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[June 25, 2006]
DVD duel: High-definition showdown (Orlando Sentinel, The (FL) (KRT) Via Thomson Dialog NewsEdge) Jun. 24--Competing formats for next-generation DVD players are coming to dens and home theaters later this summer, bringing dazzling pictures -- and lots of confusion -- with them.
The dueling formats, known as Blu-ray and HD DVD, promise to deliver sharper, more realistic images on TVs that can show high-definition content. But the market outlook for products based on the two formats is fuzzy because the discs they produce and use are not compatible.
Think of this battle as the sequel to the VCR wars of the 1970s and early '80s, when VHS went head to head with Betamax for dominance in the then-new world of videocassette players.
Both Blu-ray and HD DVD players use discs that can hold several times as much data as a standard DVD, enabling richer, more three-dimensional cinematic images plus room for features and games. They also can be used to store computer data and can play existing DVD movies and CD music discs.
But sales of these new DVD players may suffer both from their high price -- from $500 to $1,000 -- and from consumer wariness until it's clear which format is going to triumph, experts say.
Some of that caution was evident one afternoon this week at the CompUSA store on South Orange Blossom Trail in Orlando.
Darrell Roderick was looking over a Sony Corp. laptop computer equipped with a Blu-ray drive that was connected to a high-definition TV set.
"I always like to have the latest technology, but I'm going to visit several more stores before I decide what to get," said Roderick, a construction foreman for J.C. Penney, who was considering the laptop for business and personal use.
Another factor slowing U.S. adoption of the new equipment will be the short-term availability of only a few movies in the two new -- and incompatible -- formats. Fewer than 50 of the movies are for sale now, though the number could grow to hundreds by year's end.
Consumers may be confused
To complicate matters further, one company -- Samsung -- has announced plans for a dual-format player that will handle both Blu-ray and HD DVD, though it will cost more, said Ted Schadler, an analyst at Forrester Research.
Adding to costs overall, retailers will have to spend time and money explaining to customers which players play what discs.
"The market will be slow to evolve due to complexity, cost and consumers' long memories of the last dual-format battle between VHS and Betamax," he said.
Schadler predicts Blu-ray will be the eventual winner -- but it could take two years for enough consumers to feel confident about their purchasing decision.
Even some manufacturers see the possibility of market demand remaining tepid in the months ahead.
"If a consumer wants high-def, they can buy it now or wait awhile to be safe," said Andy Parsons, senior vice president of product development and tech support for Pioneer Electronics (USA) Inc., which plans to ship a high-end Blu-ray device later this summer aimed at early adopters.
"But it's not necessary to go out and buy today," Parsons conceded. "People will want to see more content before spending their hard-earned money."
Circuit City Stores Inc., the nation's third-largest consumer-electronics retailer, also views the short-term with caution.
"We've said all along it would have been better for consumers and retailers if manufacturers had agreed on a single format," spokesman Jim Babb said.
CompUSA Inc., which is already selling both types of drives in its laptops, is more bullish.
"The demand is already there from our customers," said Jess Seymour, general sales manager at the south Orlando store. "The 'wow' factor is through the roof."
'Wow' factor can be costly
Customers wanting to purchase a high-definition television with a Blu-ray or HD DVD drive can expect to pay at least $2,500 for such a system, said Donald Tarpley, the store's business-services manager.
As an alternative to pricey, next-generation DVD machines, consumers can choose video-on-demand from their cable-TV or satellite-TV provider, or they can download high-definition video from the Internet, he noted.
Or they can simply stick with existing DVD players.
Today's world is ruled by 9-year-old DVD technology, with a market penetration of about 85 percent. Conventional DVD players, which initially carried price tags similar to the new Blu-ray and HD DVD units, eventually dropped to commodity levels of about $50 each.
The DVD player began to gain wide popularity in 2000 with the launch of Sony's PlayStation 2 game console, which included a DVD drive that could play both games and movies, Parsons said.
In a possible reprise of 2000, Sony will launch PlayStation 3 in November for $499 with a built-in Blu-ray player. Sales could reach 2 million by year's end and 6 million by March 2007, experts say, which should drive sales of Blu-ray movie titles.
The Blu-ray format, developed primarily by Sony, has the backing of numerous manufacturers, including Philips, Matsushita, Apple, Dell, Hewlett-Packard and others. The major players backing HD DVD are Toshiba, NEC and Time Warner.
It's 'content, content, content'
Equally important, Blu-ray has the support of seven major Hollywood studios that together comprise 90 percent of all DVD sales, said Marty Gordon, vice president of Philips Electronics in Hollywood.
"I compare buying DVDs to buying real estate," Gordon said. "In real estate, it's location, location, location. In the next-generation entertainment platform, it's about content, content, content -- where can you get your favorite movies?"
Philips, which will soon introduce a $999 Blu-ray system, is in the contest for the long haul.
"The race to the next-gen world will be a marathon, not a sprint," Gordon said. "We think Blu-ray will be more compelling because there will be the movies people want and a lot of brands they trust."
But it's not a lock that either Blu-ray or HD DVD will become a mass-market smash hit, said John Falcone, a senior editor at cNet.com, a Web-based technology news site.
"It's possible consumers will say no to both," he said.
"The value just isn't there right now for the vast majority of people. We heartily recommend everyone hold off on buying."
Chris Cobbs can be reached at email@example.com or 407-420-5447.
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