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Now he tells us - November 11, 2007

What a remarkable admission from Howard Stringer. Speaking at an event in New York last week, the Sony CEO described the format war between Sony's Blu-ray Disc and Toshiba's HD DVD as at "a stalemate." Apparently, Sir Howard has not been getting the memos from the Blu-ray Disc Assn., which as recently as last month's two-day Blu-ray-apalozza in Los Angeles was sticking to its strategy of simply declaring victory in the format war in hopes of convincing the other side to give up.

While Stringer's conclusion is hard to dispute, his seemingly impromptu fit of truth-telling must have come as a very unwelcome surprise to executives at non-Sony Blu-ray studios, who have stuck their necks out by championing the Sony format and who, for the last year have been telling their bosses, "don't worry, it will all be over by early next year and we'll be on the winning side."

At a "Ratatouille" event Oct. 31, Disney Home Entertainment president Bob Chapek was still proclaiming Blu-ray's "inevitable" triumph and accused others in the industry of "artificially prolonging" the format war. He can't have been happy to see Stringer come out a week later and idly note that the outcome of the war "doesn't mean as much as all that." Especially after letting Disney CEO Bob Iger get up at the Goldman Sachs media conference in September and declare support for Blu-ray "a no-brainer."

Of course, Stringer's truth-telling was entirely unvarnished. In fact, he portrayed himself as remarkably (and implausibly) detached from Sony's Blu-ray decision making.

"There was a chance to integrate," he said, implying that time was before he became CEO. "I wish I could go back in time, because I hear it was all about saving face."

Stringer was named chairman and CEO of Sony in March, 2005. At the time, neither side in the format war had shipped any players and there were still some in the industry hoping to head off the train wreck. As late as August of that year--five months after Stringer assumed the top job--there were reports of last minute talks between the camps about a possible integration of the two formats.

For the previous eight years, moreover, Stringer had overseen Sony's U.S. entertainment operations, including Sony Pictures, an obviously critical component of the company's overall Blu-ray strategy. It's hard to imagine that he could have had no influence on that strategy if he truly believed  that face-saving was inhibiting sound business judgment.

On being named CEO, in fact, Stringer was in a position remarkably similar to that of the man he replaced as CEO, Nobuyuki Idei, when Idei was named Sony's president in 1995. At that time, Sony was also in a pitched battle with Toshiba to establish the technical standards for a new optical video disc format, and the threat of a format war hung over the industry. In one of his first major decisions as president, Idei overrode Sony engineers' commitment to the Multimedia CD (MMCD) format and cut a deal with Toshiba and Time Warner to create a single, unified disc format, the DVD, based largely on Toshiba's technology.

Although the decision represented a loss of face for Sony, and arguably cost it millions in potential technology licensing fees, the success of the unified, universally compatible DVD format brought Sony Pictures and the rest of the entertainment industry billions in new revenue.

It looks increasingly unlikely that either Blu-ray or HD DVD will ever achieve comparable success.
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