Slow Start for High-Def DVD

How can you tell who the pioneers are? They are the ones with the arrows sticking out of their backs. Let’s face it, the arrival of new technology is rarely easy, and when you have a conflict such as the one between HD DVD and Blu-ray, it gets tougher still. So it should come as little surprise when Warner Brothers — who backs both formats — announced last week that they were cutting their high-def DVD market projections in half. And that’s compared with the numbers they gave out just two months ago, in August! They now expect high-def equipment and disc sales to reach about $900 million for all of 2006.

What happened? Everyone counted on the Sony PlayStation 3 with its bundled Blu-ray drive to boost sales and create an instant installed base. Now we’ll be lucky if we see the 100,000 units that Sony has promised to ship to the U.S. in November. Microsoft has yet to release the HD DVD drive for the XBox 360, which further slows the installed base growth. Movie titles and players remain in relatively short supply for both formats.

But the astonishing point in the Warner Brothers announcement is that consumers have only spent $30 million through September. Do they truly expect 97% of the sales to take place in the last three months of the year? That seems wildly optimistic to me, and keep in mind that these are their revised figures.

The fact is that the high-def DVD market remains constrained and confused, and consumers are hesitant to take the plunge (especially when upscaled standard DVDs can look so darned good). Just check out this verbatim quote from a footnote from an HP press release about their HD DVD support. Please note that I’m not trying to pick on HP here; in fact, I think they deserve applause for trying to be honest with consumers, even if they are saying that the product is not defective if it doesn’t work.

As HD DVD is a new format containing new technologies, certain disc, digital connection, compatibility and/or performance issues may arise, and do not constitute defects in the product. Flawless playback on all systems even if the above requirements are met is not guaranteed. For additional information, please visit http://www.hp.com/support/HDSupport. Some future HD DVD movie titles may require your display to support HDCP enabled DVI-D or HDMI connection only, and may not be viewed on an analog display. For more information, please see enclosed documentation or additional information at www.hp.com/support/HDSupport. Blu-ray Disc movies cannot be played with this drive.