After HD DVD: Who benefits, and what happens next?

By Ed Oswald, BetaNews

February 19, 2008, 4:30 PM

With HD DVD out of the way, BetaNews sat down with Krishna Chander of iSuppli and Michelle Abraham of In-Stat to discuss the future of high-definition discs.

Toshiba's surrender in the two-year long next-generation disc war has finally put an end to what has seemed to be a never-ending stream of back-and-forth between two groups of technology and content producers, over concepts and features with very little to distinguish themselves from one another.

However, is the end of HD DVD really a net benefit to the consumer? And where does the platform as a whole go from here? In BetaNews' discussions with analysts, we found some similarities and differences in opinions.

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Ed Oswald, BetaNews: Krishna, Michelle, thanks for taking some time to help our readers sort through Tuesday's news. So, the logical starting point here is: who benefits from the scales being tilted in Blu-ray's favor?

Michelle Abraham, In-Stat: Obviously the Blu-ray Disc Association and its members. You could also argue that the consumer could be grouped into that category as well.

Krishna Chander, iSuppli: Yes, the Blu-ray Disc Association benefits the most. Consumers confused by the battle also now have a single choice, and Sony can now move forward with promoting the format.

BN: I guess it would be pretty obvious that BDA probably sees the biggest gain from a single format. But lets focus back on the consumer a bit. Will we see prices of Blu-ray players drop even more now?

Chander: There still are some economic issues with Blu-ray. Keep in mind that the discs are still more expensive to make than HD DVD was. At the same time however, Blu-ray discs have more capacity: 25 GB to start out versus the basic discs for HD DVD only capable of 15 GB.

BN: So, without HD DVD there wouldn't be much pressure to bring prices down?

Chander: Correct. Prices won't just tumble. With its main competitor gone, there is not much of a reason for prices to drop quickly.

Abraham: Prices will come down, as that is just the nature of the electronics industry. This happens for a variety of reasons: Component prices come down as more are made, and so forth. But don't expect any $99 Blu-ray players in 2008, like HD DVD was able to do with Wal-Mart. We'll definitely see a price decline by the holidays, however.

BN: That makes sense. Do either of you however feel that we will still see combination players to ease the transition for the 600,000 or so that already own HD DVD players and/or drives?

Abraham: I doubt it. There will be no more combination players coming out. From what we've seen in the market, I wouldn't be surprised if many of those player owners -- basically the "early adopters" -- don't own both already.

Chander: Combo disc players are done, gone the way of the do-do bird. These players were already quite expensive, and I suspect in one to two years to see such players disappear from the market.

BN: That could be a hard switch for many who may not own both players. With this 'format war' going on for much of the past two years, are we at the point where the confusion has permanently damaged the success of HD discs overall?

Abraham: The market is not permanently damaged. But it will come down to what the content creators put on the disc. It can't just be about the video quality.

BN: Krishna, do you agree with that position?

Chander: There is certainly a level of fragmentation in the market. Although its not the official position of iSuppli, we don't see much of a future in optical discs. [Ed.: Chander did add it was dependent on several factors relating to our next question.]

BN: That seems to be the argument from quite a few people. So does that open up the HD industry to streaming, which has seen a significant uptick in the past several months amid all this disc confusion?

Abraham: I don't think so. The video quality is still not on par with that of regular discs. There is a convenience aspect, no doubt. Again, it comes down to the content on the disc.

Chander: Streaming HD has started to gain traction. We think that with fiber into the home, there is promise here.

BN: Wrapping things up, do you think Toshiba's implicit diss of Blu-ray in its press conference saying it had "no immediate plans" for high definition discs means anything in the end?

Abraham: I don't think it matters much. BDA already had enough manufacturers before Toshiba.

Chander: [in agreement] Toshiba had three main areas of focus: NAND flash, HD, and HD DVD. They will be refocusing some of that HD DVD effort into NAND. I think in about a year they will support Blu-ray. Right now Toshiba is not ready either mentally or economically.

BN: Krishna, Michelle, thank you both for your time and insight, it's much appreciated.