|IN THE SPOTLIGHT|
Driving the HD DVD Juggernaut: Microsoft's Amir Majidimehr
By Peter M. Bracke
Monday, January 22, 2007 at 12:01AM EST
They say the only sure things in life are death and taxes. Perhaps we should add to that the absolute certainty that no matter how well-informed, there is no such thing as a sure-fire prediction when it comes to launching a new consumer technology. Nine months ago, as Blu-ray and HD DVD were nearing their scheduled launches, the battle lines of the pending format war looked very different. Riding a wave of almost unilateral positive buzz for months, Blu-ray had all but been declared the winner in the next-gen high-def sweepstakes. The launch of the two formats almost seemed like a formality, a mere prelude on the way to Blu-ray's victory lap. With majority backing from consumer electronics manufacturers and the top Hollywood studios -- not to mention the ace-in-the-back-pocket fourth quarter release of the Blu-ray driven PlayStation 3 -- all signs pointed to a high-def future with all things painted Blu.
Not so fast. Like some hi-tech version of Red State/Blue State politics, the HD DVD steed leaped out of the gate with last-minute, underdog-like surge that hit full gallup in record time. Launching two months earlier than Blu-ray, and withstanding a few first-gen hardware glitches, HD DVD was greeted by surprisingly positive reviews and a rapidly-growing, passionate fan base of videophiles that remain steadfastly defiant to all things Blu. A steady stream of high-quality, feature-laden HD DVD disc titles followed, and primary format backer Toshiba quickly responded to consumer complaints about its hardware with a robust series of firmware upgrades that continued to feed the press frenzy. In only a few short weeks, HD DVD went from being a footnote in consumer electronics history to the industry's potential heir apparent to DVD.
Equally surprising, the last nine months have also brought the the phrase "compression codec" to the front and center of the HD DVD versus Blu-ray quality debate. VC-1, MPEG-2 and AVC MPEG-4 have become, if not household words, then the hip lingo bandied about by those in the know. Most early Blu-ray releases relied on MPEG-2, an older, more space-consuming codec first made famous with standard-def DVD, while most in the HD DVD camp opted for the newer VC-1. The result was that many earlier HD DVD releases came packed with goodies, while Blu-ray fans were left undernourished. Even the PlayStation 3 was no longer a sure format-decider -- while the Blu-ray-backed wonder-machine mushroomed Team Blu's installed base, HD DVD appeared to still be holding its own in terms of disc sales.
Through all of this, one integral participant in the HD DVD onslaught has flown by somewhat under the public radar. Though the name Microsoft is certainly known to anyone living and breathing in the 21st century, they may be the most underestimated of the next-gen battle's major players. Their development of the VC-1 compression codec, coupled with the successful launch of the HD DVD add-on drive for their mega-selling Xbox 360 game console were perhaps the two biggest factors that gave HD DVD its early lead.
Of course, fortunes change quickly in the next-gen sweepstakes, with momentum seemingly on Blu-ray's side heading into 2007, especially after the format's impressive showing at the 2007 Consumer Electronics Show in Las Vegas.
It was under this backdrop that High-Def Digest welcomed the invitation to visit the HD DVD camp's "The Look and Perfect" promotional 18-wheel semi truck when it recently rolled into Los Angeles, California. In addition to a peek inside the most swanky hi-tech convoy you're ever likely to see (in full 1080p, no less!) Microsoft treated us to a demo of some of the latest top HD DVD titles and a chance to chat with key personnel behind the well-oiled HD DVD machine.
Joining us from Microsoft's Consumer Media Technology Group was Amir Majidimehr, corporate vice president of the Mobile and Embedded Devices Division and the HD DVD format's unofficial cheerleader. Upbeat, unflappable, and yet practical about the real-world challenges facing the format, Majidimehr chatted openly with us about all of the hot-button topics currently flaming the fires of the format war, including HD DVD video and audio quality, early sales success for the Xbox 360 add-on, HDi interactivity, disc storage and online connectivity. We also discussed the impact the less-than-stellar early reaction to Blu-ray may have had on HD DVD's early success, and controversial claims made against Microsoft regarding its heavy campaigning for VC-1 encoders and codecs.
