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What is Michael Bay talking about? - December 6, 2007

In response to a question posted on his official discussion forum, producer/director Michael Bay (Transformers) trots out the hoary old saw about Microsoft's supposed manipulation of the high-def format war in order to make the world safe for video downloads.

"What you don't understand is corporate politics," Bay writes. "Microsoft wants both formats to fail so they can be heroes and make the world move to digital downloads. That is the dirty secret no one is talking about. That is why Microsoft is handing out $100 million dollar checks to studios just embrace the HD DVD and not the leading, and superior Blu Ray. They want confusion in the market until they perfect the digital downloads. Time will tell and you will see the truth."

Leaving aside his dubious assertion of Blu-ray "superiority" to HD DVD (they use the same encoding formats and neither can control the quality of the source material) he grossly overstates Microsoft's world-controlling capabilities, as any user of Vista can tell you.

More to the point, he misreads Microsoft's motives. Bill Gates may wish that everything could be delivered electronically, but he's informed enough to know that a commercial movie download business comparable in size to the current DVD business is years away. Bandwidth issues, standards issues, consumer equipment-replacement issues, DRM and rights issues and myriad other problems still need to be resolved, some requiring substantial capital investments, before people can start throwing away their DVD players.

Microsoft's working assumption--as Gates himself has articulated--is that the Blu-ray/HD DVD generation of optical-disc technology will likely be the last, at least as far as entertainment content goes, but not a step that can easily be skipped. It's main concern is that the winner not be Blu-ray.

Blu-ray was developed largely by Sony and is supported by Apple, Microsoft's two main rivals for dominance of the future digital living room and it has no interest in helping either establish a foothold there. Even more critically, Microsoft will fiercely oppose any format that uses a Java-based development platform for writing applications, as Blu-ray does with BD-Java. Microsoft very much wants to make Windows the default development environment for future entertainment applications; Java-based platforms represent a threat to that long-term strategy.

Thus, if it did indeed throw cash at Paramount and/or DreamWorks to get them to go HD DVD-only, as Bay and others allege, its motive was more likely defensive--something akin to its $240 million investment in Facebook--than part of some master plan to bring about electronic delivery. The investment in Facebook was more about keeping Google from grabbing the 1.6% stake the social-networking site was shopping than about any immediate strategic goal for Microsoft. Likewise, propping up HD DVD by throwing $100 million at Paramount is more about keeping Blu-ray from establishing itself as the winner than about any strategic designs on downloading.

Microsoft doesn't have to do anything to promote the eventual migration to electronic distribution. The irresistible momentum of the technology will push the industry there in any case. It just wants to make sure Windows is still the dominant development platform when it gets there.

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