BusinessWeek: Warner Leaning Blu?

Posted by Tyler Pruitt on December 7, 2007 
Filed Under: Blu-ray, Format War, Studios


In a new BusinessWeek article, Lionsgate Vice Chairman Michael Burns is quoted saying “The rumor is that Warner is coming aboard soon.” We wonder if this is just BDA propaganda, or a real insider hinting on a deal thats in the works. Either way, CES is likely to bring big news from both sides of the Format War.

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29 Responses to “BusinessWeek: Warner Leaning Blu?”

  1. C on December 7th, 2007 6:56 am

    I doubt that it’s legit, but you have to hand it to the Blu Ray folks…they certainly know how to get their spin out there.

  2. Chris on December 7th, 2007 7:59 am

    At least they don’t have to spin winning the weekly sales numbers every week so far this year.Also a rumor to someone like Michael Burns is a lot stronger than an anonymous online rumor. 

  3. James Segars on December 7th, 2007 8:06 am

    I find it hard to believe that they would be allowed to comment on pending business negotiations.  If it were real, I would expect not to hear anything until CES or some random day in the spring/summer, much like the way Paramount/Dreamworks dropped their support for Blu-ray.  They’re just trying to put a scare into buyers before the holidays.

  4. Wishtar on December 7th, 2007 8:10 am

    Although I doubt the truth of this, it would be huge.  Warner Bros is in the unique postion of being the only company that could truely end the format war.  Being a major contributor to both formats, if it chose to drop either side it could very well be a death blow.  To date I would say that they favor the HD-DVD side as they have release more titles than for Blu-ray.

  5. Chris on December 7th, 2007 8:53 am

    WB dropping Blu would not be a death-blow to Blu-ray… you’d end up with roughly 50% support on each side. It could be a death-blow to hidef movies in general as the general public would then wait for cheap dual-format players. Interestingly some of the titles they released for HD DVD sold so poorly (Casablanca I think?) they decided not to bother with a Blu-ray release. 

  6. Kevin Murphy on December 7th, 2007 9:02 am

    The way things are going, it is more likely that studios are going to go neutral than Warner is going blu or red.  According to people who see the raw numbers, some Warner titles to better on red (comedies, family) and some do better on blu (action).  As the stalemate continues it will become in the interests of both camps to come to terms.  The war made sense when the marketplace could name a winner, but since it can’t it does no one any good.  Sony’s chairman seemed to indicate that, before they pulled it back.

  7. Kevin Murphy on December 7th, 2007 9:16 am

    BTW, I’ve lost count.  Is this the 9th or 10th time some major press player has predicted the death of HD DVD?  Is Business Week the last mag that hasn’t been hit with this spin yet?  The BDA is expert at sliming the opposition, and this seems just more of the same.  I guess this will die down soon as the BDA press consultants turn their attention to cleaner things like campaign mudslinging.I note that this last week the BD:HD ratio was back down to 58:42, which seems like robust competition in a week with no special offers or blockbuster releases.  Be interesting to see what happens as the 500,000 new HD DVD owners start buying movies after xmas.

  8. C on December 7th, 2007 9:28 am

    Key statement:
    "Warner isn’t talking, but people close to the situation say the studio is waiting to see which group sells more of the new-fangled DVD players this holiday season. "Warner wants one of the two sides to make a commitment to getting this format into as many hands as possible," says a studio executive with knowledge of its thinking."
    Will Warner let the fate of their HD catalog rest on a gaming system?  

  9. Dave Cowl on December 7th, 2007 12:15 pm

    @C – I guess it depends on what they mean by ‘as many hands as possible’ – PS3 would seem to do that for BD.  Warner dropping HD DVD is one of the few scenarios that I think would end this whole thing (Universal dropping HD DVD would be the other). Otherwise it is a stalemate. I expect we will see more stirring of this pot at the month goes by…

  10. Kris on December 7th, 2007 12:27 pm

    @Chris, they sure do have to spin winning the weekly sales nielson figures.. how many BOGO’s have seen now? This will be like the 5th or 6th one this Sunday at best buy and they would’ve for sure lost Transformers week and the week after without their BOGOS. And here we have another 58-42.. wow.. Obviously Blu-ray is scared with the way HD DVD has been closing the gap to them and are trying to spread false rumors in time to prevent more HD DVD holiday sales but we’ve seen it before! Do you ever see the HD DVD studios making claims about a studio coming their way? No, they just let what happens happen.. but the Blu-ray side tries to do it because they are living in fear.  Nothing but more blu-lies! Warner is going HD DVD at CES.

