Sony Paid Warner Bros. $400 Million to Go Blu-Ray?

eldavojohn writes "How much would you pay to be the leading video media technology right now? Is $400 million too much? Sony didn't think so and this article speculates that's how they won the Hi-Def format war. 'With billions of dollars in global sales at stake, experts had predicted the Toshiba-Sony battle would go on for years - not unlike the 1980s battle of videotape formats between VHS (Matsushita) and Betamax (Sony). That war lasted a decade, leaving Sony battered and humiliated. So how did this epic battle come to such an abrupt end? The answer lies in part with the bruising Sony experienced with Betamax, which, like Blu-ray, was also the better product on paper.'"

Betamax wasn't better.

[RightSaidFred99]

VHS had longer recording times, and that is what the customers wanted. This is proved by the fact that VHS "won", and ergo VHS was "better". Betamax did have better video quality, but it was not "better" in every dimension.

Blu-Ray was the better product?

[Anonymous Coward]

Lets see Blu-Ray has the following

1. Costs more to create players
2. Worse DRM scheme in the spec
3. More capacity for the stuff you don't watch

What exactly did I miss about Blu-Ray that made it better?

Even for /., bad summary and headline

[DragonWriter]

The article does not say that Sony paid Warner $400 million. It merely states that there was a bidding war between Sony and Toshiba and that unnamed "analysts" have suggested that payout may have been "as much as $400 million", though no one who knows anything is saying anything. Actually, the summary could have been good with a small change:

Is $400 million too much? Sony didn't think so and this article speculates that's how they won the Hi-Def format war.

Should read:

Is $400 million too much? This article speculates that Sony may not have thought so and goes on to speculate that's how they won the Hi-Def format war.

Really, other than the really obvious things we all know (Sony won the format war), there aren't any facts in the article, just speculation and some rather weird ideas from a variety of sources. Like Professor Xavier Dreze and his suggestion that "PlayStation buyers ... unwittingly embraced Blu-ray and undermined HD DVD." As if PS3 buyers were shelling out the high price of the console without realizing that it was a Blu-ray player, and just started purchasing Blu-ray discs without any consciousness of their actions. To the extent that PS3 owners embraced Blu-ray at all, they didn't do it "unwittingly".

Re:Or...

[ironwill96]

I don't really think Blu-Ray was a better format in any real sense. Yes, initially it had 5-10GB more space allowed, but Toshiba figured out how to top 50GB using HD-DVD discs as the technology got more mature. Also, HD-DVD players and discs were cheaper to produce as far as I can tell, and the HD-DVD spec was finalized long before Blu-Ray's was. This resulted in Blu-Ray players being released that only supported the 1.0 spec and could NOT be upgraded. Basically when all the fancy Blu-Rays come out a couple of years later, the people with 1.0 spec players are hosed. They can't use any of the neato features that HD-DVD had in from the very beginning. As far as I know, Blu-Ray did not have things like dynamic Picture In Picture with real-time overlays etc in the 1.0 spec. They added that stuff in 1.1 and alienated early adopters.

Also, Sony may have "won" by shoving Blu-Ray players into every PS3 and jacking their price up, but how much money are they making off of software sales on the PS3? I'd say not a lot since the software attach rate for PS3 is fairly low (Wii is also not that great - I think many of the casual players just want to play Wii Sports which comes with the console for free!). It also does sound like Sony just was willing to throw more cash into the "pay for exclusive" war. I really am torn at this point as I did not buy Blu-Ray merely because I did not want to support Sony due to their DRM-happiness. Now that i'm stuck with a mostly useless HD-DVD player I guess i'll have to pick up blu-ray eventually if I want 1080p movies for my HD TV.

Re:Or...

[PrvtBurrito]

Uh, HD-DVD's are: 1) region free 2) not a rushed to market technology (no customer screwing profile x.x limitations) 3) half the price 4) has more interactive features in contrast blu-ray store more space. Are you guys that obtuse?

Re:Or...

[BigMattyC]

Oh, and they are required to be played on a player that runs a Microsoft HDi application that uses 2x the resources of BDJ. If you consider subsidizing the DRAM industry to be a design win, then yeah, HD-DVD is great.

Re:Betamax wasn't better.

[thtrgremlin]

This really seems to be the common theory across the web (and theory like theory of gravity). Sony had a great format that was higher quality, and more compact... but they wanted to be big brother. "We got the big movie format, so we're going to 'fix' the morality of the world". Sony with BetaMax, and originally with Blu-Ray, they said "no porn on OUR format"... but they didn't really consider that despite how much people may talk about loving their favorite big screen movie, there is a market for porn flicks 10x the size of "normal" films. So when your format is out sold 10/1 by people that are a little more quiet about their movie buying experiences... well the rest is history. Oddly enough this time, the big players in porn knew Blu-Ray was better, and they wern't going to settle for less (I think this was on slashdot last year). Likely money had something to do with it again, as Sony quietly gave in to the Adult Industries request.
 
