One size fits all, says Warner Bros. – New THD disc is both HD-DVD and Blu-ray Disc

(This article first appeared in the January 8, 2007 issue of Jon Peddie’s TechWatch)

At CES this week, Warner Home Video unveiled its new Total Hi Def (THD) disk format, a medium that features HD-DVD content on one side, and Blu-ray disk content on the other, in a play to help increase consumer confidence in high-definition content and, thus, sales of high-definition movies.

Barry Meyer, chairman and CEO of Warner Bros. Entertainment, explained that “the market has experienced confusion and hesitation” due to the competing standards of HD-DVD and Blu-ray disk and that “this is a problem desperately in need of a solution.” He went on to say that he hoped industry colleagues and consumers alike would embrace THD technology.

One for all and all for one - Warner Bros. THD is both an HD-DVD and a Blu-ray Disc
One for all and all for one – Warner Bros. THD is both an HD-DVD and a Blu-ray Disc

Kevin Tsujihara, president of Warner Bros. Home Entertainment, and Ron Sanders, president of Warner Home Video, presented a number of statistics about the high-definition disk market, including a statement that a total of 775,000 high definition playback devices, including game consoles, shipped in 2006 – this includes HD-DVD and Blu-ray. However, these numbers are at odds with Sony’s statement this week that they shipped one million PS3s in 2006, never mind the CEA report of 250,000 stand-alone high-definition players sold in 2006, plus some number of HD-DVD add-on drives for Xbox 360s. It would appear the total number of players sold through the end of 2006 may well actually be between 750,000 and 1.5 million – a rather broad spread, and as every-one is putting a spin on things, it’s not clear if an accurate first-year number will really every be obtainable.

The photo above shows Kevin Tsujihara, Steve Nickerson, and Ron Sanders with mock-ups of Superman Returns on THD media (note the combination blue and red box). Steve holds the demonstration THD disk, which he used to play a clip from the movie on both an HD-DVD player and on a Blu-ray player.

Tsujihara and Sanders further predicted that another 8.7 million players would be sold in 2007, including game consoles, with 2.5 million of those units being HD-DVD and 6.2 millions being Blu-ray (the balance of these presumably being Sony PS3s).

Interestingly, Tsujihara and Sanders also stated their research predicts that there will be $600 million in HD-DVD “software” (a euphemism for titles) sold in 2007, and $400 million of Blu-ray titles, making the high-definition content market a billion-dollar market in 2007. Not a number to sneeze at, but it is noteworthy that they expect more HD-DVD titles to sell than Blu-ray, implying that the PS3 has less of an impact on Blu-ray title sales than Sony might hope.

In customer surveys Warner conducted, they found that among users who had high-definition players, there was 98% user satisfaction with their hardware and high-definition content, with 85% of those surveyed feeling that high-definition content was a great value, and 90% very satisfied with the picture quality. Those are encouraging numbers, and it’s not surprising that this provided Warner with an incentive to get more people to move to high-definition media.

Warner believes that their new THD format can overcome the concerns consumers have about obsolescence, and they have surveys to back this position up as well. Forty-nine percent of the people they surveyed said they would be more likely to buy high-definition players of some sort if content on THD disks became readily available, and 62% felt that that the THD disk format would remove confusion about high-definition choices. Interestingly, 46% of the people Warner surveyed also indicated that THD would allow them to potentially choose different players for their household, for example, an HD-DVD player for the living room and a Blu-ray player for the bedroom.

Under the mottos of “All of the content, none of the risk” and “One world, one disc,” Warner’s Nickerson demonstrated a prototype of the THD disk in both an HD-DVD player and a Blu-ray player, followed by playing the disk in LG’s new BH100 Super Multi Blue Player (see related article below). The clips he played from Superman Returns performed flawlessly. It was probably no coincidence that Superman Returns was chosen, as it is the industry’s top-selling high-definition title in both Blu-ray and HD-DVD formats, and because Superman is wearing both blue and red (the respective packing colors for each of the formats), making Superman an icon of sorts for the unification of Blu-ray and HD-DVD in a single embodiment.

The actual THD media consists of two .6mm disks bonded together – one side is a Blu-ray disk, and the other an HD-DVD disk, and therefore it has the same capacity on each side as a solo disk of the format involved, meaning that the Blu-ray side can hold up to 50 GBytes using dual-layer recording, and the HD-DVD side can hold 30 GBytes. The actual cost of the new hybrid media was not disclosed, but Sanders indicated that the final packaged movie pricing would not be materially more than existing high-definition titles. In terms of production, as long as a production house already has both HD-DVD and Blu-ray manufacturing equipment, they will be able to produce THD media.

Movies on THD disks will start shipping during the second half of 2007, and once THD is in full swing, Warner will ship its titles on THD exclusively – and therefore no longer producing two SKUs for every title.

I asked Sanders and Nickerson about licensing fees Warner might charge to let other studios use the THD format, and they indicated that THD was covered by existing licenses for the individual formats, and that in any event, they wanted to see broad adoption of THD as it could only help retailers and consumers, in turn helping the movie industry. Warner produced statements from Best Buy and Trans World Entertainment to support their position on the potential benefit of THD to the industry at large.

In response to a final question from the audience about the future of the individual formats, Sanders said he expected HD-DVD and Blu-ray to coexist into the future, much as the Xbox 360 and PS3 will continue to co-exist. Not a great analogy, but certainly his company’s efforts with THD will ensure that both formats will continue to be well supported for a long time to come.