By: Robin Bloor Published: 22nd June 2007 Copyright © 2007

Stone beats scissors, scissors beat paper, and VHS beats Betamax. Those are the rules of the game that is played by consumer electronics companies everywhere. In a recent comment on Apple, I suggested that Apple is a consumer electronics company and doesn't care much for open standards. It's true and neither do Sony and Toshiba. Rather than collaborate on the next standard for high capacity DVD they chose to fight a commercial war, which Toshiba lost last week when BlockBuster video decided to carry Blu-Ray only and ditch HD-DVD. The immediate aftermath of that decision was a large number of cancellations of HD-DVD player orders. It now remains for Sony to send in its troops to bayonette the wounded.

Victory will be sweet for Sony, as it knows how to lose a war of this kind. Sony was the proud purveyor of the Betamax standard and was given to boasting that Betamax was a far superior format to VHS—a fact that no-one seemed to dispute as the world gradually adopted VHS. A commercial war of this kind is not in the interests of the consumer for obvious reasons. It delays the introduction of the new format for quite a while, delaying the benefit for the consumer. After all, who wants to be left with a completely useless Betamax player on their hands or a niche set of Betamax movies, which you eventually throw away or keep for 30 years in the hope of selling them as antiques on eBay.

Why did Sony win with Blu-Ray? It wasn't certain that Sony would win. HP, Microsoft and Intel, for example, were in favour of HD-DVD, while Dell was on the side of Blu-Ray. Ignoring Sony itself, the Hollywood studios were more enthusiastic for Blu-Ray, but not so much that it sealed the fate of HD-DVD. And, believe it or not, the pornography industry chose HD-DVD. A significant technology adoption in terms of numbers, but this wasn't the stuff of a great press release: "Porn Kings Prefer HD-DVD" is not a killer endorsement.

The reason Sony won was because of the limited success of its PS3, which is both a games machine and Blu-Ray player. Despite the fact that it came to the market late, is sold at a loss and was deemed pricey, the numbers that actually sold convinced Blockbuster to back Blu-Ray. Any company, like BlockBuster, whose business depends on carrying vast numbers of video disks will decide early rather than late in a commercial battle like this. Think about it. With more than $5 billion in rental revenues, mostly from movies, you don't want the additional cost of two formats. When you have millions of customers worldwide you just made the format choice on their behalf. Game over.

Scissors beat paper, VHS beats Betamax, Blu-Ray beats HD-DVD.

Reader Comments

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22nd June 2007: 'Chris' said:

HD DVD didn’t lose anything. Fact: Blockbuster rentals count for less than 1% of the business. Fact: HD DVD players are outselling Blu-Ray Players (excluding PS3). Look on Amazon.com’s best sellers, there are 2 HD DVD players ahead of the $499 Sony Blu-Ray player.

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22nd June 2007: 'V' said:

HD DVD supporters have tried to play this down with spin, but the facts remain that Blu-ray owners represented 70% of Blockbuster's high-def rentals during a 6 month trial, and Blockbuster is the largest player in the rental business by far owning over 80% of the market. During those six months Blu-ray has also led in total player sales with a lead of 5 to 1, and also led in total software sales with a lead of 2 to 1. HD DVD supporters don't dispute this, they just ALWAYS forget to mention it!

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22nd June 2007: 'Brian' said:

Your facts are funny. Hahaha. You said HD-DVD players are outselling Blu-ray, excluding PS3. Well duh, the PS3 is selling well and it's a Blu-ray player. You can't exclude the PS3 from the list of HD player sales. It's the best seller of all of them. That's what this article talked about even.

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23rd June 2007: 'darknight69ay' said:

Fact: The ps3 is a blu ray player as WELL as a gaming system. You cannot omit this piece of technology. As it stands, it is the best deal out there, simply because you get a blu ray player as well as a high end gaming machine. I find it odd that you would omit that. The only reason that ps3 owners are not buying more discs is because this 'war' could have gone either way. There are a lot of ps3's out there, and being HOME ENTERTAINMENT SYSTEM, it would be illogical of consumers not to take full advantage of it.

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22nd June 2007: 'IRISHCALIBER' said:

These are straight down misinterpretations and lies! Yes, Blockbuster went with Blu-ray for the summer and sighted the reason for this as, "in their 250 test locations, the majority of HD rentals went to Blu-ray do to the large amount of PS3 gamers seeking something to watch on their near gameless PS3s". Thats the major reason! Based on that reasoning, and obviously researchable data consisting of a zero game line up for the PS3. Blockbuster is banking that they will be coming in in droves to rent Blu-ray movies. What you obviously don't know is that their are so few releases this summer that their start up investment in Blu-ray would be much less than HD-DVD. They will continue to support HD-DVD on their online rental program and have stated that they would shelve HD-DVD if in store demand required it. Shelf space is slim as Blockbusters are small and nearly insignificant stores.

