THE GIZMO: Universal Home Entertainment holds the HD-DVD fort . . . and maybe the keys.
In what's shaping up as an electronics industry trial of the century - between two incompatible, high-definition video-disc formats - the holdout juror is Ken Graffeo, Universal Home Video executive vice president of HD strategic marketing. And he may very well upset the whole case.
Every other Hollywood studio (that would be Sony, Fox and Disney) is either backing the Blu-Ray high-def disc format exclusively or maintaining a Swiss-like neutrality.
In the latter camp are the likes of Warner Bros. and Paramount, issuing titles on both Blu-Ray and its close but incompatible rival, HD-DVD, and calling on other studios to do the same.
But then there's Graffeo's company. Universal Home Entertainment is the one and only "major" exclusively backing the other combatant in this trial, putting out content only on HD-DVD.
That means that if you crave a high-definition disc version of, say, "The 40 Year Old Virgin" or the futuristic thriller "Children of Men," the first season of "Heroes" (out Aug. 28), or any of the other 100-plus HD titles that Universal will deliver this year, then you've gotta accept his vision and buy an HD-DVD player.
What is this man thinking? We had to ask.
Q: I imagine the pressure on you is pretty intense when you talk with your studio peers. Having two rival formats keeps most consumers on the sidelines waiting for a winner. How do you respond to that?
A: I'd argue that this format war is actually beneficial to the consumer. A little over a year ago, the least expensive HD-DVD player was $799. Now, with Toshiba's current rebate promotion (good through June 16), you can get an HD-DVD player for as little as $299.
On the Blu-Ray side, the players started at $1,000 to $1,800 at the end of [2006] and this summer will be down to $599 with new models from Sony and Panasonic. It's the format war that's driving pricing down at such a dramatic, accelerated rate.
Q: Why did Universal opt for HD-DVD?
A: Several years ago, we looked at the technology and decided that this format would offer the better set of mandatory specifications.
From day one, every HD-DVD player made has to have an Ethernet port for online connectivity. And every player had software to support unique, interactive viewing experiences either programmed onto a disc or available online. We're exploiting this on many Universal releases.
In Blu-Ray, the interactive specs are still just an option. The only Blu-Ray player now sold with an Ethernet port is the PlayStation 3.
A lot of their players can't even support the interactive BD-Java software that's running the two new (Blu-Ray-exclusive) "Pirates of the Caribbean" titles.
[Editor's note: The balking Samsung, Philips and Sony players will eventually show the "Pirates" discs but only after a firmware upgrade.]
In fact, the Ethernet and Java specs for Blu-Ray won't be fully firmed up until Oct. 31.
That's why Warner Bros. is putting out a more sophisticated, online-connected version of "Blood Diamond" on HD-DVD, and also why they've put out "Batman Begins" and the new "Matrix" box sets first on HD-DVD.
Q: How about the manufacturing costs?
A: Also very important - and lower for HD-DVD discs and players.
When you can get below $300 for hardware, you open up the mass market. Now people are willing to jump in and buy a player.
Even if the other format were to eventually win, there's no risk. Because that HD-DVD player you buy will still play your regular DVDs and, by upconverting, will actually make the discs look better.
I can't imagine Blu-Ray getting even close to a $300 player this year. I expect their lead dog, PlayStation 3 [now $599], to drop $100, but that's it.
Q: Sales figures for Blu-Ray movie discs are significantly higher this year than for HD-DVD. How do you counter the argument that the tide has turned in Blu-Ray's favor?
A: We didn't have many hot releases in the first quarter, or many releases at all. They had some real biggies, like "Casino Royale." The fourth quarter will be telling. Our releases will be stronger, and we're looking for a big attach rate [that's disc sales per player] when people jump for an inexpensive HD-DVD machine to show off their new high-def TV set.
To that end, we're doing a lot to educate the retailers and the consumers. You know, there are now HD sets in probably 25 million households. But more than half of those owners still believe, incorrectly, that anything they plug in - including basic cable and standard-definition DVD - is going to be in "high definition" on those sets. We've got to show them what they're missing. *
