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Blu-ray vs. HD DVD: War without end

Which side will win remains unclear, but the camps seem to agree that both formats are mere rest stops on the journey to instant digital downloads.

UNIVERSAL CITY, Calif.--What if somebody started a format war and nobody came?

That was the question posed at the opening session of the DisplaySearch's 5th Annual HDTV Conference here. The much-hyped battle between opposing next-generation packaged media formats HD DVD and Blu-ray Disc still has no clear winner. Each of the panelists onhand to hash out the question of which side will prevail predictably had an agenda--to explain why his camp will win.

While there was no answer, several things became more clear: Studios have learned some lessons over the past year, and both sides are still essentially guessing as to what will be most compelling to consumers. Adoption of next-generation players and media is still low compared with standard-definition fare, though consumer recognition of all things high-definition is growing, which should benefit both sides.

Talk of this so-called war isn't new. But as more consumers buy high-definition television sets, and as the prices of next-generation set-top boxes and players come down and more people are exposed to the marketing push for high-definition discs from movie studios, retailers and hardware makers, they will be faced with a choice. , though, is still what many are choosing.

Since this time last year, there's been some shift in the landscape of high-definition media. One of the most highly publicized changes was Paramount's decision to back off its Switzerland-like approach of offering its content on both formats and . The shift had a significant impact--at the very least on the perception of the format war, which up until that point appeared to be favoring Blu-ray.

"We can use HD discs to train consumers to move into digital, but it's a transition."
--Dan Silverberg, vice president of high-definition media development, Warner Bros.

For the record, Paramount Executive Vice President Allen Bell said the decision "didn't have much to do with the format war," but rather observations of the industry dynamics. (However, The New York Times reported that Paramount and Dreamworks Animation had both been paid off to choose HD DVD.)

"Up until (the) launch of two formats you could do an analysis and it was fundamentally a PowerPoint deck...more or less a white paper," Bell said. "We were the first company that went ahead and said, we're going to try both. A year later...does it become a good consumer proposition?" Compatibility, as well as consistency of the players from competing manufacturers and content availability led the studio to HD DVD, he said.

Though Paramount might think it has picked a winner, consumer polling by The NPD Group doesn't back up that decision. There are still plenty of factors holding up the next-generation packaged media industry as a whole.

Though NPD is forecasting that more than 1 million next-generation players will be sold and 400 movie titles released next year, there still doesn't appear to be a stated demand from consumers for high-definition DVDs. According to an NPD poll, 66 percent of respondents said they're not likely to buy a high-definition player in the next six months. "We've been seeing this over and over and over again," said Russ Crupnick, a senior industry analyst for NPD.

Besides intent to buy being low, standard-definition DVDs are just fine with most consumers. "Unfortunately, we developed the perfect product (with the DVD)," Crupnick said. "We've got to overcome the fact that we're competing against a wonderful product that's in 80 percent of households." Upconverting DVD players--players that translate standard-definition discs to output them in high-definition--cost significantly less (around $60) than HD DVD and Blu-ray players, which go for between $200 and $800.

But DVD wasn't a perfect product in the beginning, which several of the panelists were quick to point out. In fact, it was the one thing they could all agree on.

"When DVD first launched it was anything but the perfect product," recalled Andy Parsons, a Pioneer executive and chairman of the Blu-ray Disc Association. "There were many doubters that said there was little chance of overtaking VHS."

As HDTV adoption continues to creep up (8 out of 10 television purchases last month were high-definition sets, according to NPD), the number also represents potential consumers of next-generation players, because they have the displays to take advantage of high-definition content. But how to persuade consumers, first, to decide to buy a next-generation player and, second, to choose a side?

The HD DVD camp seems to believe that interactive content--the ability to download trailers and extra behind-the-scenes footage--will be the key differentiator, while Blu-ray harps on its superior picture and sound quality.

"We're not saying interactivity is not important. 300 outsold on Blu-ray 2 to 1. The interactive functions were nice, but it's about the story," said Parsons of Pioneer and Blu-ray. "If it's outselling the HD DVD version 2 to 1, I would have to say interactivity is nice, but it doesn't mean people are saying 'I refuse to watch it on Blu-ray.'"

Whether it's picture quality or DVD extras that will drive purchases of high-definition DVDs, everyone seemed able to agree that in the long run, HD DVD and Blu-ray are mere rest stops on the journey toward instant downloads of digital content.

Many of the panelists currently play in both arenas--like Disney, which offers its content for download from Apple's iTunes Store, and Microsoft, which facilitates downloaded content via its Xbox Live service. But packaged media is the name of the game right now because U.S. broadband infrastructure isn't developed enough to offer quick or easy enough downloads of high-definition content yet.

But Disney says another issue is that consumers also still want to collect and physically own their content. "Mainstream Americans are buying (content) in the digital world for immediate need, not for long-term collectability to watch over and over," said Patrick Fitzgerald, executive vice president of distribution and marketing for Walt Disney Home Entertainment. But the sale of packaged media will be the catalyst for the growth of digital content over the next 10 years, he said.

Warner Bros. likewise sees high-definition packaged media as akin to a set of training wheels for digital downloads.

"We can use HD discs to train consumers to move into digital, but it's a transition," said Dan Silverberg, vice president of high-definition media development at Warner Bros. "Downloaded content will come, but the consumer will get quicker tutorial into video-on-demand, etc. by owning a Blu-ray player or HD DVD."