Regardless of how the high-def format war eventually plays out, no one will ever be able to claim HD DVD or Microsoft didn't fight the good fight. At least if Majidimehr has anything to say about it...
How did Microsoft first become involved in the development of the HD DVD format?
We got involved around four years ago or so. We had our own video codec that we used for both the Internet and digital cinema and we demonstrated it to Warner Bros. Warner said, "This is a fantastic codec, and surely you are participating in the HD DVD shoot-out for new codecs?" And we said, "Actually, no we're not." [laughs] And that's how it started.
That codec was VC-1, correct? And by the way, just what does "VC-1" stand for, anyway?
Yes, it was VC-1, which stands for "Video Codec One." It's the name the SMPTE organization gave to Windows Media Video, when we opened it up for standardization to that organization. Among other things, the group gets to name things, and that is what they named it.
As it became clearer and clearer that the studios and manufacturers might be splitting into two separate next-gen camps, why did Microsoft decide to side with HD DVD over Blu-ray?
For a while, we were neutral. Both of the formats had been testing with
our codec technology. But for us, there were two technologies in particular
we cared about for a next-gen format: interactivity, and content security.
In terms of interactivity, Blu-ray looked for a while as if they were going
to adopt the same technology as HD DVD, which is called HDi. And on security,
it looked like Blu-ray was also going to use the same encryption technology,
which is AACS.
Unfortunately, in both of those areas Blu-ray deviated from those plans. Which meant that if we wanted to support Blu-ray, we had to implement two completely different authoring systems to support both. And that, combined with the manufacturing issues we saw with Blu-ray versus HD DVD, pushed us over the edge to side with HD DVD. This was about, a little over a year ago.
I imagine it must have gotten very contentious?
It was very contentious, because some of our best partners were supporting Blu-ray: Sony, Dell, HP [Editor: HP now supports HD DVD as well]. It is tough to go against our best partners in the matter. But as big companies, sometimes we compete, sometimes we cooperate. In this case, we compete.
Going back to your mention of HDi, I sense from our readers that there is still a bit of confusion over just what it is. Could you speak to the impetuses that led to the conception and development of HDi, and its purposes?
About two, two-and-a-half years ago, one of the major studios came to us and said, "High-def is great. Many people appreciate the higher resolution and sound. But some people may say that DVD is still good enough. Consumers have seen the movie, why do they need to buy the disc again, in a new format?" The studio wanted a platform that could take the movie experience and extend it. Gaming consoles really do that. You can get a game based on a movie and play for fifty, sixty hours -- you get very high value for your money. But a movie, you watch it for two hours, put it on the shelf and maybe never watch it again.
So how do we bridge that gap? DVD had very rudimentary, interactivity.
It didn't have a lot going on there. So the studio said, "Can
we make it [high-def] a programmable platform?" We said that sounds
like a very innovative idea, we'd love it, too. But we also had a
concern that if you made it too complicated, we'd face the same compatibility
issues we have with computer programs , and no one wants that.
So we sat with that studio -- which was Disney -- and designed a system through the DVD Forum that was based on web standards. We used what was great about the web -- that it was easy to author to.
Was that web standard Java?
No, actually, we don't use Java. That was the competing solution [eventually for Blu-ray]. We used XML, or XHTML, which you may have heard about on the web. We use Scripting -- which is a language behind web pages that can enable dynamic content -- plus graphics and real-time response. So you can have all these things happen while the movie is playing.
We combined it all together, and presented the specification to the DVD Forum. It ultimately won out over Java. I believe that when the DVD Forum Working Group voted, Java only got two votes and HDi got nineteen votes. Even Blu-ray-supporting companies voted for it. Apple and others voted for it, too. Because it is much simpler and much more elegant than Java.
The Blu-ray group also considered HDi, and their Working Group actually gave the majority vote to adopt it as well. But their board decided to overrule their Working Group and go with Java instead. Java is a powerful language, and a powerful platform, no doubt about it. But it has those worries we initially had developing HDi -- issues with complexity, time to market and how many bugs it would have.
And you've seen the results -- we have many titles [on HD DVD] that use HDi, and basically none of those experiences and titles have come out on Blu-ray. Or if they have, they don't have the same functionality and features. You can see all difficulties we have predicted have come true. You can't expect the creative people who make discs to become programmers. And that's what Java requires.