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22nd June 2007: 'Sinclair1k' said:

finally, I hope that there are not surprises

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22nd June 2007: 'Michael' said:

I dont rent from Blockbuster. My understanding is that Blockbuster is not financialy that strong (go check the financial data) - it is up for sale in some countries as a matter of fact. So I fail to see how a shrinking company in a shrinking "rental" market is somehow convincing me to buy one format over another.

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22nd June 2007: 'V' said:

Just to address some of the other commenters: From Chris: "HD DVD didn’t lose anything. Fact: Blockbuster rentals count for less than 1% of the business. Fact: HD DVD players are outselling Blu-Ray Players (excluding PS3). Look on Amazon.com’s best sellers, there are 2 HD DVD players ahead of the $499 Sony Blu-Ray player." This is not quite correct. Fact: Movie rentals make up about 1/3rd of the movie retail business, and Blockbuster owns the lion's share of the rental business. Also, Blu-ray is leading 2:1 in both rentals, and sales of discs, so they are winning the whole of the business not just Blockbuster's business. Fact: Blu-ray has a 5 to 1 lead in player sales. Source http://gear.ign.com/articles/798/798463p1.html. HD DVD spinners like to ignore the fact that the PS3 is a Blu-ray player, and many people choose to buy the PS3 for $599 rather than the other players for $499. This is because for the $100 extra you get a full next-generation videogame console as well as just a Blu-ray player. Until recently the PS3 was the most affordable Blu-ray player, which is why it is by far the most sold Blu-ray player. From Michael: "I dont rent from Blockbuster. My understanding is that Blockbuster is not financialy that strong (go check the financial data) - it is up for sale in some countries as a matter of fact. So I fail to see how a shrinking company in a shrinking "rental" market is somehow convincing me to buy one format over another." Blockbuster's business has been slowly declining each year. This is thanks to two things, online rentals taking off (Netflix), and a decline in the DVD market. Blockbuster still owns something like 80% of all movie rental business, and since the DVD market is on the decline, it is really understanding why they see the new high-def movie formats as a way to reinvigorate their business. The whole movie industry is hoping the same.

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22nd June 2007: 'DJDSAINT' said:

You're woefully out of touch with reality and the actual impact a choice by Blockbuster (which itself is diluted tremendously by the fact they continue to carry HD DVD for their growing online rental biz) has on the emerging Hi Def marketplace. While there will be a subtle impact on PR level, the facts that Blockbuster is in the fading biz of rentals and HD DVD is primarily a Retail biz and that big impacts are still likely forthcoming, assure any person with a reasonable grasp of trends in consumer entertainment and electronics that this so-called war for next gen superiority is far from over and that this is but one of the bigger salvos in several along the war path.
Should Wal-Mart start retailing millions of HD DVD players at about $150.00 throughout their retail chain come November, you'll see how much greater an impact THIS move would have compared to Blockbuster's ill-advised move.
DJDSAINT

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22nd June 2007: 'james' said:

Robin Bloor is an idiot. This format war is far from over. Blockbuster still carries HD DVD in at least 250 stores, as well as online, and has stated that they will look to carry HD DVD in the future.

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22nd June 2007: 'Jim' said:

This is one sloppy mess of an article. Blu-ray hasn't won anything. "Scissors beat paper, VHS beats Betamax, Blu-Ray beats HD-DVD" _and_ DVD (and digital distribution) beats them all! Not Blu-ray nor HD DVD will win, most people will stay with DVD for a long time and in maybe 5 years or more they'll use downloads to distribute films and not physical media discs.

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22nd June 2007: 'MD' said:

So, Mr. Bloor, how much did the BDA camp pay you for writing this article, claiming (again and again) Blu-Ray has won the format war? I'm surpirsed you didn't provide us with an expected date or is that too much to ask?

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22nd June 2007: 'B Smith' said:

this idiot couldn't have added more incorrect garbage, and flat out lies in this article.

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22nd June 2007: 'drcrawn' said:

Mention Betamax at least 6 more times, and you might convince me to allow Blockbuster to buy me a Blu-ray player.

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22nd June 2007: 'BG' said:

Anyone who's ever been to a blockbuster store knows that the people who walk through there are mostly families with small children who are looking for a Disney/Pixar or other G or PG rated movie. BB tested 250 stores with both formats. Since Disney/Pixar are only available on Blu-ray the obvious is more rentals for Blu-ray. Also to mention their decision was based on a very short time span. BB is a financially hurting and their decision will probably hurt them further since people who are looking for HD DVD will be disappointed at the 1700 cooporate stores. They're stupid but not ignorant at least to carry HD DVD online for owners of HD DVD players.

