Netflix Decides HD DVD’s Fate

Even though Warner has decided to take Blu-ray’s side in the high-def format war, HD DVD has been able to hold on by a thread as retailers and rental chains like Netflix allowed customers to continue ordering Toshiba’s ill-fated media.

But in the final deathblow to HD DVD, Netflix said Monday it will only carry standard DVDs and most importantly, Blu-ray discs going forward. The company said its decision was impacted by the majority of the movie studios’ decision to back Blu-ray and indicated that it was simply costing it too much money to keep three formats in stock. Netflix has said that it won’t phase out its entire HD DVD stock immediately, but will have none left by the end of the year.

And while a few last adherents may scoff at the news and say it’s not the final nail in the coffin that we’ve all been waiting for, I disagree. Now that Movie Gallery is practically out of the movie rental picture, Blockbuster, the world’s largest brick-and-mortar retailer, continues to support Blu-ray exclusively and Netflix has finally turned its back on HD DVD, how can the format survive going forward? [Update: Best Buy also said today it would recommend Blu-ray to its customers.] As it stands, Toshiba’s format is only available in major retailers, and considering the kind of deals they’re trying to offer, HD DVD sales are looking more like a firesale than bargain shopping.

Why is Netflix so important? With some 7.5 million customers and command over arguably one of the most important facets of the entire movie industry, that red envelope means everything to movie studios. Long after the film has dried up at the movie theaters (typically after two weeks), the studios immediately try to find ways to recoup the millions of dollars they doled out to make and promote it. And while DVD sales certainly do help, they are watered down — to some extent, at least — by piracy. But when all else fails, these studios can still rely on movie rental services like Netflix to acquire media and distribute it to a huge number of consumers — far more than any movie studio could through selling it on the open market.

But how is anyone supposed to learn about a format when it’s not even available to rent? Consumers may see HD DVD players in the store and buy one, but as soon as they get home and realize that the vast majority of movies are only available on Blu-ray and all of their rental services only supply Blu-ray movies, that player is likely to get sent back. And if no major rental service backs HD DVD, what’s stopping Paramount and Universal from jumping ship? Nothing.

The high-def format war is over. In a matter of weeks, both Paramount and Universal will realize what’s going on and decide to back Blu-ray. And once that happens, we can all jump on the Blu-ray bandwagon too.

It’s about time.