Thursday, May. 14, 2009


HD DVD was one of two formats for high definition DVDs. The other format was Blu-ray. HD DVD specifications were put in place in 2002. Negotiations among consumer electronics companies to have only one product for playing high definition discs ended when there was no consensus about royalties. HD DVD was primarily funded and marketed by Toshiba and NEC and was first released as a consumer product in 2006. When HD DVD was first launched, it had a sales lead over Blu-ray. Industry analysts say that Toshiba lost almost $1 billion supporting the format before abandoning it in 2008. There are a number of reasons that the HD-DVD format lost out to Blu-ray, which was championed by Sony (SNE). The most commonly cited explanation is that Sony did a better job convincing major film studios to release high definition editions of movies for Blu-ray. Sony may have had an advantage because it owns one of the largest studios. Analysts believe that when Sony got Warner Brothers to adopt Blu-ray exclusively, it won the battle against HD DVD. Toshiba had several explanations for the failure of its product. One of those that it mentioned most often was that the digital video download business hurt sales of physical DVD players. That argument does not carry much weight because downloads should have hurt Blu-ray just as much. The final blow to HD DVD was probably when Wal-Mart (WMT) decided to stop offering the format in favor of Blu-ray. There has been no compelling analysis as to why Blu-ray survived and HD DVD did not. One thing is certain. Sony was willing to continue to spend money even though the future of high definition disks was not assured, and that risk is not over. Blu-ray is still not a staple in most consumer entertainment systems.

Douglas A. McIntyre

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