As far as disruptive DRM and rootkits, as much as people complain, this has virtually no influence on people's buying habbits. Just look at the number of people that use Windows.

Plus and Minus

[TheSync]

VHS won the consumer war over Betamax, but Betacam [wikipedia.org] (that used the same tape cassette) went on to become the dominant professional video format.

Now BluRay won the consumer war, but it is unclear if the professional disk version called XDCAM [wikipedia.org] will win the professional format, as pro video folks moving beyond tapes are also looking at flash-based systems like DVCPRO P2 [wikipedia.org] , and even Sony now offers professional XDCAM EX on SxS [wikipedia.org] flash memory.

Just Sony?

[hansamurai]

A lot of people don't realize that Blu-Ray is more than just Sony, there are three levels of membership in the Blu-Ray Association. Currently there are 18 board members (top level), 65 contributers, and over 200 members. Sony is the obvious front company for the association because of their reliance on the technology for the PlayStation 3, but there are a lot of groups that have a big stake in the project too.

Maybe Sony did pay Warner the big bucks for the commitment, but I'd be surprised if they're the only ones making deals like this.

http://en.wikipedia.org/wiki/Blu-ray_Disc_Association [wikipedia.org]

Re:Market Isn't Even Ready

[morari]

I wish we could stop hearing about streaming video. I like having my content conveniently on actual media that I can access instantly whenever I want without having to go through or ask anyone else. Most of the world doesn't even have broadband at all, which I think is a far more important problem than people not being able to download and redownload gigantic movie files because they've never heard of a disc binder.

Rehash of rumor from HD-DVD fan blog

[guidryp]

Ummm old and unsubstantiated/busted rumor:

The Original source is Dan Lindich, he has since edited the story to remove all references to money changing hands. Read some of his blog, he hates Blu-Ray with a passion and has always recommended HD-DVD, still doesn't recommend Blu-ray, even it won the format war, here is his now eidited story:
http://www.soundadviceblog.com/?p=758 [soundadviceblog.com]

From Digital bits:
"As it happens, I've actually spoken about this today with Fox's senior VP of corporate and marketing communications, Steve Feldstein, who echoed something Warner's Ron Sanders has also said in recent days: "The kind of money they're talking about [in these stories] isn't worth jeopardizing a multi-billion dollar business." In other words, payoffs would not have impacted Fox and Warner's decisions. Feldstein also told me that when The Pittsburgh Post Gazette piece broke, he contacted Lindich immediately to let him know that he was being misled by someone. When Don posted the same piece on his own blog, it was edited to reflect this. Specifically, the references to $120 million and $500 million payoffs were gone - something that's worthy of note."
http://www.thedigitalbits.com/mytwocentsa149.html [thedigitalbits.com]

Basically bitter Fan can't see writing on wall, sees conspiracy instead.

The facts were Blu Ray disks outsold HD-DVD disks for every single week of 2007, by the last weeks of 2007 there were more standalone Blu Ray players sold than HD-DVD players sold, despite HD-DVD being massively cheaper. HD-DVD was toast before Warner announced.

Slashdot, all the quality of Digg, without the quantity.

Re:Betamax wasn't better.

[ashridah]

Looks like i was misinformed anyway. Someone i know has mentioned that many major pornographic studios have switched to blu-ray recently as well.

Re:Stores more ... per layer

[RoboRay]

Actually, 200GB EIGHT layer BluRay discs have been produced in the testing lab (which is the only place where those 3-layer HD-DVDs ever existed. The 8-layer BDs wasn't in response to competition, either. BR was designed from the beginning to support that many layers, which is why the first data layer is close to the surface instead of being sandwiched in the middle like HD-DVD.

Of course, neither the 3-layer HD-DVDs or the 8-layer BDs are relevant to the format war, because there were never any plans to use either for movies and set-top players can't read them, anyway.

Re:Or...

[mzs]

No BD-ROM and HD-DVD both use 'blue' (really closer to violet) lasers. BD uses a different data encoding to achieve more data density and uses a more scratch resistant coating on the disk itself to counteract it's lesser ability at handling read errors.

Re:Or...

[Keeper]

It would also explain why BluRay players using BDJ boot much faster than HD-DVD players ...

Wait, no it doesn't. Because BluRay boot times are 2-3 times longer (8 minutes!) than HD-DVD drives.

Re:free market?

[Aereus]

Game companies sign deals all the time to make certain games exclusive to a certain console. I guess they are in collusion as well?

Re:free market?

[AmigaMMC]

In the United States, Corporations are "people" - that has been defined by the Supreme Court a century ago.