How HD DVD Almost Won The Format War

Posted by Mehar Gill on July 31, 2008 
Filed Under: Blu-ray, DreamWorks, Format War, HD DVD, Paramount, Retailers, Sony, Studios, Warner

There was a interesting article over at Forbes, the article talks about how Sony followed up the HD DVD Paramount announcement in August, believe it or not the announcement had done more damage to Sony then previously thought.

[When] Paramount announced last August that it was choosing the Toshiba technology over Blu-ray…Toshiba began selling HD-DVD players for $99, hoping to outsell Blu-ray players and lock in its advantage. The news triggered “sheer and utter panic” at Sony, says its U.S. chief financial officer, Robert S. Wiesenthal…

So what could Sony have done? They decided to use the PS3 to their advantage, how? They decided packing in a Blu-ray will make the consumer test out the disc and hopefully spur them to buy more instead of just using it to play games (Don’t worry, that jokes been beaten to death).

Howard rang me up and told me, ‘I really need you to pack half a million Blu-ray units of Spider-Man with PlayStation 3,’” says Michael Lynton, chief executive of Sony Pictures Entertainment…

Thats not all Sony needed to do, they then turned their sights to Hollywood to lock in studios so they would not switch, where did they start first? They started at Lionsgate who was apparently in talks with Toshiba, how did they talk Lionsgate out of their decision? They told them:

“The relationship between Sony and Lionsgate was going to continue a lot longer than the relationship between Toshiba and Lionsgate” said Robert S. Wiesenthal


“Toshiba was not going to co-finance one of their movies.”

The next step was advertisement, Sony decided using snippets of Blu-ray movies in their PS3 ads would give the consumer another reason to “jump in”. Forbes is reporting that Sony had spent over $60 million in advertising Blu-ray alone in only 3 months! At this point Toshiba was still cutting prices, Sony had to retaliate, by doing the same. They cut the price of the PS3 by $100 and introduced what is now know has the 40GB SKU.

As expected Sony stated they did not pay movie studios to side with Blu-ray, then again Toshiba said they did not pay Viacom/Paramount either, maybe we should wait for their financial reports? While this was going on Sony still stated the overall revenue of Blu-ray sales including the PS3 was beating out HD DVD by $1.8 million.

Looking back at it Sony had a huge advantage in the format war, which raises a lot of questions. They already had Japan and Europe locked, North America was the only territory they had trouble with. Was all that really necessary? No denying it these decisions really put the Playstation 3 in jeopardy has a gaming console. Toshiba is not to blame, they did their best with the budget that they had, but Microsoft’s interest is still questionable.

Maybe for the next format war Toshiba (assuming they want to get back) should follow Sony’s lead and start investing in movie studios, it seems like Microsoft already has. Your thoughts?

Related posts:

  1. Toshiba Says to Quit HD DVD, Ending Format War
  2. Viacom Earnings Report Confirms Paramount Payout from Toshiba
  3. CBHD Players Ship In China, Format War Begins
  4. Studio Heads Target $1 Billion for Blu-ray
  5. Blu-ray/Format War Mentioned in Tropic Thunder Movie


38 Responses to “How HD DVD Almost Won The Format War”

  1. The Guardian on July 31st, 2008 8:22 am

    Question: How exactly did cutting the price of the PS3 put it into jeopardy as a gaming console?

  2. Mehar Gill on July 31st, 2008 8:28 am

    @The Guardian

    Not cutting the price, just the fact that they could have used those resources to better tout the system has a console instead of a Blu Ray player. I mean the ads they made were pretty cool, I understood what they were showing but did the general audience who just see them as “game players”.

  3. DavidB on July 31st, 2008 8:47 am

    @The Guardian
    Well, PS3 is STILL suffering with the perception that Sony is supporting it MORE as a multimedia center than as a games console. That may be turning around of late though, if you look at EA’s latest quarterly report their software for PS3 and PSP is outselling their X360 and Wii software by very large margins.

  4. Mehar Gill on July 31st, 2008 9:11 am


    Looks like the 5 people still buying PSP games made an impact ;-)

  5. Dave Cowl on July 31st, 2008 9:33 am

    Toshiba is to blame.

