Was Paramount Paid to Drop Blu-ray?

When Paramount decided to go HD-DVD exclusive, many denizens of the internet were confused at the choice, wondering why they would choose to forego an extra possible source of revenue. Naturally the topic of monetary incentive came up, and, if a report by the New York Times is to be believed, the above theory may hold water after all. The popular newspaper quoted two executives close to the deal who said that Paramount was paid to go HD-DVD exclusive, including a bonus of $150 million in a combination of cash and promotional guarantees for films. In addition, the deal is allegedly only for the next 18 months after which the studio can produce content on both formats. Unsurprisingly, Andy Parsons, a member of the Blu-ray Disc Association, had nothing good to say about the agreement: "This seems like a move of desperation."

On the other hand, Microsoft and Intel, two firms which back the HD-DVD standard, have explicitly denied any funding. "We provided no financial incentives to Paramount or DreamWorks whatsoever," said Amir Majidimehr, head of Microsoft's consumer media technology group. In addition, a move to HD-DVD isn't entirely illogical, as production costs of the format are lower than those of Blu-ray, as well all HD-DVD players following a unified spec, whereas Blu-ray has the 1.1 and 2.0 profiles. Thus, the case boils down to a matter of he-said, she-said, and it is up to the reader to decide which side sounds more credible.

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I forgot to mention one other thing regarding Sony's choice of BR over DVD as a disc format for the PS3. The DVD has been maxed out as a delivery system for a long time, which has severely limited what game developers are able to do, both in storyline and graphical representation, even on the PS2.

If the current platform was already cramped for space, and the next generation was supposed to not only increase the display area (going to widescreen), but crank up the resolution to HD AND add surround AND bigger gaming areas (maps) AND higher bitrates AND larger color palettes - how could this be done on DVD? It's simple - it can't be done.

The single-sided DVD tops out at 9GB, and many games push this as far as it can go. The only way to get around this is to either have double-sided discs (impractical, since we don't have double-sided drives), or use multiple discs. if any of you have been unfortunate enough to play games that use multiple discs, you already know how much fun THAT is. No, the only answer was to move to a high-capacity delivery system, and AGAIN Blu-ray wins because contrary to what the HD camp will tell you, SIZE MATTERS.

Blu-Ray is more expensive to produce then HD-DVD is. HD-DVD uses pretty much the same equipment as DVD (including the same type or similar laser) so manufacturers spend a lot less upgrading the equipment to handle HD-DVD.

Any company would be smart to support both formats, so I do think Paramount & Dreamworks were paid off.

BUT THEN AGAIN...

Andy Parsons, a member of the Blu-ray Disc Association, had nothing good to say about the agreement: "This seems like a move of desperation."

One could say the EXACT same thing with Sony delaying the PS3 for how long? And having the most expensive console on the market and much more limited quantities through the first year... because they wanted to include the Blu-Ray drive in their system.

They did this on purpose and their tactic worked as most people buying Blu-Ray DVDs are watching it on the included Blu-Ray player on the PS3, not stand alone systems.

But thats business and if HD-DVD and Paramount/Dreamworks had a monetary deal then that too is business.

I only wish they bought out Fox too!

EDIT : Do note, I am not bashing Sony, just pointing out that they have their own tactics.

And having the most expensive console on the market and much more limited quantities through the first year... because they wanted to include the Blu-Ray drive in their system.

As opposed to Microsoft who rushed out their system with a poor defective design and no support for next gen media without purchasing additional hardware?

1% defective rate vs 30-plus% defective rate. Superior BD playback vs. noise and red rings of death. You decide.

Fox isn't stupid and short sighted. Note they made their new release announcement the same day.

Ash said,
HD-DVD uses pretty much the same equipment as DVD (including the same type or similar laser)

Wow, that's about as ignorant as they come. The only similarity is that they are in fact lasers. DVD players use a 650nm wavelength laser (Red) and CD players use a 780nm wavelength laser (infrared). Both HD-DVD and Blu-Ray use a 405nm blue-violet laser, which is not only the key component to manufacturing players, it is the biggest expense. You can walk into just about any discount store and find a DVD deck for $30 bucks, but it will be awhile before we can say the same about any deck with a blue laser.

The main reason there are additional costs in BR disc manufacturing is the addition of a 'hard-coating' on the optical side of the disc. This is a requirement for BR discs, but only optional for HD-DVD. The other (and more significant) cost is mastering for higher capacities, a problem the HD-DVD camp will not likely ever have to worry about, since they have already pretty much maxed out the capacity of the format, whereas working prototypes of up to 200GB capacity discs have already been demonstrated for the Blu-Ray format. If you don't think this is significant, try explaining it to a 'Lord of the Rings' fan who wants their Precious [pun intended] extended editions on a single disc at high bitrates with uncompressed audio and ALL of the additional commentary tracks available on the same disc. This is the only acceptable answer to these folks, and it will never EVER be possible on an HD-DVD disc.

The marketplace has already decided who the winner is, and it is Blu-Ray. The only HiDef format being rented by Blockbuster? Blu-Ray. The only type of player being sold at Target? Blu-Ray. The clear sales winner for software? Blu-Ray.

