HD DVD vs. Blu-ray: So far, people aren't taking the bait

Sequels have long been the rage at the box office: The Santa Clause 3 anyone? And just like Tim Allen in a rubber suit, another sequel, partly of Hollywood’s making, is also one you’d be wise to skip.

The nascent next-generation DVD format war between the Blu-ray and HD DVD camps is shaping up to be a redo of the 80′s VHS/Betamax battle royale. Thank you Sony, Toshiba, et al"¦we all loved your last collaboration and can’t wait to see what adventures you’ve dreamed up for us this time around! Consumers are once again destined to be on the losing end of this greed-fueled battle.

Next Gen players looking for homes?

Toshiba’s HD DVD format was first to market in April, followed two months later by Sony and Samsung’s first Blu-ray players. Judging by the tepid number of online shoppers these disc players have attracted to date, consumers certainly aren’t flocking to either format and an early leader has yet to emerge. Neither format was successful in sustaining its pre-launch momentum. Blu-ray demand spiked when it launched in June, but has since fallen by half. HD DVD demand has plateaued since launching in April, averaging just north of 20,000 monthly online shoppers since debuting in April. If this keeps up, the rumored component shortages for these players this holiday season might not matter.

Why the collective "ho-hum" from consumers for these first players? Beyond price, limited titles, and the absence of a compelling upgrade catalyst, this format war is raging at a time when packaged media is fast becoming a relic of days long past.

1. Too much for too little: For 10 c-notes you can upgrade your home theatre system with Sony’s BDP-S1 Blu-ray player"”a big box that does really one thing"¦plays movies. Behind door number 2: Sony’s own PlayStation 3 which, for $400 less, offers to play Blu-ray DVDs and video games!

2. Limited titles: Unless weekends watching Hitch are your idea of time well spent, you’re not likely to be overly impressed with the selection of titles currently available in either format. Kevin James in High Def? Thanks, but I’ll pass.

3. No clear reason to upgrade: I will concede that many people have already or are in the process of dumping their CRT TV sets in favor of sexy and svelte flat panels they can mount over their fireplaces. But I’m much less convinced that consumers now staring at their walls to watch movies will find their old DVDs so appallingly blurry as to warrant a player upgrade"¦let alone one that could be on the losing end of the format war.

4. We want our hamburgers packaged not our media: Thanks to Hollywood, bookcases full of DVDs have replaced bookcases full of books in American homes. This trend in home décor isn’t likely to go away if yet another form of packaged media is adopted by the masses. Apple’s success with iTunes and the upcoming introduction of iTV (and rival technologies and services) give me hope that this endless cycle of packaged media obsolescence might soon meet its cellophane-wrapped demise.

What’s Next?

Round 2 kicks off in November"¦or December"¦or January (only Sony knows for sure) with the arrival of the PS3. Its built-in Blu-ray support should give that format a much-needed boost heading into the holiday season"”assuming those not turned off by the $600 price tag can even find one of the few that make it stateside this winter. Microsoft counters soon thereafter with a HD DVD player for xbox 360 buyers, but Sony’s bundled approach guarantees it a Blu-ray convert for every PS3 sold.Which format will win and which (if not both) will join "8-track" and "Betamax" and "DIVX" (thank you Circuit City) in consumers’ techno-lexicon of shame?

If you are gutsy enough to place a bet on a standalone player before the inevitable shake-up, I tip my hat and wish you the best.

Note: Online demand for these formats was calculated based on the monthly unique visitors to Blu-ray and HD-DVD disc player product pages at the leading online electronics retailers.

About Matt Pace:
As VP of Retail and Consumer Products at Compete, Matt Pace is responsible for leading a team of client services professionals who deliver digital intelligence and insights to clients in the retail and consumer packaged good industries. Before Matt joined the Compete Team he was a CPA and senior auditor with Deloitte & Touche. Follow Matt on Twitter @mattpace.

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