    They are the only company making HD DVD players. If that one company opted to join everybody else there would have only been one format.

    Of course, most people believe that there were talks to merge the formats and it was Microsoft that convinced Toshiba that they could win as the sole provider of a format.

    The only thing Toshiba could ever have won is a stalemate. We were lucky that the Blu-ray stack became large enough to end it.

  6. Mehar Gill on July 31st, 2008 9:35 am

    @Dave Cowl

    Toshiba was not the only company, Onkyo, Samsung, and I think LG also made them.

  7. Bigdmelt12 on July 31st, 2008 10:21 am

    how the heck do you bold stuff lol

  8. Dave Cowl on July 31st, 2008 10:52 am

    Samsung and LG made Blu-ray players that could also play HD DVDs. And iirc the Onkyo player was just an expensive Toshiba with a fancy name and maybe better components.

    The simple fact is that Toshiba was the one company that could end the format war single handedly – this was demonstrated in February.

    They didn’t have to wait for Warner – they could have ended it before it begun or anywhere in between.

    If you want to bold stuff, learn HTML ;) Though it looks like I messed up the ‘bold off’ tag and I have not worked out how to edit comments yet… Sigh!

  9. Mehar Gill on July 31st, 2008 10:56 am

    @Dave Cowl

    Thats true, but it wouldn’t have been fun if they did that :-)

    After I heard HD DVD drives were available months before the Xbox 360 launch I kind of blame Microsoft a bit on that one. Despite what they say they did intend to support HD DVD to the fullest (They had a fricken branch devoted to it!). The first drive prototypes were available in May/June among the corporations, Microsoft didn’t have to delay the 360 by much to get the drives into the 360.

  10. burndive on July 31st, 2008 11:01 am

    It appears that you can’t edit comments, and also there’s no preview feature, so it’s FWC’s crappy comment software’s fault that you couldn’ t fix your bold tag.

  11. Mehar Gill on July 31st, 2008 11:03 am


    You can edit comments if you have right privileges :-)

    The software is actually wordpress and plugins do exist that allow the end user to have full control over their comments.

  12. Dave Cowl on July 31st, 2008 11:19 am

    I assume that I have the privileges. I still haven’t found the right links.

    Certainly WordPress allows it, it just depends on the theme you use as to what links are available where and to whom…

    360 should have included higher capacity media than it did – doesn’t really matter too much which type…

  13. Beta-guy on July 31st, 2008 12:05 pm

    Dave Cowl has it right, Toshiba is to blame for the format war, you can even tell by the timeline how things happened.

    “In February 2002, the project was officially announced as Blu-ray”
    “In March 2002, the forum voted to approve a proposal endorsed by Warner Bros. and other motion picture studios that involved compressing HD content onto dual-layer DVD-9 discs.”
    “in April that it was pursuing its own blue-laser high-definition solution. In August, Toshiba and NEC announced their competing standard Advanced Optical Disc.[25] It was finally adopted by the DVD Forum and renamed HD DVD the next year”

    Sony came up with it first, hey offered greater storage capacity and faster bitrate, and Toshiba/DVD Forum tried to slap together a medium that could hold on to their money. Because HD DVD was allowed to continue, movies like Troy ended up being bitrate starved to try to fit it on a HD DVD disc.

  14. Ryan on July 31st, 2008 1:44 pm

    @ Dave Cowl

    Toshiba is to blame?

    Had they just joined the other companies, yes we would’ve had only one format to choose over DVD – but it’s also very likely it would STILL be an early adopter technology.

    Only recently has Blu Ray evolved into a mainstream competing technology, and even at that it’s what, 5% penetration into DVD sales? Give us a break, we know you were always more Blu than Red, but seriously that argument is weak.

    On a side note; I remember the monday morning that announcement broke – it was well talked about among friends interested in, or already vested owners of either/both technologies. it was a very big deal in retrospect.

  15. merrick97 on July 31st, 2008 1:44 pm

    You’re title is a little misleading. There is nothing in that article to suggest that HD-DVD ever had a real chance to win the format war. Paramount gave them a fighting chance, but not a real chance.

