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Remember the old Betamax vs VHS standards war?
Sadly, my family made the wrong choice and I have a box of Beta tapes of my old figure skating competitions languishing about somewhere.
There’s a similar war being waged right now between competing high definition DVD standards — Toshiba/Microsoft/etc’s HD-DVD and Sony’s Blu-ray. Blu-ray and HD-DVDs look and generally act like normal DVDs but they support video resolutions that are about 4x the existing DVD format. The most prominent (and cheapest, if you can find one) players are the Playstation 3 for Blu-ray and Microsoft’s HD-DVD add-on for the Xbox 360.
The impact of the DVD format wars is currently spilling directly into the gaming industry’s latest console generation as Sony designed the Playstation 3 to be a fully fledged Blu-ray DVD player as well as a gaming device. Sony’s strategy in this area was pretty sound – use the PS3 to trojan horse a large installed base of Blu-ray players, giving them a potentially large and early advantage in the high def DVD battle.
The execution of this strategy has not gone so well, however, as the Blu-ray part of the PS3 has been one of the primary reasons the device was delayed several times (the PS3 ended up launching a year after the Xbox 360) and also a reason why Sony has been unable to produce the PS3 in bulk. This has resulted in a huge supply shortage and a very small installed base for the foreseeable future. Given how dependent Sony has become on its gaming division to make up for losses in other divisions, these production problems (and the resulting botched PS3 launch) are likely to be cited as a serious misstep for the company, particularly since - for reasons I’ll go into below - it seems increasingly likely that the high definition format war is unwinnable by either the Blu-ray or the HD-DVD contingent. In essence, Sony has bet their future on a technology that is currently very shaky at best, and which has the potential to pull their gaming division down from the dominant position it currently enjoys. It remains to be seen how well they manage to fix the PS3’s current production problems in the second act of the console’s life, but if the device remains as costly to produce and as difficult to buy as it is now well into 2007, it is easy to see Sony’s PS3 related costs running blood red, turning the go-to profit division of the company into yet another money loser for the company. Paul Kedrosky has a good blog post here about how Sony is losing several hundreds of $ on every unit sold. Microsoft employed a very similar upfront loss strategy during the Xbox 1’s launch (as an attempt to gain market share in a market that most people considered pretty locked up,)losing about $4 billion over the life of the console. The problem for Sony is that they only have about $3b in cash and short term investments to lose (from their 3Q2006 quarterly report,) whereas Microsoft still has about $28b and the profitable Windows and Office divisions to keep growing that pile.
There are, two big problems that lead me to believe nobody will ever actually win the high def DVD war outright:
1) The jump from videotape to DVD was a much bigger value add than the move from DVD to high def DVD. Videotapes were large, bulky and prone to being worn out, due to the magnetic tape technology used. They had to be rewound and had no instant chapter jump features. There was no way to add multiple audio tracks, flexible subtitles or crew commentary features. With high def DVDs, the only true value add is the higher resolution, and while high def does look noticeably better than standard DVD resolution, the difference between a good upscaling DVD player playing a standard DVD and a full high def DVD are not, in my opinion, great enough for the masses to throw out their existing movie collections and start over. The jump from standard DVD to high def DVD formats is more like the move from CD to SuperCDs or DVD-Audio discs than from videotape to DVDs, and those formats never really caught on in the mass market. High definition DVDs will do well with the videophile niche and certainly won’t disappear but they also don’t really have a chance to become mass market for years and years and years when there is no difference between the price of current standard upscaling DVDs (less than $100) and HD-DVD and Blu-ray players. 2) The reason why I don’t think either side will ever technically win this “war” is that downloadable video is likely to take off long before either side can win over the mass market, obsolescing physical media formats altogether. With services like iTunes video store, Direct2Drive and Microsoft’s Xbox 360 video download service and new hardware like Apple’s iTV soon to be on the scene, coupled with really cheap cost per gigabyte harddrives, the (near) future is Tivo-like devices with terabyte+ harddrives and always-on network connections with on-demand video services that stream and download movies in HD resolution. The movie companies seem to be doing a decent job of not making *all* of the same mistakes the record companies made during the MP3 boom, so I believe this future will materialize before either high def DVD standard can declare victory.
My friend Sanjay pointed me to Microsoft’s announcement yesterday about the new HD Video on Demand service for the XBox 360.
This new service allows XBox360 owners to download TV and movies on demand, via the Xbox Live service - further pushing the boundaries of online console services and further establishing the Xbox360 as the ultimate trojan horse platform.
They haven’t yet released pricing details, but I’m assuming their pricing will be in line with what Apple charges for iTunes video downloads.
