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HD VMD: Better red than dead? - March 10, 2008

I'll say this for the folks at New Medium Enterprises: They're nothing if not persistent. The British company has continued to put out press releases and pester reporters for years with tales of imminent developments and breakthroughs for its red-laser based HD VMD disc format despite few of its promises actually being borne out. And yet the company refuses to give up, recently going so far as to hire Michael Solomon, a well-regarded TV industry veteran, as its new chairman to try, once again, to attract interest in the format from U.S. program suppliers.

This morning, NME managed to land a piece in the NYTimes, covering much of the same ground covered by the trades over the previous several weeks, which sparked additional chatter on various media and technology blogs. Well done, NME.

But could another, HD disc format really find love in the U.S., even after the industry just went through a painful war between two blue-laser formats?

Solomon says NME doesn't need major-studio support to succeed. "We want to create a huge Spanish-language library,” Solomon told Video Business last month. “There are not a lot of others [from the Blu-ray and HD DVD camps] doing that. There is a huge amount of faith-based content from the mega-churches. We can try to corner that.”

Because the players are based on existing red-laser technology, the company claims, manufacturing costs are much lower than for Blu-ray, which could give the format a significant price advantage in emerging markets like China and India, where the company has already attracted some interest from local program suppliers, as well as Central Europe and Russia.

"We can sell players for $90 and make a profit," Solomon told the Times.

It's difficult for Media Wonk to put much stock in anything NME says about its plans at this point. But its latest claims have at least one thing going for them: Despite Blu-ray's triumph over HD DVD, it's far from clear that Blu-ray will become the sole--or even dominant--HD format around the world. Its high costs will remain a deterrent to consumers in many markets, some of whom will be open to lower-cost alternatives. Content publishers in many of those markets are also likely to look for cheaper alternatives, given the high costs of mastering and manufacturing Blu-ray discs.

It's at least as likely that the HD disc business will fragment globally as it is that Blu-ray will become the dominant format worldwide.

In China, for instance, a low-cost version of Toshiba's HD DVD format has backing from the government, which seems determined to go ahead with the format even if Toshiba has dropped out. Whether the Chinese HD DVD format succeeds, or whether HD VMD finds fertile ground there, China will be a difficult market for Blu-ray to crack.

Even in the U.S., some small publishers fear the high costs of Blu-ray could make releasing their titles in high-def unprofitable. That could, in fact, leave the door open for alternatives, if not HD VMD than something else (WMV HD, anyone?).

Blu-ray costs will eventually come down, of course, but they'll always remain higher than the alternatives, if for no other reason than the high royalty costs associated with the physical format as well as BD-J, BD+, AACS and other mandatory features. And as always, Blu-ray's enemy is time. It will take time for BD drive volumes to increase, and for mastering and replication capacity to come on line sufficient to lower costs to mass market levels around the world. And the world is not going to wait for Blu-ray.



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