  11. Kris on December 7th, 2007 12:37 pm

    The following post should also be noted.. great research by Mikael.H.
    I’ve checked out some other HD DVD vs Blu-ray articles on BusinessWeek, specifically with the same author(s): Cliff Edwards, ranging from this summer untill today. This is an example of lines I will find in all of them:"Is this the best Toshiba could come up with to keep their HD DVD next-generation high-definition DVD standard alive?""Movie studios seem to be running away from HD DVD faster than the speed of light as the competing Blu-ray technology.""But even with the rival Blu-ray format now apparently looking at HD DVD in its rearview mirror…""Toshiba’s HD DVD format, is desperately looking for a lifeline after a series of major disappointments."

  12. Dave Cowl on December 7th, 2007 12:43 pm

    @Kris – Do you think this kind of spin is exclusive to Blu-ray Disc? Do you think that 42% market share being considered a good week, is good for HD DVD?

  13. Kris on December 7th, 2007 1:14 pm

    I don’t think we’ll see the reflection of all the holiday HD DVD purhcases start hitting the Nielson numbers until Spring 2008.  But you can be sure the tide is turning and its not blu. For HD DVD to get 42% without the inflation of BOGOS, and when they have 750,000 players to 2.5 million, is a pretty bad sign for blu-ray! Don’t think studios like Warner are only looking at Nielson figures, they are looking at standalone sales, 750,000 to 200,000, and at actual revenue generated (ie. Bogo’s mean nothing, if HD DVD’s lower Nielson numbers actually made more money!)

  14. Dave Cowl on December 7th, 2007 1:24 pm

    So one week above 40 and it is all over for Blu-ray? Did you notice that the highest HD DVD achieved for November was 35%, with half the weeks below 30? While I am impressed with your ability to take one ‘good week’ for HD DVD and call it a bad sign for Blu-ray, you should consider that the whole month of November was a bad sign for HD DVD. And I believe that next week we will see the same swing back to Blu-ray that we saw in November after September showed that ‘it was all turning in favour of HD DVD’.

  15. C on December 7th, 2007 1:49 pm

    I think Warner is paying attention to the attach rate, but I think they really just want to see who is trying to make it affordable to the consumer for quick adoption. Up to this point, I’d say it’s HD DVD.
    The next few weeks will be interesting.

  16. Kris on December 7th, 2007 1:58 pm

    Dave, what you say has no merit because even if they do have the bigger numbers, they inflated all of them.. did you happen to miss the #2 top selling blu-ray disc for the 72/28 week? Guess what it was? Open Season.. the disc that was given away that week at all the brick and morter stores along with all the BOGO’s we keep seeing every single week from either Amazon, Best Buy, Circuit City, Hastings Entertainment, etc. So for you to say Blu-ray blows them away for November, they blew them away by generating half the revenue they should’ve to do so and by giving away their discs and counting them as sales. At least you can’t accuse the HD DVD side of doing this.. yet, although if they were smart, they’d do so to eliminate the inflation blu-ray tries to achieve by doing so.

  17. Dave Cowl on December 7th, 2007 1:59 pm

    The only problem with the assumption that HD DVD is winning in any way by being ‘affordable’ is that all of the hardware promotions continue to fail to actually influence the software sales in any significant way. We have had hardware promotions for HD DVD since Father’s Day, each with decreasing hardware pricing and increasing free movie count – yet we are still waiting for the impact on the software sales. Either there has been no impact at all, or the Blu-ray side has had equal impact and opposite impact with their promotions and PS3 penetration. Warner is not selling hardware – they will need to see the software sales benefit from these extra players. Just like people want to see the benefit of the PS3 install base. So far we have not.

  18. Kris on December 7th, 2007 2:13 pm

    You make a great point.. when as many as 12 HD DVD’s are being given away with all these players which continue to sell like hotcakes, how can we expect to see any software sales at all for awhile as these people have plenty of movies to get them by without purchasing any for quite some time. I think rather than including all these 12 movies, they should just cut the price of the players instead, we already saw 90,000+ sell in one weekend when the price was right.. and I’m quite sure if they’d make that price permanent, it would only be a matter of months before HD DVD had more standalone players out there than there even are PS3′s with its crappy attach rate! We know blu-ray won’t be pulling prices like that, so it’ll be left up to HD DVD to decide.

  19. Ryan on December 7th, 2007 3:19 pm

    This is so ridiculous. For a movie studio to drop neutral support and favor one format over the other is insane. Why limit your customer base? If anything I can see Warner going HD for a few reasons; first they already have a larger installed base of movies (titles on HD, not yet on BD), and more importantly, look at newer releases like Harry Potter & The Phoenix – HD has more extra features because it is a finished & mandated product. BD has all these future capabilities, but HD seems to have got it right from the get go. 

