Forbes.com: The Battle Of The DVD

Forbes.com: The Battle Of The DVD

Similar to 1980’s VHS Vs Betamax the battleground for High Definition DVD has been set.

Consumers will soon find themselves in yet another quandary, thanks to the electronics and entertainment industries.

Hitting stores’ shelves late next year will be two different kinds of high-definition DVD players that are designed to make the most of the high-definition televisions we’re all hurrying out to buy. Each supports a different format; one is called Blu-Ray, the other dubbed HD-DVD, and their image quality is equivalent. Those encoded in the Blu-Ray format won’t be compatible with HD-DVD machines and vice versa.

The consortiums backing both are marching on, despite the fact that the duel between the VHS and Betamax video tape formats is cited ad nauseum as a textbook example of a costly business blunder that angered consumers and held back the technology’s adoption. And, that’s not to mention the millions of dollars that consumers will waste buying into the wrong camp, and then having to go back and buy yet another player. These high-definition DVD players will start with a price tag of $1,000, while the recorders will go for $2,000.

The movie studios who are taking sides are evenly split, enhancing the unlikelihood that this matter will be settled any time soon.

Late Wednesday, The Walt Disney Co. (nyse: DIS – news – people ) announced it would support the Blu-Ray disc format, which is being backed by manufacturers including Sony (nyse: SNE – news – people ), Dell (nasdaq: DELL – news – people ), Hitachi, HP (nyse: HPQ – news – people ), Matsushita’s Panasonic (nyse: PAN – news – people ) brand, Pioneer (nyse: PIO – news – people ), Philips (nyse: PHG – news – people ) and Samsung. Mickey et al have joined MGM and Sony Pictures in committing to put their film and television content in the Blue-Ray format.

In the HD-DVD camp are manufacturers Toshbia and NEC (nasdaq: NIPNY – news – people ), as well as film studios Paramount Pictures, owned by Viacom (nyse: VIA.b – news – people ), Universal Studios, which was recently acquired by General Electric (nyse: GE – news – people ) and Time Warner’s (nyse: TWX – news – people ) studios, Warner Bros. and New Line Cinema.

The upshot: shoppers looking to make their high-definition homes complete will be left in the aisles of Best Buy (nyse: BBY – news – people ) to scratch their heads. “Lots of money gets wasted during format wars, and usually it’s by the same group of companies,” says Strategy Analytics analyst Peter King. “A lot of it has to do with pride.”

“The stakes here are very large,” says GartnerG2 analyst Laura Behrens. “We’re talking about billions of dollars in filmed content.” As such, the winning format stands to reap tremendous rewards.

Content owners haven’t said whether they’ll publish in both formats, and, though Disney and others have termed their deals as “non-exclusive,” it’s highly unlikely that they will. Instead, they’ll wait and switch to the format that wins.

It’s impossible to say which format that will be. Blue-Ray discs have more storage capacity–50 gigabytes, or enough for a high-definition feature film and plenty of extras. But, to manufacture them will involve the costly proposition of building the infrastructure from the ground up, with all new facilities and equipment.

HD-DVDs’ 25 gigabytes of storage can also hold an HD feature film, but that’s about it. They can, however, be made in the same plants that are now being used to make standard definition discs–a much cheaper alternative. “That means that they’ll be cheaper for consumers, which will give HD-DVD the chance to get a lot of volume in the market more quickly,” says GartnerG2 analyst Paul O’Donovan.

Although it would grease the wheels for the DVD player market as a whole and save everyone time and money, neither camp seems inclined to back down.

“To the consumer, this won’t make sense,” says IDC analyst Josh Martin. “But, the companies that have time and money invested in these products want consumers to be able to choose their products.”

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