[Editor's Note: Some of these HD DVD titles include 'Batman Begins,' 'Constantine,' 'Dukes of Hazzard,' 'Tokyo Drift', and 'Miami Vice' none of which (as of this writing) have yet made it to Blu-ray. One HD DVD title that includes HDi functionality that has also been released on both formats is Paramount's 'Mission: Impossible III,' although the Blu-ray version currently lacks picture-in-picture director's commentary and other HDi-specific bonus features. Additionally, all Warner Bros. titles on HD DVD include timeline, zooming and bookmarking capabilities that are not available on corresponding Blu-ray versions.]
I'd like to talk about VC-1. The whole issue of codecs has really exploded since the launch of both formats. Of course, I don't need to tell you of the positive reviews and web feedback VC-1 has gotten. However, you must also be aware that some in the Blu-ray camp have been critical of the codec, particularly as it is reported "optimized for low bitrate applications," which seems like another way of saying it is low in quality…
We designed VC-1 to be a single codec that scales from cell phones all the way up to digital cinema. Indeed, before our codec was used in HD DVD or Blu-ray, it was being used in Landmark Theatres. Over two hundred theaters around the U.S. for digital cinema projection on thirty-foot screens. And we had fifty red laser Windows Media High-Definition formatted DVDs come out using our codec, that squeezed 720p and 1080p on a disc -- way before either next-gen format was even finalized. So this was technology that had proven itself.
In two rounds of competition in the DVD Forum, VC-1 beat out MPEG-2, all flavors of MPEG-4 and other proprietary codecs. And the group that evaluated it included Blu-ray companies, HD DVD companies, PC companies, and the major studios.
Now, people use "low bitrate" as a negative, and it is true that VC-1 is also used for encoding web content and Windows Media material. But above standard-definition, we adapt the algorithm differently and use different techniques. And that's why we've gotten all this great press. Critics can complain it's "low bitrate," but then how come we have all these fantastic reviews?
It certainly seems as if the HD DVD-supporting studios are also almost exclusively going with VC-1.
The support is exceptionally solid. The only non-VC-1 titles you are seeing now are early titles, where studios were still experimenting with different codecs to see which one worked best. Then they quickly realized that the VC-1 versions looked great. That is not to rule anything out -- the studios have access to all three codecs. But we've heard an amazing level of satisfaction on our VC-1 tools and the support they get from us, and the quality.
What is most fascinating to me is that, after reviewing probably far too many Blu-ray and HD DVD discs over the past few months, I am starting to notice a unique look and feel to each codec, particularly VC-1, which I find quite smooth and natural looking.
It does have a look to it, what I would call a very loose analog quality. Very film-like. It doesn't have a processed, crisped-up, cooked feel that MPEG-2 and the other codecs do.
I would also point out that consumers are amazingly satisfied as well. We're seeing so many people on various forums say, "If it is a VC-1-encoded title, I can pre-order with confidence. But if it is not VC-1, then I have to wait for the reviews!"
We recently conducted an interview with Don Eklund, Executive Vice President of Advanced Technologies at Sony. One of the important points he made was about the need to stay true to a film's master, as well as the original intent of the filmmakers, and not just make an HD transfer look great. I found his comments to be rather pointed towards what many on the Blu-ray side also feel is great marketing and web promotion for VC-1. How would you answer any criticisms that the success so far of your codec is just great PR, and not really about aesthetic quality?
It's funny, a year ago, I would get hammered that no one was going to use VC-1 at all. The level of control we give to the compressionists with VC-1 is state-of-the-art. They've never been able to fine-tune the image this way before. They can actually pick segments of a frame and improve it. For example, you can target and eliminate compression artifacts in hard to see dark backgrounds. Our tool allows you to go to that level of detail and control. And compressionists are amazed. We are receiving a lot of loyalty from them, because they say, "Now we can feel like artists." And really trying to optimize picture quality and not just churn these things out.
Their [Sony's] masters have some troubles, but regardless their encoder is damaging what is coming in. I think their hardware encoders are made for throughput, not best quality. It takes time to encode something properly.
