Well guys, you can all thank me because I have personally translated the Ken Graffeo interview:
Interview: Universal EVP Ken Graffeo says HD DVD is here to stay
By Nate Mook, BetaNews
January 21, 2008, 4:40 PM
NM: There was a lot of surprise when you canceled the CES press conference and meetings after Warner jumped ship. It appeared to many that you were simply giving up. Two weeks after the fact, do you regret canceling everything?
KG: It's very easy to look back and say "I could have" because you always know the result. But at the time... imagine the orchestration of a press event with the presenters, the scripts, the entire presentation, videos that were produced -- everything. The crew was already setting up and we were on a plane on Friday, so not being able to get back to everyone to say "how do we make a change for Sunday" was very difficult. And what are the answers? We had no idea because we were reading and hearing about Warner's move the same time everyone else was.
If we had our press event on Monday, it would have been different, but because it was right there on Sunday and we heard Friday afternoon we couldn't even get to everybody. If I had to go back, it was probably the right thing to do. The entire flow of the presentation would have had to been changed. When we found out at the last minute, we had to regroup and say
"Toshiba, what are you doing?" and we didn't have any answers. I hate to stand in front of someone and say I don't have an answer, I don't know what's going on.
Here's what Toshiba is doing, Ken:
NM: Sony claims that the PS3 has given Blu-ray the market lead -- is this just posturing so Blu-ray can tout higher sales numbers? Is the PS3 really seen in Hollywood as a device that sells movies?
KG: I'll go back to what we've said over and over: the set-top player is the primary movie device. If you look at the attach rate of how many movies are bought for dedicated HD DVD players versus how many movies were sold for the PS3 and the Blu-ray set-top players combined, it's a 4 to 1 gap. Which says that people who own game machines are not buying at the same rate as someone who owns a set-top. And on the DVD side, your primary player is a set-top.
So since set-top boxes are so important, let's look at that trend for a moment:
Here you go, Ken:
If you go to a store -- let's say a Best Buy or a Circuit City -- and buy an HDTV and then you want to get your movies to look better, you go to the DVD section -- you don't go to the game section. We have always been believers, not only historically but looking at a lot of recent research that has been done, that for the consumer their preference is a set-top.
The one thing that's different now compared with VHS is that when you bought a DVD player, you could not play your VHS on it. People didn't really have libraries in the days of VHS, because movies were really rented -- 80% of the business was rental. Today it's different because both Blu-ray and HD DVD are backwards compatible, so you have to take that into consideration. In turn, people want a set-top player that lets them play their current movies just as they do now, not on a game console.
ORLY KEN?
Shall I post another graph, Ken?
NM: Price seems to be the major leverage HD DVD has, even with less studios than Blu-ray. Do you still believe other studios will come around if you sell enough players? This was the belief when we spoke to Microsoft's Kevin Collins 8 months ago.
KG: I can't speak for the other studios, because I don't know how they are thinking. But what was very encouraging is that when we were at CES we met with a lot of retailers. And the retailers openly said, that as much as they hate having two formats they are not making any changes, because they want to wait for what the consumer does. We've always said we want to follow the consumer.
Good idea, Ken!
Go and follow those consumers!
Consumers right now are buying upconverting players -- they are outselling the next-gen players combined by 10 to 1 every month. They are affordable because they are under $200 -- the average price is $85 -- and consumers want to see their movies better.
Hmm...
Wait a second Ken...
Why are you switching the subject? Why are you now talking about upconverting players?
Perhaps, Ken, that price isn't the only factor for the next-gen media formats? Perhaps the silly next-gen media battle was the reason why consumers didn't want to back HD-DVD given that Blu-Ray is the obvious victor.
You can lower the price as low as you want, but it's not going to increase demand for a dead product, Ken!
So pricing is very important.
Very, Ken, but at this stage, not the
most important.
We saw that on DVD: as soon as price point went under $200 and as soon as it started getting close to $100 players really started taking off because you're hitting very consumer-friendly prices. If you want to hit the mass market, you have to be consumer-friendly in price. If you want to be a niche electronic, you're going to be high priced.
Good job Ken. That's why I can't wait to see Blu-Ray reach those prices.
Too bad HD-DVD never started taking off at those prices compared to $400 blu-ray players.
NM: From a strictly consumer standpoint, HD DVD seems to make the most sense: players are cheaper, combination discs are possible, which enables a smooth transition. Blu-ray players are still in flux and current models except the PS3 won't be upgradable to Profile 2.0. Blu-ray is pitching players that will be obsolete in a year, and discs that lack the interactivity found on HD DVD. Why hasn't there been more of a marketing message on this from HD DVD?
KG: The consumer today is very confused about HD.
Well, I would like to personally thank you, Ken, for adding to that confusion! You've done a swell job!
There's no more confusion though, so be happy Ken! Keep that head up.
^ That doesn't look too confusing, does it Ken?
Only 12% of all households are getting HD programming, but 35% of households have HDTVs. We have spent a lot of time, and will continue to try to educate the consumer because there's a lot of confusion on what this means. When you're watching a TV show and the logo says in high definition and you don't have your source for high definition, it further adds to the confusion. People don't understand this.
You've spent a lot of time Ken, but that time you've spent hasn't made the decision any clearer for consumers. You've wasted a lot of time, Ken.
People have a library of DVDs, people understand HD and know it looks better. But they're not thinking about it from a format perspective, they are thinking "I want my movies in high-def."
Yep. High-Def on Blu-Ray, not HD-DVD.
See this, Ken:
I think education has been very important and is something we have to continue doing. In Toshiba's recent press release, they said they will have an aggressive marketing campaign that will be launched very soon that will complement their new pricing strategy.
Is Toshiba going to launch an aggressive marketing campaign touting HD-DVD's death? Because, honestly Ken, that's a little unnecessary; the media is already doing that job for them.