  16. Beta-guy on July 31st, 2008 2:01 pm


    Blu-ray is gaining mainstream acceptance because there is now no consumer confusion, no 2 competing products, people were afraid of buying another ‘betamax’ and ending up stuck with some useless piece of technology. Alot of people were waiting for the format war to end. So if Toshiba had given up in 2005 before the format war started, we’d very likely see Blu-ray already over taking DVD.

    Wait until Feb 2009, after the holidays and new years sales, and see how well Blu-ray adoption has come. Prices will continue to drop, and the consumer will ultimately further the adoption of Blu-ray.

  17. Mehar Gill on July 31st, 2008 2:19 pm


    The DVD Forum needed a format if they wanted to continue, would you quit your job has assistant manager if you found out a better position called Senior Assistant manager opened up? Sony wasn’t going to give the DVD Forum Blu Ray, so what could they have done?

    @merrick97 -

    Yea I know, I wanted a unique title couldn’t think up of one so I put down a temporary one until I could have figured out a better one, and then I forgot about it until now.

    @Beta-guy -

    Who’s to say Toshiba should have given up first? Their product was the first on the market if you don’t remember, why would they be forced to shut down shop so early? In other words, when the product was just released with no competitor and no chance of a “downfall” why take the product off the market?

    @Ryan -

    “Hey Lois remember that time me and Brian fought in the civil war!”

  18. Beta-guy on July 31st, 2008 2:39 pm

    @Mehar Gill

    since you replied to me twice I’ll answer each separately.

    1. I understand, from their point of view they knew they had to release something to compete with Blu-ray if they were to keep making money off the DVD patents, but ultimately they threw together a format that was DVD but was a finer Blue laser and a copy protection that wasn’t strong enough to last the format war, let alone the life of the format. in other words they did a half-a**ed job.

    2. I said 2005 for a reason, “Bill Hunt of Digital Bits explained to InternetNews that Toshiba was ready to drop HD-DVD and join Blu-ray in 2005 until an unnamed company, which Hunt believes to be Microsoft, “pressured the company to stick with HD DVD since so much time and money had been invested in it.””

    by that time no Hi-Def format was released, Sony had done the research and developed the technology before Toshiba, the only thing Toshiba could do to avoid being laughed out of the Hi-Def market was add gimmick features like PiP and web functionality, they couldn’t compete with Blu-ray in terms of space or bitrate. Through out the format war we kept hearing TL51 is on it’s way, but it never appeared.

  19. Mehar Gill on July 31st, 2008 2:43 pm


    I guess so, not much more I can really say other then “it was fun while it lasted” and it undoubtedly helped introduce a wider audience to HD. The unnamed corporation could also have been the DVD Forum, going back to my old point if it was Microsoft we probably would have seen a HD DVD drive in the Xbox 360.

    Yea their was the 51GB disc too, from what I could gather it seems to be the “default” spec for the DVD forum. In fact just over a month for now they will have a press conference and one of their key issues will be HD DVD.

  20. The Guardian on July 31st, 2008 3:25 pm

    It should be noted that Blu-ray’s market penetration is likely way above 5% by now, given that it was there months ago.

  21. Mehar Gill on July 31st, 2008 3:26 pm

    @The Guardian

    The lastest scan showed it at 8% this week so I guess its a good enough average.

  22. Dave Cowl on July 31st, 2008 3:34 pm

    Ryan: If it wasn’t for Toshiba, there would not have been a ‘war’ – it is really that simple. One CE company vs all the others (ok, it was not always one company but it quickly became that way).

    It isn’t a weak argument, it is simply what happened. One company figured that cheaper was a better answer than what had been proposed and ran with it for whatever reason … and with disastrous consequences I might add – lots of dollars burned on that one for nothing.

    If Toshiba (and NEC) had ‘played along’ I think that we would probably be further down the ‘acceptance’ path today than we are…

    In any case, I blame Toshiba due to the first statement… If it wasn’t for Toshiba, there would have only been one format. You can’t put any other company name in that place and have the statement hold true.

  23. Ryan on July 31st, 2008 8:29 pm

    @ Beta Guy

    You talk about copy protection not lasting – that was actually BOTH formats. Copy protection, in general is a joke. In the digital age it is a matter of time (short time) before the protection is cracked.

