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Blu-Ray Blues
Exclusive: Sony chieftain discusses Blu-Ray Obstacles, Reveals new film release schedule

By Alex Ben Block -- Senior Columnist, Hollywood Today

Hollywood-CA (rushprnews) 01/08/2007 - Sony is stepping up software support for its new Blu-Ray high definition format but competition and complaints from consumers make its fate far from certain.

Sony Corp. is expected to reveal at this week's Consumer Electronics Show in Las Vegas that it will finally begin offering a steady stream of movies from its film library, along with current blockbusters, in the new high definition Blu-Ray format. This follows complaints that the Japanese giant has been slow releasing titles to drive the first wave of sales since Blu-Ray players became available in mid-2006.

"We're going to be very aggressive in 2007," David Bishop, President, Worldwide, Sony Pictures Home Entertainment told Hollywood Today late last week (www.hollywoodtoday.net). "Of course, we had to be a bit measured early because we really didn't have any significant installed base. We had just one hardware manufacturer before November. So we had to balance supplying that player, but not put out too much too soon. So that will change in 2007 for us, where you will see three to four catalog titles per month. When you combine that with new releases, you are going to see at least 90 to 100 releases from us in 2007." Sony presently has about 60 titles available in Blu-Ray.

What has changed, says Bishop, is that with the November introduction of the Play Station 3, which is also a Blu-Ray movie player, there is now a sizable installed base. Bishop cites Nielsen in reporting there are one million PS3 units already in North America, and in predicting that there will be five million worldwide by April.

Those numbers sound high by many estimates in the wake of Sony's very public inability at Christmas to deliver enough PS3's to satisfy gamers, who stood in line to grab the few available units. Launch plans for PS3 in Japan and Europe were likewise scaled back or put off, with the blame on Blu-Ray manufacturing challenges.

Analyst Tom Adams of Adams Media Research offers a lower estimate of U.S. sales. He believes that between 250,000 and 400,000 PS3's reached consumers. That compares to sales in 2006 by his estimates of 3.7 million of Microsoft's Xbox 360 players, and 800,000 of Nintendo's Wii (pronounced 'We'), which retails for about half the PS3 price.

Of more concern, while the PS3 drew headlines for lack of supply, it was Nintendo's Wii that caught the cultural zeitgeist with a motion-sensing controller that allows the player to move a wand around and see it reflected on the video screen as if the user was hitting a ball or taking action. An Associated Press story on Jan. 4 called the Wii, "The most delightful video-game story of 2006."

The Washington Post technology columnist Mike Musgrove reported on Jan. 3 that there are also questions about the quality of some PS3 game graphics: "Remember those $2,700 eBay auctions for the PS3 when it first came out, just before Thanksgiving? They've since cooled off, and now it's easy to find one on Craigslist for near list price."

This all raises urgent questions for Sony Corp. which has made an expensive company wide bet on the success of Blu-Ray as a mass market business and PS3 as the main vehicle to launch the format. The stakes are huge. Blu-Ray is in a VHS vs. Beta type struggle for market supremacy with another high def player and software format called HD DVD, backed by Microsoft, Toshiba and others, that has stand alone decks retailing for roughly half the cost of the Blu-Ray players. HD DVD software and hardware are also easier to manufacture and less expensive for consumers than Blu-Ray.

Even though it costs twice as much as Nintendo's Wii, and a third more than the X Box, Sony is still losing money on every PS3 it sells, with estimates of the deficit ranging from $200 to $600 per machine. That is to be expected, say the experts. "They're just seeding the market," says Adams. "They plan to make the real money selling the games and software."

That means instead of being a profit center for Sony, the PS3 could mean a loss of $1.5 billion, according to the web site Digital Trends, which says that HD DVD is winning the battle so far. "The movie market moves on quality of movies, price of players and price and availability of media.," wrote Digital Trends Rob Enderle on Dec. 6.

As of the end of last year, there were about 130 movie titles available in Blu-Ray, according to Ralph Tribbey, editor of the DVD Release Report, who believes there should have been 800 titles for a proper launch. While Sony has lined up exclusive software support from Disney, Fox, MGM and others, and simultaneous releases in both formats by Warner and Paramount, only a handful are on the shelves yet.

"I'm stunned at the inability of Sony to be more aggressive when they should be," Tribbey told Hollywood Today. "This is a life and death struggle. They (Sony) can't afford another Beta disaster."

Ultimately, Tribbey believes even beyond price, high end consumers will go with the format that offers the most and best programming. "This is war and the only way to win is with software," says Tribbey.

More exclusive new info on how Bishop and Sony intend to wage this war, plus year-end HD Household statistics in Part II of "Blu-Ray Blues" in Hollywood Today (www.hollywoodtoday.net).

Block has been editor of The Hollywood Reporter and TV Times as well as associate editor of Forbes Magazine. He is a best-selling author and radio talk show host on KPCC-FM in L.A.

Permission to re-print or rebroadcast granted provided Hollywood Today is credited and web address url is listed whenever possible.

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