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Two More Nails for HD DVD

February 12, 2008 | Author: Ibex Marketing

Yesterday, Netflix issued a press release stating that “as of now it will purchase only Blu-ray discs and will phase out by roughly year’s end the alternative high-def format, HD DVD, developed by Toshiba.” The press release cited the fact that “the industry now [has] picked a winner,” with four out of six major US movie studios publishing exclusively on Blu-ray.

It makes good sense that Netflix would like to declare this competition over. It costs a lot less to inventory and track one high definition format than it does with two. The company will continue to rent the HD DVD titles that it has in its collection, but it won’t be buying any additional titles in that format.

A Netflix spokesman looked to a rosy future; “Going forward, we expect that all of the studios will publish in the Blu-ray format and that the price points of high-def DVD players will come down significantly. These factors could well lead to another decade of disc-based movie watching as the consumer’s preferred means.” This still rings a bit of exuberant optimism; of the more than 90,000 titles in the Netflix library, only about 400 are Blu-ray format, or less than half a percent of the total. There’s a long way to go before Blu-ray becomes a major portion of the Netflix business.

But NetFlix will get some help with its decision. The previously uncommitted Best Buy also announced yesterday that it will start favoring Blu-ray. The leading consumer electronics retailer has more than 800 stores, and will start stocking more Blu-ray players and titles. Sales staff will recommend Blu-ray over HD DVD.

I was an early believer that HD DVD would be the ultimate victor in this race, but these two announcements add up to a double-whammy. Even I can start to hear a fat lady singing at this point.