NFLX
DVD Format War Hype
As Godzilla thunders across Japan, the guardian monsters move to stop him. Baragon is the first to challenge Godzilla. Though he struggles valiantly, the burrowing reptile is no match for the overwhelming power of Godzilla. When Godzilla marches on Tokyo, the two remaining guardians, Mothra and King Ghidorah, combine their power in a final battle against the unstoppable juggernaut. Will Admiral Tachibana and the military be able to tip the scales in favor of the guardian monsters? Can Yuri stay alive long enough to tell the story? Can anything stop Godzilla?
Does anyone really care?
With all of the hype surrounding Blu-Ray and HD-DVD, you would think that Hollywood was trying to write a new Japanese B-movie script.
First, we get the trash talk from Matsushita (Panasonic) indicating that reconcilliation is impossible, and “The market will decide the winner.” Then, rumors abound that Sony (SNE) plans to ship the Playstation 3 in November, complete with Blu-Ray drive and $399 price tag – never mind that no working Blu-Ray player is on the market right now. It isn’t clear how $399 is economically feasible given Toshiba is wrapping $100 bills around every HD-DVD player it ships out at a $500 ASP. And even this is shocking given their HD-DVD player is commodtiy IDE PC drive disguised as home electronics.
I’m still sticking with the opinion that both formats win in different applications. This opinion appears to be echoed by Reed Hastings, CEO of Netflix Inc. (NFLX), during their latest quarterly conference call.
In Q2, both HD DVD and Blu-ray are soft launching, in preparation for a larger retail push in Q4. We believe Microsoft (MSFT) sees studio support of HD DVD as very important to their game format battle with Sony (SNE). We also believe that X-box and Vista will support HD DVD more directly with every one of their product updates.
Therefore, since neither Sony nor Microsoft will concede nor win in this format war for at least several years, there will be a protracted competition which will hurt the adoption of high-definition DVD, despite everyone’s best intentions to avoid a format war.
There is, however, a practical solution. If all studios were to embrace both formats agnostically, consumers would be reasonably comfortable buying either format and presumably making their purchase decisions based on hardware, price and features.
Studios have supported VHS and DVD for years, so supporting two formats is not something new.
Embracing both formats is exactly what studios will do, and they will use the formats to price differentiate their product.
The reality is that 10 years from now getting your media on a silly plastic disk will seem as ridiculous as…. watching a Godzilla movie marathon. Movies are going to be downloaded to your set-top-box/DVR/home theater PC.
Netflix on Net Neutrality
Reed Hastings, The CEO of Netflix (NFLX), had some of the most sensible and level headed words I’ve heard on the highly polarizing issue of Net Neutrality. I wrote about the subject in “More Government != Better Broadband“.
