Toshiba Corporation today announced that it has undertaken a thorough review of its overall strategy for HD DVD and has decided it will no longer develop, manufacture and market HD DVD players and recorders.
In December of last year I wrote that high def DVD “is the new laserdisc,” as in a technology innovation that fails to capture market share despite significant technical advantages.
While the jury is still out on this, I think I will ultimately be proven wrong for two reasons.
First and foremost, Toshiba has capitulated as it became increasingly clear that the HD-DVD vs. Blu-Ray format war was not at a stalemate. With major studios backing Blu-Ray and Wal-Mart throwing their weight behind the standard, it became less of a war and more of a skirmish with one side have vastly superior forces. In the end, I believe it will be recorded that Netflix was the tipping point, as they have an ability to accelerate Blu-Ray distribution by countless orders of magnitude and provide the critical incentive for consumers to upgrade their hardware.
However, while it’s clear that studios want Blu-Ray because of the strong DRM and retailers want it because of the profit margins, it’s not yet clear that consumers want it.
There is no denying that the picture quality is outstanding and with plasmas and LCD displays flying off shelves, one would think that there would be a perfect storm developing. But take a visit to any Best Buy and a different story is being told, one with ample supplies of players and few people browsing the extensive rack of Blu-Ray titles. The price points are still too early adopter and the average consumer doesn’t appreciate the advantages because their high-def capable display is so under-utilized.
It’s not that consumers don’t want high definition, but rather that they aren’t demanding it and if they were we would be seeing a rapidly expanding lineup of channels and content over cable and satellite first, which we aren’t. I’m not big on forecasting timelines, but I do suspect we’ll be well into next Christmas before afterburner on this upgrade cycle is fully lit.