And let us not forget that EVERYONE was on board the Blu-Ray bus during years of development before Microsoft, NEC and Toshiba decided to go it alone and create this chaos. This had nothing to do with 'consumer choice' or whatever euphamism they want to use - it was pure greed. It was the only way they could control DRM and the royalties associated with the software side. Now they are trying to buy their way back into the race, and it is shameful. The money will be hidden behind 'promotional considerations' and other cleverly worded phrases, but the fact is, it is a payoff, and I for one wish the government would look into this anti-competitive, anti-consumerist behavior and call it what it is.

One last note. I wish all of you would discourage others from saying 'Sony' when you really mean the 'Blu-ray Disc Association' (BDA). Sony did not invent Blu-ray on their own, it was a broad consortium of companies. Heck, they didn't even invent the Compact Disc on their own, but people like to use them because they are a big company (and thus a big target). Let's drop the ignorance and get informed.

I don't really think a 50 million incentive would sway paramount since they already made over 1 billion in just the domestic market for 2007.

Michael Bay even took back his previous statement about Paramount and HD DVD.

Last night at dinner I was having dinner with three Blu-Ray owners, they were ****ed about no Transformers Blu-Ray and I drank the kool aid hook line and sinker. So at 1:30 in the morning I posted - nothing good ever comes out of early am posts mind you - I over reacted. I heard where Paramount is coming from and the future of HD and players that will be close to the $200 mark which is the magic number. I like what I heard.

As a director, I'm all about people seeing films in the best quality possible, and I saw and heard firsthand people upset about a corporate decision.

So today I saw 300 on HD-DVD, it rocks!

So I think I might be back on to do Transformers 2!

Michael Bay

http://www.michaelbay.com/blog/files/Michael-Bay-HD-DVD.html

I am glad they dropped Blu-Ray. Video Discs should be created according to open standards rather than proprietary standards and I think that Sony should realize that.

This is a pretty ignorant statement since Blu-ray contains intellectual property from nearly every major electronics company. Companies like Sharp, Pioneer, Panasonic, etc.

Whereas HD DVD is strictly controlled by Toshiba and convicted monopolist Microsoft. Open standards...hah.

Anything to sell newspapers. There really is no difference in Sony buying studios then this, whats good for the goose.............

"The key factor was HD’s lower cost to consumers, said Rob Moore, Paramount’s president of worldwide marketing and distribution"

Aswell as costing more to make blu-ray also costs more to license which in turn will mean higher costs to the consumer, especially if it won the format war and had no competition. Theres also a reason why a studio would choose hd-dvd over blu-ray and thats that internet access is mandatory with hd-dvd where as with blu-ray it's optional which would make it a little harder to play pirate discs because it would make it easier to block a leaked AACS key (any feedback to clarify that would be appreciated, i'm only going of whats on wikipedia).

BD discs are the same price as HD-DVD. That means that either blu-ray-ers are making zero profit, or that HD-DVD are taking advantage of this by pricing the discs at the same price. How is that helping the consumer with the supposedly lower prices? The only thing cheaper are the HD-DVD players.

And with the internet point, that's not the reason. As a customer you are not required to have your hd-dvd player connected to the internet, and I doubt many people will do so, unless they want a firmware update. The information of blocked keys should come with newer titles, not with the internet, as they can't force every customer to have internet.

Meaning that, even though hd-dvd players are required to have a possible internet access, in the end it will always depend on whether the customer wants it, if he can. Unless they come with a WiFi module, how many people do you think will or know how to connect it to a router with a cable?

Julius Caro said,
BD discs are the same price as HD-DVD. That means that either blu-ray-ers are making zero profit, or that HD-DVD are taking advantage of this by pricing the discs at the same price. How is that helping the consumer with the supposedly lower prices? The only thing cheaper are the HD-DVD players.

Actually, BDs are cheaper than HD DVDs.

Julius Caro said,
BD discs are the same price as HD-DVD. That means that either blu-ray-ers are making zero profit, or that HD-DVD are taking advantage of this by pricing the discs at the same price. How is that helping the consumer with the supposedly lower prices? The only thing cheaper are the HD-DVD players.

Wow, I'm surprised you also didn't ask "will you stop beating your wife tomorrow?"

The market has decided how much it is willing to pay for high-def video on disk. That's why blu-ray and hd-dvd disks sell for nearly the same price -- customer's don't see one format as more "valuable" than the other, so they're not willing to pay more for one over the other.

Quite simply, it boils down to this: the cost to produce and manufacture a blu-ray disk is greater than an hd-dvd disk. As the media is already priced at the market rate, there is no ability to charge more for one format over the other. This in turn means that profit margins for blu-ray disks are lower than profit margins for hd-dvd disks, meaning the blu-ray format is less attractive from a business standpoint.

You really can't blame Paramount though. As they say, competition's great for everybody; especially when you got people throwing money at you. Paramount doesn't give a rat's behind who wins the format war or whether you lose your money because you bought the other player. Though, you can't say you wouldn't do the same thing in their shoes, right?