  20. Devils Advocate on December 7th, 2007 4:35 pm

    The HD-DVD response cannot continue to be "just wait until <insert time frame here> First response was:"Now that Paramount is gone  the days of 2:1 are over"Wrong the ratio has been 70:30 on several weeks.  People can blame BOGO all they want (Its true they do help), but nothing stops HD-DVD from doing this as well. Dave hit it dead on.  In order for HD-DVD to win this format war, they HAVE to start winning the software sales battle.  Also, there seems to be this naive line of thinking that HD-DVD will continue to sell players, while bluray will continue to remain stagnant.  This is not the case, bluray players and the PS3 are also selling. 

  21. C on December 7th, 2007 6:03 pm

    A blog on Black Friday sales for BD vs. HD…it’s an interesting read.

  22. Ryan on December 7th, 2007 6:06 pm

    I’m just so baffled how companies can align themselves with one format over another. Why alienate your customer base on the other side of things? You have people not buying movies to support a particular format, or buying one player and not the other, etc … I just don’t think it’s good business practice to align yourself either way. Missed revenues are not the only thing, some people are avoiding this thing altogether, scared of having titles on a dead format or whatever else folks are worried about. It’s just prolonging universal enjoyment of HD movies. I wish they had indeed decided on a universal format, because I’m so sick of hearing both sides of this.

  23. C on December 7th, 2007 6:19 pm

    While I’m coming around to that same view, studio support has been a major talking point for the BD companies. If that was taken away and all studios went neutral, there would be no incentive for anyone to buy a BD stand-alone.

  24. Dave Cowl on December 7th, 2007 7:38 pm

    It certainly costs Warner more to support both formats – it would not surprise me if they feel the need to choose a side. If a stalemate persists for much longer, I believe that the dual format players will become the norm, assuming pricing becomes more desirable and they come from Japan and not only Korea. I think HD DVD missed the boat when it comes to the disc pricing. For some reason they discount the players, which you only buy once. They claim the discs cost less to make but the consumer does not benefit from that – they cost the same or more to buy in stores. The BOGOs have clearly shown that people buy discounted media. If you want to sell media, the media price is the thing to work on… the remainder of the year will be an interesting rollercoaster of sales ratios … that I have always believed :)

  25. tom vinelli on December 9th, 2007 2:39 pm

    come on guys lets get real. i have both format players,but you want me to beleve blu-rays better then hd dvd.
    based on what. head to head hd dvd does more now then blu-ray.everything the format can do …it does.blu-ray cant say that
    when blu-ray gets there profile 2.0 in there the field will be the real war begins
    question is will blu-ray have enough time.blu-ray has been dodgeing bullets since they launched. the ps3 saved there ass for now but that is a short term solution.
    there gonna have to win this thing with standalone players.profile 1.1 should work but who knows the way its been going with titles from fox and disney

  26. tom vinelli on December 9th, 2007 2:47 pm

    itsfoolish to say warners is looking at software sales.nobodys making money on software now.warner is looking at a lot of thing is software sales,but they said themselves there looking a hardware sales and right now hd dvd has the edge.
    you got to have the players in the home before the software sells.thats just common sense,as someone said you want to sell razors blades you got to have the razors

  27. Devils Advocate on December 9th, 2007 10:25 pm

    Bluray has more player sales.  Whether you like it or not, the PS3 DOES count.

  28. Dave Cowl on December 9th, 2007 11:54 pm

    I am kinda bored with the whole razors and blades story. HD DVD is marginally ahead these days with players. There is a video business article that indicates that even with the huge price reductions, HD DVD had little more than 60% of standalone sales for Black Friday – the same article indicates that BD had more standalone sales the week before.  Perhaps I should dig that one out. Something HD DVD is demonstrating, especially with the recent TV box sets for Star Trek and BSG is that the lack of bandwidth is showing up in the form of artifacts. It seems that when they have so many hours to encode they are getting sloppy. It is kinda sad that these box sets cost so much yet do not deliver on the most basic of requirements – artifact free images. And if we go back to the razor analogy – it doesn’t matter how many people own the razors – what matters is how many of them buy blades. Warner only does the blades. The blade sales are all that matters. Potential blade sales don’t count for anything. 

  29. Joy Medina on January 6th, 2008 11:43 am

    sony purchased mgm for the sake of giving blu ray a helping hand. mgm costed them billions. so it’s not so hard to believe that sony has half a million to bribe another studio. it’s not far fetched.

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