    @ Dave Cowl

    I have another company you could substitute; Sony. They could’ve just said “oh well, our technology didn’t get stamped with approval from the DVD forum, here’s our new HD DVD player model.” Yay, market penetration.

  24. Dave Cowl on July 31st, 2008 9:04 pm

    Well, since Sony put Blu-ray in the PS3, they could never quit the format even if they lost the ‘movie business’.

    That said, Blu-ray is also strongly supported by Panasonic (some say even more aggressively than Sony) as well as Sharp – all three made Blu-ray recorders in Japan well before this pressed disc format war came about.

    Panasonic’s Blu-ray initial player was out well before the Sony one and Panasonic also was in the lead for Bonus View and BD Live set top players.

    While any of those three abandoning Blu-ray would have been damaging, I believe it would have taken both Panasonic and Sony to abandon the format for it to actually die.

  25. BigDazza on August 1st, 2008 3:06 am

    @Beta-guy – half-a**ed job??? So that’s why HD DVD had MORE features and openly accepted higher quality releases!?

    Yeah I’m still sour so label me so, but YOU are a revisionist historian – the worst kind of blogger there is.

  26. Beta-guy on August 1st, 2008 10:12 am


    I was on the forums debating the format war since March 2007 I’m not a revisionist, I was saying these things at the time! Blu-ray came out with DVD masters at the start, I have 2 of the original movies and they really upset me in terms of quality, once they got their act together, lower space and slower bitrate does NOT equal better quality. since the point of Blu-ray/HD DVD was to provide the greatest movie experience (not gimmick features) Blu-ray was able to do this, Warner did 1 encode and put it on both discs so they always ended up encoding to the lowest common denominator (HD DVD) in their attempt to get Troy to fit on HD DVD they had to get the bitrate down to 3.3 Mbps at certain points this caused the picture to blur.

    To be clear there is nothing wrong with gimmick features, but call them for what they are, I will not support a format that has lower specs and tries to win people over with gimmick features. a format has to stand on it’s own. I chose Blu-ray entirely based on specs and specs alone.

    since you identify yourself as a HD DVD supporter, let me say this, you win, no matter how the format war turned out you win, here how I reasoned this, if HD DVD won, you get to keep all of you HD movies, no need to repurchase any movies, and you get bragging rights. If Blu-ray won, yeah the HD DVD player ultimately became a paper weight, but you can still use it for you’re immediate use, and upgrade to better quality video, movies there were encoded properly not trying to squeeze it on to the disc, lossless audio, the same features that you liked on HD DVD are now on Blu-ray. and the price of Blu-ray is coming down. you win regardless of how the format war turned out.

  27. Mehar Gill on August 1st, 2008 10:13 am


    Can we all just agree the format war was great since it introduced a new audience to High Definition?

  28. Beta-guy on August 1st, 2008 10:30 am

    @Mehar Gill

    I think it was good and bad, you’re right it did introduce people to a higher level of movie experience regardless what side of the format war you were on, that’s the key issue, it’s caused some competition as well, so we saw BOGO’s, 5 free discs with a purchase of a player (I bought my PS3 before that deal) Profile 1.1 and 2.0 appeared, and lower prices. so far so good, but it also had some bad elements to it, it caused consumer confusion, people didn’t want to risk buying the wrong format and getting betamaxed again, this delayed growth, another down side is this war was fought on the internet, and as such many people (on both sides) had the internet mentality, fanboyism, and FUD. one forum I debated on as HD DVD was losing (Jan of Feb of this year) said he was doing to have a ‘scorched earth policy’ meaning he was going to go to his local store and scare people away from buying Blu-ray with FUD. he was banned and his post was deleted, but this is an example of why the internet mentality was the wrong way to fight a format war.

    each format added something, and in the end it was the consumer that walked away the winner, I honestly hope everyone here sees it that way.

  29. Jonsson on August 1st, 2008 1:22 pm

    @Mehar Gill

    You must be joking !!!

    The format war was the worst thing that could have happened. The only thing the format war did was wasting money, delayed the acceptance of HD material, made consumers reluctant etc etc

    War is sometimes inevitable but it always a waste of resources. It is never “good” and saying that this particular one it “introduced” new audience is really amazing. It really deterred people if anything.