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22nd June 2007: 'Nate' said:

Wow, maybe if you tried really hard you could think more simplistically. At least pretend to have some journalistic ideals instead of writing like a fawning Sony fanboy. Oh, and it would help if you made some cursory attempt to cite your sources instead of just stating whatever "facts" pop into your head. For example: "The immediate aftermath of that decision was a large number of cancellations of HD-DVD player orders." I'd love to hear you cite a source for this remark. I'm guessing you can't.

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22nd June 2007: 'HTPC' said:

So Blu-ray "won" because Sony sold 1.5m PS3s in the US? Now that PS3 sales have come to a grinding hault how are blu-ray sales suppose to grow?

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22nd June 2007: 'GD' said:

It's so silly to proclaim either format "the winner" at this stage. A very good analysis of what's really going on is in this week's Economist in the article "A Slipped Disc?" Here's the link: http://snipr.com/1ngfd

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23rd June 2007: 'bla' said:

your an idiot yhe hd market is to small to call a winner you think you know what your talking about but you don't you should be alowed to post anything on the web your premature with your prodiksion the hd disc market is about 3% compared to dvd's stupid

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23rd June 2007: 'Phil' said:

A spade is a spade, and this is the beginnig of the end for HD-DVD. When comparing player sales you can't exclude the PS3, and Blu-Ray players outnumber HD-DVD players 5:1 in the U.S. Further, people buy and rent Blu-Ray movies 70:30 in the U.S. Toshiba has slashed their estimates for HD-DVD player shipments by 40%, and Sony is talking about an 8-fold increast in their forecast for stand-alone player shipments this year. Blockbuster can achieve a higher margine for rentin Blu-Ray discs than DVD, and their trials have shown that there is a business case for rolling out Blu-Ray through 1700 of their stores. There trials have also shows that there ISN'T a business case for rolling out HD-DVD. Blockbusters competitors will follow suit. None of the retnal companies want duplicate purchasing, double the shelf space, and the consumer confusion that ensues from rolling out HD-DVD. Blu-Ray will gain the public recognition, and HD-DVD is on it's way out.

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23rd June 2007: 'janus' said:

It was known from the beginninig that Blu-Ray was going to win. There is more hardware and studio support. More choices for the consumer. Besides that HD-DVD isnt as good storage capacity wise as well as technical spec wise. It was just a rush to get it into the market before BD and a bad move. Its an overall cheap product.

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23rd June 2007: 'anonymous' said:

Fact: Blu-ray sells twice as much software as HD DVD, and naturally rents twice as much software as HD DVD. It isn't any wonder that Blockbuster decided to drop HD DVD.

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25th June 2007: 'Guest' said:

This is how I see blu-ray is winning the battle against hd-dvd.
1. Blu-ray has a better picture quality than HD-DVD in the technology way of measurments.
2. Blu-ray has more than 40% disk space compare to HD-DVD (50g vs. 30g)
3. My opinion: PS3 - Who is going to buy Xbox360 and then HD-DVD? I don't think people are that crazy to have many components laying around their entertainment centers. PS3 put everything together in a beautiful black box (Presentation!).
4. Blu-ray has supported by most of heavy weight movie studios. So this mean that now as well as in the future, Blu-ray will get a lot of exclusive great movies then HD-DVD.

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23rd June 2007: 'XboxLuvR' said:

In short this is right on the money. I've been saying it for a while now, even prior to the Blockbuster announcement. Blu-ray is just literally crushing HD-DVD into a pile of rubbish. I have recommended that everyone purchase a high quality HD-DVD player -- like I wish I had done when Betamax came out. Just as a collectors item, hey they are inexpensive anyway, right? HD-DVD probably will be completely forgotten about in one year or less as Blu-ray completely erases the HD-DVD format from the market -- as if it hasn't already -- Blu-ray has already erased HD-DVD from Blockbuster retail stores.

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24th June 2007: 'David Mackenzie' said:

A little bit presumptuous, no? Repost this maybe in a year or so and we'll see then...

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28th June 2007: 'Gareth Davies' said:

Blockbuster is still stocking HD DVD but in less stores. Moreover, Blockbuster's rental business isn't in great shape so its no final nail in the coffin for HD DVD. The fact is that whilst more Blu-Ray players are sold (through PS3) more HD DVD software is being purchased. I doubt that this will be the end of the debate - 50% of the world's movie studios are outside of Hollywood and based in and around Europe - all of which support HD DVD

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