Entertainment Consumers And High Definition Playback

By: Angela Paura, CEO Advanced Marketing Perspectives, Inc.

June 14, 2006

In 1975, Sony introduced the Betamax consumer VCR console for $2295. In 1976, JVC introduced the VHS format VCR for $885. Despite the contention of pundits that Betamax was technologically superior to the VHS format, the battle that split the analogue world in the early 1980s was won by the VHS format. Twenty years later, two competing consortiums of DVD developers avoided a replay of the Betamax/VHS format wars when, in 1995, all companies involved agreed to the common set of DVD standards. In March 1997, the first DVD players went on sale in the U.S., with nearly 350,000 players and 2 million discs sold by the end of the year. Now, in 2006 DVD penetration is nearly universal. Fast forward nine years (far fewer than the 20 years it took to progress from VHS to DVD technology) to the HD DVD war between the Blu-ray disc and HD DVD. Blu-ray is supported by Disney, Fox, Sony Pictures Entertainment; Paramount, Warner Bros., Lions Gate; video game software giant Electronic Arts; computer companies Apple and Dell; and electronics manufacturers Sony, Hitachi, Mitsubishi, Panasonic, Pioneer, Philips, Samsung, Sharp, and TDK; while the HD DVD platform is supported by electronics makers Toshiba and NEC; computer companies Hewlett-Packard, Intel, and Microsoft; and movie studios Paramount, Universal, and Warner Bros. Importantly, HD DVD players by Toshiba are now available, and Microsoft's Xbox gaming console is an HD DVD drive, whereas the first Blu-ray disc players are not scheduled to hit store shelves until later this month (June 25, 2006). High definition is the next great thing in video technology, and it will replace standard definition because it presents crystal clear images that are free of pixilation. In addition, the images are intensely colorful and more realistic than ever before. The difference between standard definition and high definition DVD is more noticeable the larger the size of the monitor involved, be it television or computer. Additionally, the accompanying sound of high definition DVD is of a more superior quality than standard DVD. Will consumers decide which technology survives? While Blu-ray’s storage is greater than that of HD DVD (50 GB-dual layer vs. 30 GB-dual layer), HD DVD is available now. Beyond launch time, storage is likely to increase for both technologies. That HD DVD is available now accounts for the edge in marketplace awareness over Blu-ray. In a survey conducted by Advanced Marketing Perspectives, Inc., 80% of entertainment consumers have heard of HD DVD, while 27% have heard of Blu-ray. When asked the likelihood of purchasing a Blu-ray high definition DVD player when they are available in stores this summer, 12% responded positively. When asked how likely they are to purchase an HD DVD player which are available in stores now, 18% said they are likely to do so. 32% of those who are likely to purchase one of the new DVD formats are also likely to upgrade their movie libraries, with half stating that they intend to repurchase at least some of their movies. An additional 33% intend to repurchase only a few of their movies, and 16% do not intend to repurchase any. With backwards compatibility, Blu-ray and HD DVD players are able to play conventional DVDs; however, the resolution will be standard definition. When the highly anticipated Play Station 3 hits store shelves on November 17, 2006, Blu-ray will receive a boost, since the new Sony platform will have a Blu-ray drive. Beyond chip heads and digerati, do entertainment consumers care about the technological delivery platform from which they view prerecorded content? Probably not. Therefore, only one of the two formats will be selected as the High Definition playback format. Which one is still to be determined, and probably a long way off. The results of the data presented are based on an online survey conducted by Advanced Marketing Perspectives, Inc. among 1000 moviegoers aged 12 to 64, including 250 teens 12 to 17, 250 parents of children 5 to 12, and 500 adults 18 to 64 in June 2006. Ethnically, AMP’s sample was comprised of 73% Caucasians, 11% African-Americans, 18% Hispanics, 6% Asian/Pacific Islanders, and 2% Native American. By gender, online survey participants were 46% male and 54% female. Median income was $51,700, compared to the nation’s median income of $44,500.

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