Has there been any campaigning on behalf of Microsoft to persuade non-VC-1-supporting studios to adopt the codec?
We certainly are very open to working with other studios. But it is really their call. We wrote a conversion tool that converts HD DVD streams to Blu-ray. And we did that on our own nickel. That's how Warner is able to produce VC-1 titles on Blu-ray. It is the same stream. So we've invested our own energy in that. But ultimately, the studios have to decide to use advanced codecs to begin with, and they have to decide whether to use ours. Certainly, our track record is there.
HD DVD acceptance has been quite strong since launch, which has been surprising to many. I suppose it is fair to say that Blu-ray had the early lead, at least in terms of pre-launch buzz. Why do you think the HD DVD format has been received so strongly, despite all the nay-saying?
Many reasons. Number one is a close partnership on the HD DVD side. We don't compete with the studios, and we don't own our own studio. We also don't compete with traditional consumer electronics companies. That has allowed all of us to really work as one team. We work with the studios to get the best quality for their movies. We wrote the tools, and Toshiba built the players. We tested it all together. We all worked as one family. Whereas the Blu-ray camp, they really do compete with each other. You have some of the major stakeholders in the format also owning studios. So I believe it has really made it difficult for them to work as one team.
Second, I think a year ago, it was a war of specs -- now it is a war of reality. On spec, everything can look great. But if you can't deliver to the spec, it doesn't mean anything. We came out of the gate with HD-30 discs, with backwards-compatible HD DVD/DVD combo discs, with advanced codecs for video and audio, and HDi interactivity -- all from day one. And it all worked. In the competing camp, the players had problems with the first player softening the picture, early codec choices, and the advanced tools weren't ready. It really shows the difference between fully integrated execution, versus when some ingredients look great but when mixed all together, the recipe isn't so tasty.
With all the talk still focusing on disc sizes and codecs, I've come to believe that the issue of mandatory standardization of features, audio formats and compatibility between hardware and software has been greatly overlooked. I'm hoping you can help our readers understand more about the issue, and how the HD DVD camp's approach has differed from that of the Blu-ray team.
Absolutely, it is hugely important. If you look at Windows, why do consumers buy it? Because of compatibility. It is a platform that has everything in it. It is still proprietary to Microsoft, but when you have a base level that applications can program to, it becomes very powerful. Same with devices you hook to your PC. And this is our lifeblood. This is what we understand.
Fortunately, our studio partners also understood it. They said, "Look, for us to use this feature or that, every player must have it." We know [HD DVD] is a different level of complexity than standard DVD, but frankly if we are going to be successful together, we have to make these things mandatory. For example, we partnered with Toshiba on building and designing the interactivity system for their player. It was a lot of work -- we went from spec to finished product in six months -- and hundreds and hundreds of pages of spec data. But luckily, our business is software. We set out to build a platform that everyone could build from.
So, is the lack of extensive mandatory standardization in the Blu-ray spec the reason we are not seeing things like the "In-Movie Experience" and other such features on their discs?
What happened was that when they [Blu-ray] faced those issues of complexity, their solution was to make certain features optional, and delay them for two or three years.
Like BD-Java authoring?
Yes. So they have an expectation like, "Okay, but June of next year, we can go add that." We knew that was the kiss of death. We knew that the minute we said that to any studio, they would not waste their time putting such content on the disc.
That's because of two issues. One, if the function won't play in many players,
why spend the money to produce it? Two, if a consumer looks at the back
of a Blu-ray disc that says it has all these features, then takes it home
and puts it in their player and can't access the features, they'll likely
complain or return it. Why have that grief? So [on Blu-ray] the studios
are just putting all those features aside until later.
It is very strange, from that point of view. Not mandating a little bit of code and not building the platform right from day one comes back to haunt you later. You add things piecemeal, and it creates all these problems.
What is an example of a specific function or feature that is mandatory on HD DVD but not Blu-ray?
One is advanced audio compression. HD DVD ensures that a Dolby TrueHD track can be decoded to two channels audio, though fortunately the two Toshiba HD DVD players out there go beyond that and support full 5.1 Dolby TrueHD decoding. Blu-ray did not make that mandatory, which is why they have to use uncompressed PCM if they want high-fidelity audio. But PCM is very wasteful [in terms of disc space]. Even if you have one hour of silence on a soundtrack, you still have to use the same number of gigabytes to store it.