The ability to download TV and movies directly to a device that is built to interface with TVs is a great selling point. While it doesn’t offer the portability benefits of an iPod video solution, I think it offers something even more compelling for many non-techie people by being a direct download to the display device, with no PC interfacing required. Of course, I say that as someone who thinks portable video is overrated and who owns a video capable iPod but rarely uses it for anything other than playing music.
Unfortunately, it’s hard to get too excited over Microsoft’s new service when the Xbox 360’s hard drive is only 20gb (of which only about 75% is usable for user downloads) and HD movies take up 4-5gb each. I already find myself constantly running low on harddrive space on my 360 just from Xbox Live Arcade downloads. Trying to juggle space to fit large videos in to the mix seems like more trouble that its worth at this point.
Hopefully Microsoft will offer a new, larger harddrive upgrade option in the near future, though it could be difficult for them to do this in a way that doesn’t piss off the customers who already bought the 20 gigabyte harddrive as part of the premium system or as an upgrade. An even better solution would involve them allowing any standard USB disk or flash media to be used as storage for Live content, though that seems unlikely for DRM/content protection reasons. Given the space limitations, I’m not sure if this service will be as great as it could be, but it’s an interesting start. Glad to see they included one of my favorite shows, the Ultimate Fighting Championship, as one of the content options.
Just about everyone who lived through the dot-com fiasco should remember the hullabaloo many companies made about digital media convergence. The idea was that you’d have a central set-top box device of some sort that would enable you to watch movies on demand, listen to your music collection, view pictures of your family reunion and surf the Internet all from the comfort of your living room couch. This basic idea gave birth to a number of high profile products, many of which failed outright, many of which (WebTV) sold for millions and then faded into oblivion, and some of which morphed into something unrecognizable from their initial form. Sun’s Java originally began as language for these types of digital convergence set-top boxes. True media convergence seemed to be one of those things that are perpetually six years away, like rocket cars, sentient AI or the end of the Iraq war.
While convergence was definitely an idea ahead of its time, the level of everyday technology has managed to sneak up on us to the point where what was once a dream is now reality and increasingly being utilized by the masses. I believe that there are three major technology areas that have contributed to this; broadband Internet, cheap hard drives, and nearly ubiquitous acceptance of wi-fi have laid the groundwork for these systems to thrive.
However, it’s interesting that it took a quasi-legal community project (XBMC) to really offer a model of how all of this should function. (Before the TiVo diehards get on my case, let me say that TiVo clearly deserves a lot of credit for introducing people to the level of media control they now (or soon) will enjoy with a more general purpose set-top media solution, though the system, while fantastic for what it is, is a bit too focused to qualify as an all-around digital media convergence solution).
Anyway, back to XBMC. To those unfamiliar with the system, it turns an ordinary Xbox videogame system into a device that can play DVDs, watch video files stored in dozens of different video codecs, play mp3 and other music files, view photographs, show you current weather conditions and other net/RSS related feeds and more, all on your standard television set. It supports network file shares so you can store all of this data on a file server on your home LAN and coupled with an 802.11g wireless adapter for the Xbox, you can do all of this file sharing wirelessly. The system is incredibly slick and professional in both looks and usability and supports virtually all standard PC video formats (which allows me to subject guests to all of my boring home videos) as well as DVD image files which I rip to a home file server to act as a virtual stand-in for a 50 DVD disc changer.
Unfortunately it requires one to modify their Xbox which requires a high level of technical sophistication, voids your warranty and is guaranteed to upset Microsoft. Given these limitations, it is unlikely XBMC itself will ever become mainstream, but even if it does not it will have served its purpose if it can merely show other device designers how such a system should work if they want it to be friendly to users.
XBMC’s limited but rabid fan base may have contributed to convincing other manufacturers that the time is right for convergence because there is a clear resurgence in the idea, particularly among console makers. Microsoft’s new Xbox 360 console offers something quite similar to XBMC in the form of being a Windows Media Center Extender for video and having similar MP3 and picture file sharing capabilities. Their Zune media player will further this media convergence by allowing the media to be shared onto a portable device. Sony’s Playstation 3 will offer a similar setup, also supporting portable media via their Playstation Portable system. Apple also recently jumped into the fray with their highly anticipated iTV, which will no doubt seamlessly integrate with all of those iPods out there. Nintendo’s forthcoming Wii console will also support a subset of these media sharing features with an emphasis on photo sharing, plus it will also offer a version of the Opera web browser for use on the console.
And it is somewhat surprising to me that Microsoft hasn’t gone and bundled a version of Internet Explorer for the Xbox 360, but I think they got so used to trying to convince everyone that the Xbox consoles aren’t just PCs in console form that they painted themselves into a bit of a corner, hopefully they find their way out and start offering some more general purpose Internet integration on the 360 with their Live Anywhere push, because I believe that HDTV adoption rates rising quickly enough that general purpose Internet use via these set-tops is another idea whose time is maybe, finally coming.
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