VHS vs. Betamax redux? Blu-ray faces off against HD DVD

Paul Jackson
The Yomiuri Shimbun

TOKYO - For consumers it's confusing and frustrating. The electronics giants of the world have yet again failed to agree on a video format. The prospect ahead is another battle for supremacy in the next-generation DVD market, this time between the Blu-ray camp led by Sony and the HD DVD camp led by Toshiba.

Will this be another video bloodbath like the Betamax vs. VHS war more than two decades ago? Or will a commonsense solution prevail?

Industry observers suggest that whatever the result, consumers will wait and see rather than splashing their hard-earned cash on technology that has yet to establish itself.

Compared to the typical 4.7 gigabytes of current DVDs, the new formats boast significantly more capacity. The HD DVD offers 30 GB on its dual-layer disc, while the Blu-ray disc holds a whopping 50 GB of memory on its two-layered disc.

But if that already suggests an edge for Sony, Toshiba points out that its technology is up and running and has proven reliability. Being a closer relative to current DVD technology, both HD DVD and DVD formats can be stored on dual-format discs, the company says. HD DVD is cheaper than Blu-ray, too, and also has computing giant Microsoft fighting its corner.

"HD DVD has the same disc structure as current DVDs offering unique and crucial advantages over Blu-ray, namely optimized, high-level manufacturing and superior capacity at launch (30 GB compared to 25 GB)," says Junko Furuta of Toshiba's Corporate Communications Office. "We believe HD DVD brings the excitement of high definition video to the consumer faster, with the potential for more affordable hardware and more interactive features than other HD optical formats."

Not surprisingly, Sony has a rather different opinion.

"With digital devices, all the information is converted into data so capacity is everything. It's the capacity that's the biggest factor in fitting high-quality graphics, high-quality sound, interactivity and other aspects on to a disc," says Daichi Yamafuji, electronics PR manager at Sony. "We now have single layer discs with 25 GB, dual layer discs with 50 GB, and we're testing the technical possibilities of up to 200 GB discs. As a format designed with the future in mind, we believe that the most suitable next-generation optical disc is the Blu-ray."

Both Sony and Toshiba point out that this time, unlike the Betamax-VHS battle that pitted the technology of one company against another (Sony vs. JVC), there are many companies committed to each camp.

Another extra dimension is provided by the launch of Sony's PlayStation 3, which is equipped with a Blu-ray disc drive. The inclusion of a DVD player in the PS2 provided a significant boost to sales of the console, but this time around it looks as if the effect with the PS3 will be the opposite - the console will help to spread the Blu-ray discs. If 10 million PS3s have sold globally by the end of 2007, as is feasible, that would represent a huge boost for the Blu-ray camp - even if it's only for playing Blu-ray content.

This aspect of the battle has spawned media reports suggesting that the PS3 is really a Trojan horse for the spread of the latest Sony technology and content.

Kazuharu Miura, senior analyst at Daiwa Institute of Research in Tokyo, points out that with the DVD market flagging, movie studios - not least Sony Pictures - are looking to sell their output in a new format.

Huge PS3 sales will also help Sony to make Blu-ray components at a lower price, increasing Sony's competitiveness in the Blu-ray product market.

All in all, the spread of Blu-ray technology will be good news for the Sony group, but the company rejects the Greek metaphor.

"If you say `Trojan horse' you mean that the PS3 is no more than a means of diffusing something else and, as a wooden horse, it is concealing something. But that's not the case. The PS3 is fundamentally a gaming machine," says Yoshiko Furusawa, Sony Computer Entertainment's head of corporate communications.

Even so, it's clear that Sony has learned several lessons from its humiliating loss to the inferior-quality VHS decades ago. One of the key reasons for that failure was the simple fact that no matter how good the Betamax system was, a film couldn't fit on the original hour-long Betamax tape, prompting Hollywood to back VHS for its output in the video market. Whether Sony was naive in its strategy or arrogant about its superiority, it lost.

This time, of course, Sony is part of Hollywood and already has won support for Blu-ray from just about all the major studios apart from Universal. Factor in the PS3, and it would seem that Blu-ray has the upper hand.

"As a household video player in the vein of VHS or DVD, I think there's no doubt the Blu-ray will dominate," says Koichi Hariya, analyst at Mizuho Securities, while pointing out that this doesn't necessarily translate into a "winning" or profit-maximizing scenario. "My understanding is that HD DVD, while also aimed at the household video market, has as its main priority being a peripheral drive for computers."

But even if the Blu-ray does come to dominate the home video market, it might be some time before this happens, Hariya says, warning against comparison with the VHS-Betamax example. This time users already have a home video option (DVD or even VHS) and with DVD players going for less than $100, Hariya asks, how many people are going to spend $600 on a Blu-ray disc player at this point?

Daiwa's Miura concludes that the DVD market is a better guide to the upcoming battle than the VHS-Betamax slugfest of decades ago. DVD formats from DVD RAM to RW to +R and -R were available, but ultimately hardware emerged that read them all. This will happen again, Miura predicts.

One thing's for sure, though, consumers have learned from previous format battles, as Mizuho's Hariya points out.

"There are all those consumers who made the mistake of buying Betamax 20 years ago, but now everyone knows that history, so they're not going to rush out and buy now. They're going to wait till the price drops sufficiently," Hariya says. "Everyone's learned that one."





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