Warner Brothers goes Blu-ray only: the chapter 11 for HD DVD?

Before HD DVD's big press conference at the Consumer Electronics Show 2008, Warner sent out a press release stating that it would exclusively back Blu-ray, moving it away from format-agnostic policy.

This surprise move has sent the backers of HD DVD reeling, so much so that all meetings at the show with customers, analysts and the press were cancelled by the HD DVD group. This panic-like reaction can only imply that the HD DVD Promotion Group was caught unaware, and did not anticipate that Warner would drop its support for HD DVD.

This is likely to raise further allegations from both sides about incentives to go exclusive. Regardless, Warner Brothers has played its hand perfectly, and likely to have received the most favourable format contract of all the studios.

There is a lot of speculation as to whether this signals the end for HD DVD. It is not, but we are getting dangerously close to a 'chapter 11' for the group. If the other HD DVD supporting studios now decide to drop HD DVD, the situation will turn dire. HD DVD could become more of a replacement to DVD on the PC client than a movie distribution playback format.

How did it go so wrong?

There are three areas where HD DVD failed:

• Inclusion of white labels and 'China brands'. Even though HD DVD has a cost structure better suited for low-cost vendors, the format failed to actually bring these vendors on board, and to bring products to market on a large scale.
• PC distribution. PC vendors operate on razor-thin margins and thus avoid costly components as much as possible. The format therefore had an opportunity to bring on board PC vendors to boost shipments and the install base of HD DVD playback devices. This also largely failed.
• A-brand consumer electronic vendor support. Toshiba was the main A-brand CE vendor backing the format with product, but the format failed to gain the support of other well-known consumer electronics brands.
• Support from the small content owners. HD DVD was often cited as the favoured format for small content owners and content distributors, due to the cost structure of the format. However, it failed to ignite the markets in Europe and Asia. These are huge markets, but the industry has so far taken a 'wait and see' approach until the format war settles down in the US.