Netflix dropping HD DVD

[Craig in NJ]

http://biz.yahoo.com/prnews/080211/aqm129.html?.v=33

". . . Netflix said that as of now it will purchase only Blu-ray discs and will phase out by roughly year's end the alternative high-def format, HD DVD, developed by Toshiba. . . ."

Netflix is being very stupid -- dropping HD DVD before all HD DVD titles are available in Blu-Ray!

The smart way to transition would be to eliminate HD DVD titles where they have the Blu-Ray version in stock and stop buying new HD DVD titles only when it's clear those titles will soon be available in Blu-Ray, but it is very very stupid to drop exclusively-HD DVD titles that are already in their inventory before customers have stopped renting them.

Stupid corporate decision makers! I bet they are more concerned with fast delivery than in giving customers the titles they want in high def. Sometimes delivery speed just isn't that important. It's amazing how bad assumptions like that make they drive customers away to on-demand cable.

[Craig in NJ]

There's always a tradeoff. If HD DVD didn't exist the price of BD players would still be $1000 and almost nobody would be using any high def except via cable and sat.

In Netflix' case, it was very smart of them to carry HD DVD titles when BD players were expensive and Blockbuster carried no HD DVD. The *only* reason I'm a Netflix subscriber today is that I could rent HD DVD titles to tide me over until a future year when all those titles are available in BD and the cost of BD players finally came down to a reasonable level. I bet there are tens of thousands of people in the same situation.

I agree everyone would be happier with one affordable format ... and BD is slowly creeping toward that ... but until all the major studios offer their high def titles in BD, it's premature to abandon the HD DVD version of those titles (especially when they are already in Netflix' inventory).

[Movie Man Andrew]

I agree. Luckily that year might be this one, with so many Paramount movies being released along with others being re-released in May and Batman going blu in july and the Matrix being worked on we could see the entire HD exclusive slate in blu ray by christmas. Not to mention and August release for Heroes: season 1. I should be in the same situation as you on this.

[Spindaddydad]

By year's end most, if not all, titles that are available only in HD-DVD will also be available in Blu-Ray, especially if Netflix dedicates itself to the format. Personally, I think it would be a poor business decision for them to spend any more money and resources on a dieing format.

And just for the record, Since faster turn around times can benefit ALL members, I think it's a smarter business decision to focus there than diverting resources to a segment (Hi-def) that will only benefit a small percentage of members. Delivery speed is a major (if not #1) concern for Netflix and rightly so.

[Craig in NJ]

No, 25%-30% of high def titles will could not be available in BD even if HD DVD studios announced a reversal to BD today, and some of those titles are too compellingly good to ignore.

Your "for the record" comment is what once-dominant Ford thought just before GM adopted a segmentation strategy. At some point, a market gets big enough that you have to pursue many segments rather than assume everyone wants a perfect black model T. So rather than waste billions trying to make delivery faster than it's possible to be (1 day, which is what I see, is as good as physical delivery can get), it's better to invest in capturing many easy-to-grab segments.

HD DVD player owners are a great example -- they want to avoid owning discs in a doomed format, but aren't ready to buy an overpriced BD player that will be obsolete the next year and/or they want to enjoy exclusively-HD DVD titles now. Renting is a very compelling proposition for them. Meanwhile, I expect Netflix could easily negotate a deal with the HD DVD studios to get full credit rebate toward BD version for any HD DVD disk they return in working order when the BD versions are available, so there's really no risk to Netflix of being caught with obsolete inventory.

[Chris]

Two studios are releasing only in HD so all titles will not not be available. I for one subscribe to Netflix so I can rent HD movies which their competition (Block Buster) ignores. I will buy more and rent less, but probably only movies I know are great to make a purchase. Netflix gave up their edge by quiting HD.

[Movie Man Andrew]

Actually, I think its just Weinstein now.

[Arkweld]

Did you read it? They aren't dropping their existing inventory, they are just not buying new discs. Those existing HD DVDs will be around until the end of the year (or until they crack or get lost) by which time any studio which is releasing new discs will already have made the decision to go Blu or HD.

All things considered that decision is going to be more and more Blu so by years end you'll be lucky if any studio is left producing HD discs. Like Warner they are cutting their losses now and trying to aim for one format to simplify things.

Those HD exclusives that you think are coming and now won't be stocked by Netflix, is becoming a smaller and smaller pool.

Who cares if all HD DVD titles are currently not on Blu-Ray? Not all new release DVD's are available on either format so there is no difference. In either case you'll watch the DVD version or wait however long for a high-def format to appear.

