blu_ray_300pxThere was a minor flap in tech news last week when the CEO of Activision, a huge video game company, called on Sony to drop the price of its PlayStation 3 game console, suggesting that if Sony didn’t follow this advice Activision would consider withdrawing support for the game platform altogether.  I hardly expect Activision to withdraw its PS3 support, nor do I expect Sony to dramatically reduce the price of systems that have already effectively dropped 20 percent or more in Sony’s top market, the U.S., because of the weak dollar. To the astonishment of hard-core gamers, in fact, I’d suggest that this little drama has nothing to do with game sales or games at all, but is instead directed at the Blu-Ray optical disk drive inside every PS3.  The dude from Activision, sensing blood in the water, is trying to look like a shark, for there is growing sentiment in the industry that Blu-Ray, as it was originally intended, is a failure.

How can that be?  Wasn’t it just a year ago that Blu-Ray, with its greater data capacity, triumphed over the opposing HD-DVD standard?  Well promises were made to achieve that victory and now it appears promises may have been broken.

Understand that the success or failure of Blu-Ray has little to do with games and everything to do with movies.  Two historical events informed the battle between Blu-Ray and HD-DVD.  First was the epic and costly 1980‘s competition between the BetaMax and VHS tape cassette standards.  Second was the triumphant succession of DVD over VHS, when we all replaced our tape libraries with disks, gladly paying anew for what we already owned, buying every Hollywood exec a new Mercedes in the process.

Re-fighting the battle between BetaMax and VHS was something the industry wanted to avoid when it came to an emerging HD video standard,  There had been for a moment such a potential conflict for DVD but the opposing forces were brought to a compromise by the movie studios, themselves, and a single technical standard emerged, pumping billions into the movie business as a result.  That’s the same goal that all sides had in the HD video fight — to get it over with quickly and get us all replacing our video libraries with HD.

According to Hollywood insiders who speak with me, the HD video battle was again decided by the studios when Disney and 20th Century Fox went with Blu-Ray in 2008.  The leader in that decision was reportedly Disney, which had 35 animated classic films it envisioned bringing to market in a data rich format with lots of extra material — so much material and games that HD-DVD, with its lower capacity, couldn’t hold it all on a single disk.  So it was Blu-Ray’s greater capacity that swayed Disney, along with Sony’s promise that the rampant success of PS3 game machines would quickly put Blu-Ray drives in most American living rooms.

The Disney fantasy was that Blu-Ray would triumph, PS3s would be everywhere, and American families would, all over again, buy enhanced copies of the 35 animated classics, sending up to $7 billion to Disney.

Well so far it hasn’t happened.

Yes, there are millions of PS3s in use, but millions more xBox360s and Nintendo Wii’s.  PlayStation 3 is the third-best-selling next-gen game console — third out of three, which is the wrong place to be for any competing tech standard that hopes to dominate.  Game consoles that have already been on the market for a year or more don’t suddenly win from behind like Seabiscuit.  Sony sells more PS2s still than PS3s.  PS3 was a year late to market, had supply problems, fewer game titles, and those titles usually cost a bit more than on other platforms.  But what really killed it for the movie studios was something completely different and unanticipated — the need for an HDTV to go with each PS3 Blu-Ray player.

Both the VCR and DVD revolutions required that just a single revolutionary (in the case of DVD, evolutionary) product be successful.  Your TV remained the same.  You can play a DVD on a DuMont black & white TV set from 1956, but Blu-Ray — unless you are not taking advantage of any of its, well, advantages — requires a whole new TV.  The chances of people buying simultaneously an HDTV AND a PS3 were lower and so was the dual penetration with the result that Blu-Ray disk sales, while not terrible, are also not material, yet, to the movie industry.  And the question now is whether they ever will be material?

Blu-Ray will survive, but will it be just for cinephiles?  That depends on how the 1080p download market evolves (which is why Apple has yet to sell a computer with a Blu-Ray disk installed, seeing it as eventual channel conflict with iTunes) or whether a new HD-DVD standard will emerge to compete again with Blu-Ray.

And don’t forget the impact of up-converting progressive-scan DVD players, which even Sony sells: I just bought one for $44.77 at Wal-Mart and driving the 720p display in my RV makes a standard-definition DVD of Charlie and the Chocolate Factory look amazingly good.  Not good enough for a cinephile, but that’s five percent of the video market, tops.

Yes, Blu-Ray is better, but for many people the incentives aren’t there, which leaves us still looking for a higher-density data standard that ideally costs less than Blu-Ray. That particular need, especially in the PC industry, never went away.

This alternate standard is coming, I’m sure, and don’t be surprised if it turns out to be pretty much the same HD-DVD that lost-out a year ago, though this time probably not under the Toshiba brand.  It would make a superior archival platform and might even be used for HD video, too.  Retooling a factory to stamp HD-DVDs costs millions less than upgrading to Blu-Ray and the eventual disks are significantly cheaper.

But that The Making of Bambi featurette may have to go.