Many fans really want Dolby TrueHD and other lossless formats on all HD DVD titles in the future. What are some of the hurdles to accomplishing that?
On our end, we made sure that the HD DVD add-on for the Xbox 360 had Dolby TrueHD decoding. And first-gen Toshiba HD DVD players already have TrueHD decoders built-in. So both of us [Microsoft and Toshiba] have made TrueHD standard in our players. That is what we felt we had to do to give the studios the comfort that, if anytime they want to add TrueHD, they can. From the studio point of view, it is a choice they make. Every feature is a marketing decision -- it is like having more airbags in your car. It is up to the studios to decide which of their high-end titles has more features, and what they should be.It is certainly a process, an evolution, as standard DVD was and still is. Do you see interactivity as more commonplace on HD DVD titles in the future?
We do, but just as with everything else with HD DVD, we learn, and we take things one step at a time. Our goal is not just to throw big specs on the back of the box, and fail at it. We want to learn with the studios and ask, what are the next steps and the next scenario? We've already taken three steps -- menus that are simple to navigate and in real-time, Picture in Picture commentary, and advanced HDi interactivity, like the In-Movie Experience and U-Control. And we will be taking more and more steps, and every few months going to the next level.
My preference is that features are done in the highest quality, rather than just on every title. Because these are features you really have to get people to like. So if you just throw on this or that to fill a disc -- I'm really against that. Of course, studios can make their own call. But I think it is better for them to take their time and gauge what is attractive to consumers. As opposed to just saying that a feature should just be standard on every disc.
I'd like to ask about storage issues, which of course still are very important. Some have questioned whether an HD-30 is big enough to handle the kind of extensive next-gen content fans are hoping for in the future. Is 30 gigabytes of storage really enough?
Yes, we have been able to do a lot with a 30GB disc. And another point, to put this in perspective is movies are not getting longer. If anything, with our current attention spans, they are getting shorter! [laughs] But we've encoded 240 minute movies [using VC-1] on a HD-30, with no loss in quality. For example, King Kong is three hours long, has impeccable picture and sound quality and still includes picture-in-picture commentary.
The question is, what do you do when you start adding more and more extras? I say add a second disc. People used to say, "Oh, no, that's what 50 gigabyte BD-50 is for." Well, look at 'Mission: Impossible III' or 'World Trade Center.' On both HD DVD and Blu-ray, it is two discs anyway. The marketing value of two discs is higher than one. The consumer does not associate more value because you sell them less. They won't feel they've gotten more just because it is all on one disc. Hundreds of millions of dollars have been spent by the studios on advertising to train audiences that box sets are better, five discs are better, two discs are better than one. So from that point of view, the market is already trained -- the extras on a second disc are perfectly fine.
I have to admit that, so far, I have not been as blown away by the Blu-ray BD-50 dual-layer releases as I had hoped. I find that many still don't have as many features as most HD-30 HD DVD releases. Nor is the quality an exponential leap.
That's the ironic part. As much as there is talk about how much more
vast in terms of space the Blu-ray format is, they are very, very sparse
discs, and have almost no extras on them. Where even our standard titles
have all the extras from the standard-def DVD releases.
And what is also important to think about is that our codec [VC-1] is getting more efficient. And like I said, movies aren't getting longer, so we can continue to squeeze more and more content in the future without a loss of quality.
One other thing about HD DVD discs [versus Blu-ray] is that they are very cheap to make, comparable to current DVD disks. So the cost of adding a second disc is relatively nothing. I can't speak for the other guys, but their cost structure is obviously much higher. The cost of two of our discs may even be cheaper than one of theirs. [laughs] And two discs again have a higher marketing value to consumers.
The new HD DVD add-on for the Xbox 360 has been getting positive notices at launch, and sales seem to be good. But how come Microsoft did not integrate HD DVD into the console in the first place, as Sony has done with Blu-ray and the PlayStation 3?