  30. Mehar Gill on August 1st, 2008 3:04 pm


    Your make it sound like people died! Since their was a format war HD media got more coverage, if their was only one format that coverage would not be guaranteed. Recent example being UMD, people were like “what the hell is this” and we all know where that went.

  31. Beta-guy on August 1st, 2008 3:19 pm

    @Mehar Gill

    UMD is used in only 1 device, it was never designed to take on DVD it was just a means of selling more units, and making a quick buck of some movie sales. Blu-ray is designed to take on DVD. without the format war, the BDA could have put money into advertising to sell this new format to the consumer, the people would learned about it, but UMD is just a bad example.

  32. Mehar Gill on August 1st, 2008 3:21 pm


    They had standalone UMD players, it was meant to take on something.

  33. Belard on August 3rd, 2008 5:41 am

    @ Mehar
    - They still make standaone UMD players. The Japanese market is not the same as the USA. UMDs have/had their place.

    - I agree with some other posts, Toshiba should have thrown in the towel a long time ago – imagine this. The Xbox360 might have come out with a Blu-Ray player built in…. but it’s pricing would have made it far more expensive than a PS3.

    - Toshiba/HD-DVD didn’t have a chance. While Sony and others were pissed whtn Parmaount was bought out to go to RED, it wasn’t deadly. It hurt, yes. it only meant pro-longed war. It gave HD-DVD about 3-4 months of life, nothing more. Sony, Fox, Disney movie studios were enough to hold out. WB went both ways. Even when Parmount signed over, only Toshiba was making and selling HD players. Other than Samsung & LG making dual-format (so I don’t count them either way) – Toshiba was the ONLY maker of HD-Players, period.

    If Disney was HD-DVD only, then Toshiba would have had a good fighting chance to make the format..

    On this weekend, Wal Mart is selling a blue-ray player for $280. I think its a Sanyo or some other not-so-top end brand.

  34. Mehar Gill on August 3rd, 2008 9:03 am


    Yea Japan is a weird market, even if Toshiba did throw in the towel I doubt Microsoft would have done a Blu Ray console even if their was no format war. Console companies also like to use proprietary disks, it was done with a countless number of consoles in the 80s and early 90s, it was done with the Dreamcast, Gamecube, and Wii recently. Microsoft would have probably gone with DVD’s or HD DVD’s since they did have a hand in its development.

  35. ron on August 3rd, 2008 1:06 pm

    I bought a HD-A3 for its upconverting and it came with 9 free HD movies for $120.
    Then I bought more HD DVD movies for $10 at FRY’s.
    I loved that format war.

  36. Belard on August 4th, 2008 10:05 pm

    $10 movie titles mean little if/when the A3 dies. Even when I was starting my DVD collection, I was buying $3-8 Laser Discs! But looking back, I had only wasted my money. I only watched a few of those LDs and the size and flip-hassle quickly caused me to make little use of that player vs my DVD player(s). For many years now – my LD player sits below my AV hardware – dead. Perhaps one day to be fixed or I replace it with another player… for about $50 at the most. But looks like some are about $20~40 on ebay ;) Hmmmmm

    In a year or so, you’ll be able to buy those Blu-ray versions for under $10. DVDs that come out NEW are $20, after 6 months, $10 and 9-12 months $4~7 each. Already seeing some Blu titles go for $15~20.

  37. James on August 5th, 2008 7:47 pm

    Toshiba is to blame for the format war….

    If they hadn’t promoted HD-DVD, we would have not had any choice but to cave into Sonys demands.

  38. ron on August 5th, 2008 8:40 pm

    @Belard – Unlike BD, HD DVD has some combo format disc. So far for under $200 I got an A3 and 15 movies. Could use a backup, 360 HD DVD player for $40 at FRY’s just might work. $240 for 2 HD DVD players and 15 movies not bad! How long before I could get 2 bluray players and 15 movies for $240? I loved that format war.

    I hope you are right about BD going for under $10 in a year or so, that would be great. I would love to have the onkyo 805 and a bluray player.

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