Sev Bragg
Stunt Coordinator
- Joined
- May 22, 2005
- Messages
- 70
What do you guys think of this?
Took from here, http://blogs.starwars.com/pablog/87
HD-DVD: The Super-VHS of the New Millennium
I'll preface this by saying I haven't crunched any numbers. I haven't pored over charts or done any statistical analysis. It's just a blog, and not any real prediction of the future. It's just one outsider's perspective.
This really is, like the positions shared by Stephen Colbert or the President, from the gut. And, unlike those chaps, I'm willing to suggest that I may be totally off, and history will prove me quite wrong. But I think HD-DVD and Blu-Ray technologies are too little, too
late, and too expensive. In essence, they're the SuperVHS of this technical generation. What? You don't remember SuperVHS?
Okay, we live in a technologically accelerated lifestyle. VHS had a 15-20 year run (or thereabouts) before its vast installed user-base decided to trade up to DVD. I just don't see the DVD audience willing to do the same right now -- I don't see the DVD life-cycle at that stage yet, and I can't imagine a business model that makes sense for studios to switch over to the new formats.
Consider these factors.
1) The "maturing" DVD marketplace. Now, it's been reported that DVD sales have plateau-ed. That instead of ever-increasing numbers, some studios ended up reporting losses on big titles. Does this mean the DVD market has antiquated to the point that it must be replaced? Does it mean that it's no longer a money-maker?
No. It means that typical Hollywood accounting has misrepresented the numbers yet again. I'll let you in a dirty little not-so-secret. When a public company reports its DVD sales, those numbers are almost always hiding something. Recall that Pixar proudly proclaimed record sales for the Incredibles, as Dreamworks did for Shrek
2. About a year later, when posting their numbers for stockholders, it turned out that both those titles under-performed compared to expectations. Is something not adding up?
When a public studio issues a press release pounding its chest about DVD sales, it's doing so to bolster its stock. These records make the rounds thanks to an entertainment press that doesn't ask too many hard questions, and confidence in the stock is bolstered, the stock prices go up, and shareholders are happy. But what do the numbers really mean?
More often than not, a studio is bragging about the numbers of units sold to retailers -- not to consumers. What they're not telling you is that if consumers don't buy the DVD from the retailer, the retailer then ships the DVD back to the studio -- at the studio's expense! So, in Quarter 1, you can make big money by selling 12 gazillion units to
stores. Issue the press release. The stock goes up. But as the year continues, and the retailer doesn't want your inventory clogging up its aisles, it ships back 7 gazillion units -- and you're footing the bill. Now, can you understand how a studio can post losses on what was supposedly a smash hit?
Is the DVD market declining? Or are the studios finally getting pinched by their squinty numbers?
2) Does the consumer want the bells and whistles? And how much will it cost?
The picture difference between HD-DVD and regular DVD is not as pronounced as the difference between DVD and VHS. It's not a quantum leap. I have HD TV, and regularly watch programming that's in higher resolution than many of the DVDs I own, yet I'm not aching for HD-DVDs. At a recent trip to the Metreon in San Francisco, I saw a demo of a Blu Ray player, and wasn't sufficiently impressed.
I have a hard time imagining that the consumer base as a whole is dissatisfied with their DVD experience. If engine speed was very important to you, you'd pay a hefty sum to trade in a car that topped out at 60 mph for one that could 100 mph. But you wouldn't
necessarily pay the same price to get up to 110.
Aside from picture quality, much has been said about the sheer storage space of these new formats. Why, you can now cram them with extras!
But guess what? Tricked out DVDs costs more money to produce. Which do you think was produced in greater numbers: a 2-disc LOTR movie, or a 4-disc LOTR movie? The 2-disc, of course. It's cheaper to produce, manufacturer, ship, and purchase. And now single discs are becoming the norm as wider initial releases, followed by more robust and more expensive double-disc sets later down the line. Audiences are saying the price matters more than the bells and whistles.
But who is going to pay for the production of all that extra HD-DVD content? If an HD-DVD can hold eight documentaries, then it may end up eight times more expensive to produce that bonus material than a disc with only a single doc. So, is the price going to have to be jacked up accordingly?
Is the audience out there ready to pay for it? Again, the studios ended up shooting themselves in the foot due to their overproduction of DVDs. Because they overproduced and ended up with extra inventory that retailers didn't want, studios hacked the prices down the bone in some cases. We're talking blue chip titles for as little as $10 --
not stuff like The Secret of My Success, but Harry Potter movies.
Now, that's great short term news for the consumer. And it lets the studio make its quarterly numbers, making stockholders happy. But what does it mean for the industry? You've now lowered the bar and price expectation so low that to remain profitable, you're going to have to cut corners on what's on future DVDs.