As you know, we shipped the Xbox 360 a year ago. There were two reasons why we didn't put it [HD DVD support] in there. Number one, our focus on the customer. The audience wants a great gaming experience. Red laser with an advance codec is plenty powerful for that, and we can do all that we want to do. Second, as you can see this year, Sony cannot get enough volume shipments for the PlayStation 3. We wanted to get lots of volume out there, and our customers wanted to play games. We didn't want to hold up a fantastic gaming platform only so that one day, you could watch HD DVD movies on it.
Now, of course, if the Xbox audience does want it, as you know we've added the option [with the add-on drive]. We opted to give consumers that choice. The nice thing, too, is that you get two drives now -- so you don't wear out your primary drive watching movies. You can put your movie in one drive, your game in another, and get instant access to both.
Has the media and retail reaction to the add-on met your expectations?
We are very pleased so far. It is always hard to predict new markets. I think that one or two months before launch [of the add-on] I was getting tons of questions and interest about it. That's when I went, wait a second, there may really be a big market for this! Luckily, we had built a pretty good supply of units on the manufacturing side, so we were able to fulfill demand -- for the most part. There are still shortages and some places sold out, but it is not as crazy as it is with some of the other consoles.
Hopefully no one got shot trying to buy one.
No, thankfully. But certainly interest is high. But more importantly, the satisfaction quotient is through the roof. Gamers buy it for $200 and may have no expectations given the price, but they are incredibly pleased.
But at the same time, it doesn't replace the stand-alone product.
At my house, my home theater has a stand-alone HD DVD player right next
to my Xbox. So the add-on is a good way of filling your house other modes
of playing HD DVD, and that you can move around your home.
Do you see Microsoft fully integrating HD DVD playback into future generations of the Xbox?
Certainly that is possible. We could also bundle them as one package. But we have no such plans at the moment.
Can you speak more to the web connectivity functions of HD DVD? It certainly seems like it has huge potential.
The sky is the limit. The simplest thing is, you buy the disc in one country but it may come with three or four languages on it. So should the consumer want it in another language, they can download subtitles or full audio tracks.
Second, your menu system on the disc could be updated and stored in your player. So the next time you put the disc in the player, those menus are now updated, not just for additional languages but any other additional content.
You could also download new HDi applications and the extras that go with it. Graphics, making-of materials, whatever -- they can all be download, and again with new menus.
What about storage? I assume today's current HD DVD players are lacking in any considerable amount of hard drive space?
Yes. Current HD DVD players have around 128mb of non-volatile memory. And things like subtitles and graphics don't take up much space. But above and beyond that, yes, you would need to add additional storage. The Xbox 360 and PCs obviously have ample storage. The Toshiba HD DVD players have USB connectors for external storage. So that could be added.
Longer term, we think we can sort of blur the line between packaged media, in this case optical discs, and digital downloads. In that you can download all the extras, starting from the one disc you've bought. Because once you bridge from the optical to the Internet, you get the best of both worlds. You have the instant gratification of your original purchase, then you can also go online for added content -- anything from a new ending to the movie, to even a direct-to-video sequel for it, or other possibilities.
Sounds like any concerns over storage limitations with HD-30 can be solved with bigger hard drives...
That's what we've been saying -- HD DVD really has infinite storage. Because it mandates networking and Internet connection in the spec. So you really can go well beyond the disc itself. And the experience is seamless -- again, with HDi, the menus can be changed, as if the disc originally shipped with all that new material. It fully updates the disc.
I assume that again, none of this is mandatory in the Blu-ray spec?
It is not mandatory. So it will be a long time before they can get the installed base up to speed with those kinds of features.
Though another point is whether or not that is even of interest to them or not. Do the studios and electronic companies love Blu-ray only because it is an optical format they can promote and market? From our point of view, we don't care if it is an optical disc that spins, or a hard drive that spins, or flash memory that doesn't spin. Same with Toshiba. They are a leader in flash memory production throughout the world, and they make hard discs, music players and HD DVD players. So for both of us, and the studios supporting HD DVD -- we want to deliver on all formats. So you can see that our camp is very progressive -- whatever it is, we'll go there. We're not trying to say everything has to be an optical disc. Other forms of storage are just as good.
Codecs, interactivity and mandatory specs aside, by far the biggest worry I hear from early adopters, regardless of format preference, is one of obsolescence. What steps are Microsoft taking to ensure that the investment fans are making today in HD DVD won't come back and, to be blunt about it, bite them in the ass?
