a considerable decline on the part of HD DVD in favor of Blu-Ray, this isn't true at all: to date (Jan. 2, 53.3 percent of all next-gen DVDs have been in the HD DVD format, compared to 46.7 percent for Blu-ray.

    This contrasts quite strongly with reports that the Blu-Ray format is widely outselling HD DVD.

    Figures from another analyst firm, The NPD Group, which also tracks U.S. retail sales, also seem to support this: sales of hardware players (not movies) from April through December 2006 also give HD DVD a slight edge, 52 percent to 48 percent for Blu-ray.
    Unfortunately, they are reserving the most recent data for their paying clients.

    As the graphic clearly shows, the momentum seems to have recently swung in Blu-Ray's favor. However, a few issues still need clarification.

    The gift certificate conundrum
    As many have pointed out, Sony has been the principal backer of Blu-ray, and also the designer of the PlayStation 3 games console, which uses a Blu-ray drive.
    With each console, Sony has bundled a copy of the Blu-ray movie "Talladega Nights: The Ballad of Ricky Bobby," together with a gift certificate for $15 off the purchase of a second Blu-ray movie.

    Microsoft, on the other hand, also offers an HD DVD drive as a $199 add-on for its
    Xbox 360, which it has bundled with a copy of the HD DVD movie "King Kong."
    According to Erin Crawford, the general manager of Nielsen VideoScan, the bundling of "Talledega Nights" and, by inference, "King Kong" was not included in the Nielsen numbers, as it does not represent a conscious buying choice on the part of the consumer.
    However, since a consumer must make the choice to buy another disc, the effects of the gift certificate would influence the Nielsen numbers.

    Crawford declined to estimate how many disc sales could have been a direct result of the gift certificate. Also, the Blu-ray sales do not include the sales of games.

    We do know the number of PS3s that have been sold to date within the U.S.: 687,300, at least through January 11, according to NPD. But we don't know what the potential effects of the gift certificates are, as we don't know the size of the respective player markets.
    (Although it doesn't affect this issue, NPD also noted that 4.5 million Xbox 360s have been sold to date, 6.7 million Sony PSPs have been sold, as well as 9.2 million Nintendo DSes.)

    Also, since Wal-Mart does not break out sales of any particular category, Wal-Mart sales of either Blu-Ray or HD DVD discs aren't included in either the Nielsen or NPD numbers.
    Would a typical Wal-Mart shopper buy a next-generation DVD disc?

    If we're speaking stereotypically, probably not. On the other hand, it seems ridiculous to assume that the world's largest retailer wouldn't have an effect on sales.

    (A Wal-Mart spokeswoman refused to comment, even to indicate which format was outselling the other.)

    I think it's safe to say that the gift certificate is the reason for the sudden spike in Blu-ray disc sales, even if Crawford will not. As this USA Today article notes:
    "Most people spend their gift cards in January and February. And because retailers can't count gift card sales until the cards are redeemed, those sales dollars are pushed out of December into the next year. Gift card sales now represent 5% of total holiday sales, so those dollars are having a significant impact on retailers' business in the months after Christmas. About 40% of card redemptions are made in the first week after Christmas. But the rest comes in January or early February."

    This seems to be consistent with the curves as indicated by the graphs: a dramatic run-up in Blu-ray sales in January, followed by a flattening of the curve in late January. The PlayStation3 was launched on Nov. 17 in the U.S., about the time the Blu-Ray sales begin to head upward.

    So what effect has the PS3 had on Blu-ray sales? Again, it's difficult to tell. Anita Frazier, who covers the gaming market for NPD, indicated that consumers are in fact using PS3s as high-definition DVD players:

    "While I don't believe the initial PS3 sales were motivated by those wishing to get a Blu-Ray player, I do believe it's a legitimate function of the machine and should be counted toward the install base of Blu-Ray DVD players," Frazier said in an email. "Likewise, sales of the Microsoft HD DVD player should count toward that format's install base as well. What is interesting is that since it is a separate purchase from the Xbox 360, it's a conscious decision motivated by the desire to obtain an HD DVD player specifically."
    February/March trends will be telling

    If this is true and the gift certificates indicate an aberration, rather than a trend, then I would think we would see the Blu-ray numbers continue to flatten, followed by a decline, complemented by a resurgence in the HD DVD unit share. (The assumption here, of course, is that the early adopters sprung for a PS3, and the rest of the world is waiting for a price drop.)

    On the other hand, it's also possible that those customers who purchased a Blu-ray disc for their PlayStation3 "player" will continue to use it as such, fleshing out or replacing their current DVD library with Blu-ray alternatives. This, clearly, is Sony's intention.
    Microsoft competes with Sony in the games console space; is there room for both movie formats, as well?

    There's certainly room for a hybrid solution, as the Blu-ray/HD DVD combo player indicates. But I don't think that there's any desire on the part of the studios to encode and press two formats, as this quote from a Universal Studios executive at the recent CES show revealed:
    "I've learned one thing in my industry, and that's never say never," said Jerry Pierce, senior vice president for technology at Universal Studios, when asked if Universal would support the Warner Bros. plan for a hybrid disc. "I think it's an interesting idea, [but] a stupid idea. How do you package it? What, is one half red and one half is blue? Where do you put it on the shelf?"

    So which format should you invest in? Even as one of the few with all of Nielsen's numbers, I can't yet rule out one format or the other.

    The data already factors in the price of each player, video quality, number of titles, et cetera, and gives HD DVD the edge; on top of that, I think that the knowledge of the effects of the gift certificate is now known among the enthusiast community.
    And while that may sound like a little too much inside baseball, I do think those numbers will have an effect on some buying decisions. Buying the losing format isn't like voting for the losing candidate when the other has clearly won; it's money down the drain.
    In my mind, neither format has reached a critical mass, and until then, the horse race is wide open.

    What's critical mass? In my mind, probably one of the following conditions: either one format holds an 80 percent market share for three months; or, one format holds a two-thirds market share for six months.

    For now, though, that hybrid LG player looks awfully enticing.
    Source = http://www.foxnews.com/story/0,2933,251514,00.html

  2. #2
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    of couse haveing a blu-ray player in the PS3 has the upper hand on HD-DVD
    thats why sony put a blu-ray player in the PS3 for..................................

  3. #3
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    I think the PS3s Blu-ray actually saved the format, because while Blu-ray has most of the major studios and movies the players were too expensive to compete with HD DVD. So really getting all those Blu-ray players out there in the form of PS3s shot sales up and will continue to do so. Blu-ray is not outselling HD DVD just because of the PS3, so you can imagine what the 1million PS3 launch in Europe will do.

    Also by the end of the year the PS3 userbase will just keep growing and growing and if the ammount of PS3 ever gets close to the 120million PS2 sold over its lifetime, HD DVD will pretty much have no chance of winning. Maybe all they can do then is stall the war till movie downloads become standard, but I doubt Toshiba will continue to keep the war going if they see they basically have no chance of winning.

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