And it turns out, the audience won't care. Not if they're paying only $10 for a movie.
All of these factors seem to go in directly the OPPOSITE direction as what HD-DVD is promising -- more content for a bigger sticker price, where audiences as a whole seem to happy with just-a-movie for a decent price.
3) Consider iTunes. I don't think it's a slam dunk success just yet, but it is in indication of where the future is heading. People replaced their record collections with CD collections at great expense. Now, they're not willing to pay the same price, but do seem to be happy buying songs here and there in digital format. The shelves crammed with CDs will soon be history, and music libraries will be invisible, stored in hard-drives.
I think the same will be true of movie libraries. Rather than having to buy a physical product every time the format changes, you'll just end up downloading the movie in the next higher resolution. Or with a new commentary. Or with a happier ending. Or whatever. And it won't be at $20 a pop. It'll be priced to encourage shopping a la carte. You can buy the documentaries and add-on materials. And documentaries can be continued to be produced with no real deadline, on an on-going basis. Didn't think the Wizard of Oz 3-disc set had enough behind-the-scenes material? well, go online and download the next 12-part documentary directly onto your media player. And burn it to
disc to keep forever, if you want the security of a physical product.
I really think the view-on-demand format is what's next, effectively side-stepping the whole HD-DVD and Blu-Ray transition. We don't need discs anymore. Studios stand to make more money charging a la carte for value added material and don't have to risk inventory costs from retailers shipping back product that doesn't sell. There's no authoring costs. No product that has to be shipped to warehouses.
Surely, there's a catch, right?
4) But, WalMart won't like it. That's the tough part. Hollywood probably won't want to rock the retailer boat so roughly, not when WalMart commands such power over it. Don't believe it? Why do you think certain directors who insist on fullscreen presentation capitulate and still produce Pan and Scan movies? Because Walmart consumers want them. And what Walmart wants, Walmart gets. Fun fact: the big W makes as much money in seven days as Hollywood does all year. That kind of coin means you can make some very lucrative partnerships, and Hollywood isn't likely to get out of that bed just yet.
Oh, there's other factors. For one thing, the digital download future requires a Hollywood willing to make a major change, and the industry has long been reluctant to make changes. Witness the snail's pace adoption of digital exhibition.
But if the business model can be cracked, and there's money to be made, it'll happen.
Of course, I may be wrong. But this is just what my gut is feeling today.
ph
Took from here, http://blogs.starwars.com/pablog/87
HD-DVD: The Super-VHS of the New Millennium
I'll preface this by saying I haven't crunched any numbers. I haven't pored over charts or done any statistical analysis. It's just a blog, and not any real prediction of the future. It's just one outsider's perspective.
This really is, like the positions shared by Stephen Colbert or the President, from the gut. And, unlike those chaps, I'm willing to suggest that I may be totally off, and history will prove me quite wrong. But I think HD-DVD and Blu-Ray technologies are too little, too
late, and too expensive. In essence, they're the SuperVHS of this technical generation. What? You don't remember SuperVHS?
Okay, we live in a technologically accelerated lifestyle. VHS had a 15-20 year run (or thereabouts) before its vast installed user-base decided to trade up to DVD. I just don't see the DVD audience willing to do the same right now -- I don't see the DVD life-cycle at that stage yet, and I can't imagine a business model that makes sense for studios to switch over to the new formats.
Consider these factors.
1) The "maturing" DVD marketplace. Now, it's been reported that DVD sales have plateau-ed. That instead of ever-increasing numbers, some studios ended up reporting losses on big titles. Does this mean the DVD market has antiquated to the point that it must be replaced? Does it mean that it's no longer a money-maker?
No. It means that typical Hollywood accounting has misrepresented the numbers yet again. I'll let you in a dirty little not-so-secret. When a public company reports its DVD sales, those numbers are almost always hiding something. Recall that Pixar proudly proclaimed record sales for the Incredibles, as Dreamworks did for Shrek
2. About a year later, when posting their numbers for stockholders, it turned out that both those titles under-performed compared to expectations. Is something not adding up?
When a public studio issues a press release pounding its chest about DVD sales, it's doing so to bolster its stock. These records make the rounds thanks to an entertainment press that doesn't ask too many hard questions, and confidence in the stock is bolstered, the stock prices go up, and shareholders are happy. But what do the numbers really mean?
More often than not, a studio is bragging about the numbers of units sold to retailers -- not to consumers. What they're not telling you is that if consumers don't buy the DVD from the retailer, the retailer then ships the DVD back to the studio -- at the studio's expense! So, in Quarter 1, you can make big money by selling 12 gazillion units to
stores. Issue the press release. The stock goes up. But as the year continues, and the retailer doesn't want your inventory clogging up its aisles, it ships back 7 gazillion units -- and you're footing the bill. Now, can you understand how a studio can post losses on what was supposedly a smash hit?
