Hollywood Embraces Blu-ray…and Format Obsolescence, Too?

blue-ray.jpgWith news that Universal is planning to sell its movies in Sony’s Blu-ray format, and Paramount sidling in that direction as well, Blu-ray has managed to bring all the Hollywood studios under its own standards banner, rendering its supremacy in the format war against HD-DVD indisputable.

Maybe I’m missing something, but this strikes me as a disastrous victory for Blu-ray and Hollywood alike, borne from ignorance of the game industry and a myopically arrogant assumption that movies per se still drive the high-technology market in video. The studios are putting their weight behind a standard which is now almost certainly destined to remain niche for years — if it doesn’t go totally defunct in the process.

Why? Well, consider who owns Blu-ray players: The bulk of the format’s install base are owners of Sony’s Playstation 3 game console, which has the drive built in. (In the U.S. there are 3 million PS3s, compared with just 500,000 standalone Blu-ray players.) But as anyone who follows games knows — none of whom work in the film industry, apparently — the PS3 is selling horribly in comparison to other install bases.

Last holiday season, the 8-year-old PS2 was still selling better than the PS3, for God’s sake. For the second year since going on sale, gamers have decisively rejected the PS3 for the Xbox 360, which currently has double PS3’s 9 million-unit install base (and can play HD-DVD with an upgrade), and even moreso for the phenomenally popular Wii, which plays neither high-definition format. (Follow the console war numbers on VGChartz.com.)

At least PS3 gets the Blu-ray to a good headstart, right? Well, sort of. But as far as Hollywood’s concerned, here’s the worst part: According to an NPD report from last August, 60 percent of PS3 owners are not even aware their console has a Blu-ray player. A marketing campaign would boost awareness and excitement for Sony’s high-definition DVD, of course, but to expand this market, the company will have to target early adopter hardware fans, who are generally males aged 18 through 34…many of whom already own an Xbox 360 or a Wii. Thanks to Sony’s format bullying, there are now some 30 million-plus next-gen console owners who must somehow be goaded into spending $600 or so on another game console, mainly so Transformers looks a bit better on their HDTV. (If they even own a high-definition TV, yet another consumer adoption hurdle.) Hard to see that happening, even with a Blue-ray price cut.

So what happens now? There’s hints that Microsoft may make the 360 Blu-ray compatible, but even if that happens, it’s unlikely to move the market much. Instead, broadband connection (360 and the Wii both have them) will route around the need for any disc format, with 360 owners preferring to buy high-def content from Microsoft’s fairly successful video download service, Wii owners enjoying Net-delivered video with StumbleUpon’s widget, and everyone else sticking with HDMi cable. Meantime, in their ambition to dominate by eliminating alternatives, Sony has probably remanded itself to owning the market for a niche format, like the Laserdisc of the 80s and 90s that never appealed to anyone beyond hardcore videophiles. (Anyone but me even remember those?)

Wagner James Au is GigaOM’s games editor and writes about Second Life for his blog New World Notes.

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