First of all, if you look at what a consumer's investment is in our technology, with the Xbox add-on drive you are almost spending nothing. You can buy a few movies for the cost of an HD DVD add-on drive. So your hardware investment is really low. Even a stand-alone Toshiba player is only a few hundred dollars. It really is not that much money for the enjoyment of this stuff, even if you have to chuck it the next day. But you don't have to chuck it, of course, because all HD DVD players can play DVD. Plus, with the HD DVD/DVD combo discs, they are forwards and backwards compatible.
Plus, we are shipping a lot of these drives. And look at Toshiba, what they've shipped in [stand-alone] HD DVD players is by far more than the sum of shipments of all Blu-ray stand-alone companies combined. So, from that point of view, we expect the format to have a very long shelf life.
My personal opinion is that neither side is going to win. We will have a PlayStation/Xbox kind of scenario with Blu-ray and HD DVD co-existing. But we [HD DVD] will be very popular -- we're sticking around.
Also like a VHS/Beta scenario?
Not so much VHS and Beta, where the idea was that one had to be squeezed out. I don't think in this case that will happen. It literally is CDMA and GSM phones -- both of them exist in the U.S., there are two networks, you pick your phone, and there is no war.
What about non-HD DVD supporting studios? Aren't they needed as well if HD DVD is truly going to succeed?
Obviously, all the other studios need to come onboard. And I would think they would. Because otherwise they are walking away from business. A Blu-ray disc won't play in the Xbox. Though, ironically, an HD DVD/DVD combo will play in the PS3 -- at least the DVD side of it. [laughs]
In an interesting twist, we are more compatible with them than the other way around.
But we think the other studios will come onboard. They are ultimately in the business to make money and sell their movies to consumers. We have all of our [Xbox 360] add-on customers now wanting to give them their money -- I think longer term, they wouldn't want to deny that market.
Of course, neither Blu-ray or HD DVD has a chance if consumers don't take to high-def itself. Where do you see the market going, and how optimistic are you about HD's adoption rates with the mainstream?
I think one has to be realistic, and say that in the short-term, you have to have patience. At least for two or three years. But once high-def picks up, it is going to take off big. The reason for that is that the cost of electronics is going to get so cheap that one day, you'll be buying a $100 HD DVD player. And when that day comes, consumers will start buying the movies in earnest.
One phenomenon happening, too, is that flat panel televisions are becoming very popular. And they are getting bigger and bigger yet going in smaller and smaller rooms. And people are sitting closer and closer to the screen. As a result, people are starting to see all the artifacts and issues with broadcast and low-quality standard-def. I think because of that, HD will come into is own very nicely. Years ago, everyone bought these standard-definition plasma displays that are basically DVD quality. As a result, even now they can't see much difference [with HD material]. But as they upgrade to newer technology, they will, and that popularity is going to drive prices down. Which is our best friend when it comes to driving mainstream adoption of HD.
I've found it is true -- once you go HD, you never go back. Even friends who laughed at my expensive toys a few years ago are now all getting HDTVs and HD DVRs and the like. And inevitably, they all complain now when a show is only in standard-def. They've all turned into HD snobs, too. I love it!
That's the key thing -- many people ask about HD, is it enough of a step up? Maybe it isn't, but it is a huge step down when you go backward. So when you first watch HD, you go, "Eh, it is kinda a little bit better." But give them ten HD movies to watch, then give them a standard-def DVD afterward, and they'll think their picture is suddenly out of focus!
Sounds like a great marketing campaign! So, in closing, what do you want consumers, who may be on the fence between the two high-def formats, to know about HD DVD?
Look at the reality of the technology and what we are delivering; don't look at paper specs and hype. Look at the products in the market. We now have over 150 HD DVD titles, and the quality speaks for itself. People thought you needed a more expensive format like Blu-ray, and now they realize you really don't. When you look at HD DVD, it does everything we said it was going to do -- and then some. Which surprised even our biggest critics. That's been our motto -- deliver the best experience possible. Design it well from day one, get all the pieces together, and execute it well. And in the end, the consumer will make up their own mind.