Is the DVD market declining? Or are the studios finally getting pinched by their squinty numbers?
2) Does the consumer want the bells and whistles? And how much will it cost?
The picture difference between HD-DVD and regular DVD is not as pronounced as the difference between DVD and VHS. It's not a quantum leap. I have HD TV, and regularly watch programming that's in higher resolution than many of the DVDs I own, yet I'm not aching for HD-DVDs. At a recent trip to the Metreon in San Francisco, I saw a demo of a Blu Ray player, and wasn't sufficiently impressed.
I have a hard time imagining that the consumer base as a whole is dissatisfied with their DVD experience. If engine speed was very important to you, you'd pay a hefty sum to trade in a car that topped out at 60 mph for one that could 100 mph. But you wouldn't
necessarily pay the same price to get up to 110.
Aside from picture quality, much has been said about the sheer storage space of these new formats. Why, you can now cram them with extras!
But guess what? Tricked out DVDs costs more money to produce. Which do you think was produced in greater numbers: a 2-disc LOTR movie, or a 4-disc LOTR movie? The 2-disc, of course. It's cheaper to produce, manufacturer, ship, and purchase. And now single discs are becoming the norm as wider initial releases, followed by more robust and more expensive double-disc sets later down the line. Audiences are saying the price matters more than the bells and whistles.
But who is going to pay for the production of all that extra HD-DVD content? If an HD-DVD can hold eight documentaries, then it may end up eight times more expensive to produce that bonus material than a disc with only a single doc. So, is the price going to have to be jacked up accordingly?
Is the audience out there ready to pay for it? Again, the studios ended up shooting themselves in the foot due to their overproduction of DVDs. Because they overproduced and ended up with extra inventory that retailers didn't want, studios hacked the prices down the bone in some cases. We're talking blue chip titles for as little as $10 --
not stuff like The Secret of My Success, but Harry Potter movies.
Now, that's great short term news for the consumer. And it lets the studio make its quarterly numbers, making stockholders happy. But what does it mean for the industry? You've now lowered the bar and price expectation so low that to remain profitable, you're going to have to cut corners on what's on future DVDs.
And it turns out, the audience won't care. Not if they're paying only $10 for a movie.
All of these factors seem to go in directly the OPPOSITE direction as what HD-DVD is promising -- more content for a bigger sticker price, where audiences as a whole seem to happy with just-a-movie for a decent price.
3) Consider iTunes. I don't think it's a slam dunk success just yet, but it is in indication of where the future is heading. People replaced their record collections with CD collections at great expense. Now, they're not willing to pay the same price, but do seem to be happy buying songs here and there in digital format. The shelves crammed with CDs will soon be history, and music libraries will be invisible, stored in hard-drives.
I think the same will be true of movie libraries. Rather than having to buy a physical product every time the format changes, you'll just end up downloading the movie in the next higher resolution. Or with a new commentary. Or with a happier ending. Or whatever. And it won't be at $20 a pop. It'll be priced to encourage shopping a la carte. You can buy the documentaries and add-on materials. And documentaries can be continued to be produced with no real deadline, on an on-going basis. Didn't think the Wizard of Oz 3-disc set had enough behind-the-scenes material? well, go online and download the next 12-part documentary directly onto your media player. And burn it to
disc to keep forever, if you want the security of a physical product.
I really think the view-on-demand format is what's next, effectively side-stepping the whole HD-DVD and Blu-Ray transition. We don't need discs anymore. Studios stand to make more money charging a la carte for value added material and don't have to risk inventory costs from retailers shipping back product that doesn't sell. There's no authoring costs. No product that has to be shipped to warehouses.
Surely, there's a catch, right?
4) But, WalMart won't like it. That's the tough part. Hollywood probably won't want to rock the retailer boat so roughly, not when WalMart commands such power over it. Don't believe it? Why do you think certain directors who insist on fullscreen presentation capitulate and still produce Pan and Scan movies? Because Walmart consumers want them. And what Walmart wants, Walmart gets. Fun fact: the big W makes as much money in seven days as Hollywood does all year. That kind of coin means you can make some very lucrative partnerships, and Hollywood isn't likely to get out of that bed just yet.
Oh, there's other factors. For one thing, the digital download future requires a Hollywood willing to make a major change, and the industry has long been reluctant to make changes. Witness the snail's pace adoption of digital exhibition.
But if the business model can be cracked, and there's money to be made, it'll happen.
Of course, I may be wrong. But this is just what my gut is feeling today.
ph