[Craig in NJ]

I should've cited the other news reports that were less ambiguous about what "until the discs' natural life cycle takes them out of circulation in the coming months" means:

http://www.reuters.com/article/marketsNews/idINWEN388420080211?rpc=44
". . . will only buy Blu-ray discs going forward and will phase out stock of HD DVD by about the end of the year. . . ."

It took years for studios to release a reasonable number of titles in any high def format, so even if exclusive-HD DVD studios switched today BD substitutes won't be available by the end of 2008. Unless I'm mistaken, about 25-30% of titles are still in the HD DVD camp (Universal, Paramount incl. Dreamworks, Weinstein incl. Dimension Films) -- that's still a small mountain. I'd guess it'd take 2 years to move that mountain even after they adopt BD.

Early adopters who embraced high def aren't necessarily willing to play regular DVD's for titles that exist in a high def format, so for at least some some of them "you'll have to wait" could translate as "cancel subscription until then."

Don't get me wrong -- I do want those last major studios to adopt BD (even though my Sony BD player broke within weeks) and not buying new titles in HD DVD does seem a good compromise since there'll still be a lot in inventory initially, but liquidating the HD DVD inventory by year-end would be premature.

[Arkweld]

and for those that cancel due to lack of HD-DVD the number will be balanced by new Blu-Ray owners now that the format war is beginning to fade out. In fact the number of users moving to a decisive format will be far higher than those who jumped in to HD-DVD already.

There are plenty of early adopters who will pick a standard DVD over not seeing a movie just because it's not available on HD-DVD. They've had to because the release schedule has been evaporating for months. By picking one disc format that's a choice they've always had to make. If they hadn't seen movies such as Casino Royale and wanted to they have no choice - watch it in SD or not at all. So what if it takes until the end of the year before HD discs become Blu-Ray? The previous choice was format specific discs would NEVER be available to the other camp.

It hasn't stopped me from watching standard DVD when Blu-Ray isn't available and given the ability of upscaling devices the quality can be more than passable. Certainly better than any standard on demand service over cable.

End of HD-DVD purchases means more funds can be allocated to Blu-Ray disc acquisition. In the meantime HD-DVD users can still drink from the well of existing HD-DVD discs, they'll just miss out on seeing such great titles as "Girls Gone Wild" in high-def and maybe one or two movies that are actually good and released during the next year.

Where is the list of HD-DVD releases that you think will be greatly missed by HD-DVD owners over the next 10 months that makes killing off the format by then premature?

[Craig in NJ]

Re: "Where is the list of HD-DVD releases that you think will be greatly missed by HD-DVD owners over the next 10 months that makes killing off the format by then premature?"?

Please don't misquote me. I didn't restrict the timefreame to 10 months since the issue here is dumping both existing and new HD DVD titles within a few months, at least a year or two before they could possibly become available in BD.

Such lists are readily available in forums that follow the formats. I could, but won't distract this thread with specific URL links to those analyses of formats and to announced release schedules because the point isn't about what any one person (you or me) feels is a compelling HD DVD title, but about how many HD DVD player owners want access to any of the 25%-30% of exclusively-HD DVD high def titles from top studios until BD versions are available.

I absolutely agree that some people will make do with DVD's to tide them over until HD DVD dies. I'm not one of them. I don't like dealing with physical discs in the first place, so it's only hi def that gave me a reason to try Netflix. If customer satisfaction is important, it's useful to keep in mind that no matter how "adequate" DVD may be, high def is almost always preferred by people with the players for it.

fyi - The constraint on Netflix' BD inventory isn't funding, it's availability. Ending HD DVD means nothing for funding for BD purchases, and good negotiating could have ensured there's no risk of obsolete HD DVD inventory either (e.g., credit for exchanges for BD versions, or maybe offering 1080p viewing over the Internet as an alternative to physical HD DVD's that aren't carried).

[Craig in NJ]

FYI - I just received an email from Netflix announcing:

"Toward the end of February, HD DVDs in your Saved Queue will automatically be changed to standard definition DVDs. Then toward the end of this year, all HD DVDs in your Queue will be changed to standard definition DVDs."

Based on this, the plan is clearly to not get any new HD DVD's and to dump their entire HD DVD inventory by about the end of this year before BD versions could possibly exist. This is clearly a service downgrade since we will no longer be able to see Universal Studios, Paramount/Dreamworks, and Weinstein/Dimension movies in high definition. At best, it'll probably take nearly 2 years for those studios to negotiate format licensing terms and re-release those existing titles in BD format, and at worst we might have to wait for them to show up in 1080p high definition on demand online over cable or the Internet.

[Movie Man Andrew]

The decision was made to go blu weeks ago. It wouldn't make sense to changes sides again, would it? And new release DVD's not being on Hidef is a closing window.