Only possible way this could bite them in the ass is if HD-DVD loses the format war. I really doubt that will happen though, so long as Microsoft or other company's backing HD-DVD keep on "not providing financial incentives". :P

Well, the last major Blu-ray Paramount title, "Disturbia", outsold its HD DVD counterpart 3-1.

That means BD owners bought THREE HUNDRED PERCENT more copies.

Amazon showed similar stats for preorders of the now canceled "Blades of Glory".

Sad when the market can't decide for itself.

In other news "The New York Times" edited George W. Bush's wikipedia page to enter "Jerk Jerk Jerk Jerk Jerk Jerk", the Pulitzer Prize shall be awarded tomorrow.

Well there's that annoying little thing called CONSUMER CHOICE.

Consumers are choosing Blu-ray 2-3 times more than HD DVD. Now Microsoft money and Paramount GREED are taking that away.

That makes you happy?

How embarrassing for you Peter, you forgot to read the article.

"Microsoft and Intel, two firms which back the HD-DVD standard, have explicitly denied any funding."

Because it drags out the format war for at least another year and a half.

Ever hear of SACD and DVD-Audio?

Both HD formats die and MS gets what they want: inferior quality HD media via downloads, strictly DRM controlled with no one owning anything anymore. And BD bashers have the nerve to criticize BD copy protection.

I have a question. Does it really ****ing matter?

Sorry bout the language, but seriously, does it? I'm not particularly committed to either format, but if they paid them off or not, it doesn't make much difference - the outcome is the same. I just don't see why this is being blown up into a big deal about whether they were paid or not. These 'business dealings' happen quite often in the industry.

-Spenser

stifler6478 said,
I have a question. Does it really ****ing matter?

Sorry bout the language, but seriously, does it? I'm not particularly committed to either format, but if they paid them off or not, it doesn't make much difference - the outcome is the same. I just don't see why this is being blown up into a big deal about whether they were paid or not. These 'business dealings' happen quite often in the industry.

-Spenser

It dose matter to some, I know only a small number of people are in the HD market but I already have my Blu-ray player (my PS3). If everyone took a buyout and Blu-ray ended up dieing then I would probably have to end up buying some kind of HD-DVD solution and that means spending more money.

Such is the risk of being an early adopter during a format war. No matter which side wins, some consumers are going to lose.

TRC said,
Such is the risk of being an early adopter during a format war. No matter which side wins, someone is going to have to spend more money to switch to the other format.

Yep. As I say in every "format war" news post, you grab what's fresh out the oven, you could get burned.

Dakkaroth said,
Yep. As I say in every "format war" news post, you grab what's fresh out the oven, you could get burned.

But it always tastes best straight out the oven... no point leaving it to go soggy.

With most information leading that Bluray sales are by far out doing HD-DVD this choice is definitely odd.

Last I heard 300 on Bluray was selling 3x as fast as 300 on HD-DVD. Moving in the other direction is very odd.

If they did really take a buy out that is very lame.

cloudstrife13 said,
With most information leading that Bluray sales are by far out doing HD-DVD this choice is definitely odd.

Last I heard 300 on Bluray was selling 3x as fast as 300 on HD-DVD. Moving in the other direction is very odd.

If they did really take a buy out that is very lame.


Why is it lame... its a business deal.. perhaps the $$ and a look at the production costs, etc were enough to say its worth it to try out an 18 month deal... as others have stated... we see million dollar deals all the time that give one company exclusive releases... GTA ring a bell?

cloudstrife13 said,
With most information leading that Bluray sales are by far out doing HD-DVD this choice is definitely odd.

Last I heard 300 on Bluray was selling 3x as fast as 300 on HD-DVD. Moving in the other direction is very odd.

If they did really take a buy out that is very lame.

Actually, I think it's pretty smart if the studios are in it strictly for the money (which they are). On one hand, they get $150M to release movies on HD-DVD only for 18 months. Then after that, they get to release the Blu-ray versions (you can bet they will, once the exclusive deal runs out), and they get to watch the lemmings purchase the same movies all over again.

Especially if there is any truth to the idea that HD-DVD is the one that's on the way out. They just got paid to release movies that those buyers will purchase again when HD-DVD is dead. Not that I'm a Blu-ray fanboy--personally I'd rather see HD-DVD win out, but my gut tells me the writing's on the wall...this deal will only prolong the agony, and the only winners are the studios who get to sell the same movies again to those who originally went with the losing format.

As for myself, I just sit back and watch the whole fiasco from a comfortable distance. I'm not such a snob that I think "regular DVDs" are unbearable to watch.

cloudstrife13 said,
Last I heard 300 on Bluray was selling 3x as fast as 300 on HD-DVD. Moving in the other direction is very odd.

Closer to 2:1 actually. (1.87:1 if you want to be more precise...)

Profit margins on blu-ray disks are lower than hd-dvd disks. They can sell less hd-dvd disks than blu-ray disks and still make more money. One would assume that they did this calculation before making a final decision. They probably also factored in attach rates for each format (per owner [not net total], blu-ray owners buy less disks than hd-dvd owners) and the player lineup/pricing over the next year or two.