What did you do in the Format War, Daddy?

My kids are 2 and 4 yrs old so have little concept of what Daddy does, though they do know the words DVD, Xbox, and Lightsaber. However in a decade or so they might be able to understand what Daddy did in the format war, so here’s how I plan on explaining the last three years of my work:


In early 2005 Daddy joined what was then called the Professional Content Group at Microsoft, who were working on the replacement for DVD. At the time the team was mostly program managers who were working on the advanced interactivity aspects of the formats, then called iHD. There were two competing formats, one mostly from Sony called Blu-ray, and another mostly from Toshiba called HD DVD. Blu-ray was originally a very primitive high definition recordable format, while HD DVD was created by the same forum as DVD as a high definition replacement for it.


While the program managers worked on the standards committees specifications themselves, us developers started implementing iHD. It was designed based on certain tenets from studios like Warner and Disney, with features to match. Before I got to the team it had produced a demo with Disney called “WayVD” [strange name, that’s another story] that had helped convince the DVD Forum to accept iHD. However not long after Disney switched to the Blu-ray camp, for reasons never made public. The BDA (the cartel of Blu-ray supporters) voted to accept iHD as well, but due to complications this decision never stuck, and in the end they went with a Java-based solution called BD-J instead. For this and other reasons Microsoft ended its format-neutrality and became HD DVD-exclusive.


Toshiba licensed the iHD code that Daddy’s team produced and used it in every HD DVD player they shipped, starting with the HD-A1, which became available in April 2006, at a reasonable price of $499. Along with the three launch titles it got rave reviews, which surprised many as Blu-ray had been talking a lot of smack in the years before release and fooled many people into thinking HD DVD was dead before it even launched. The A1 proved a lot of people wrong.


A few months later the first Blu-ray player appeared, the Samsung BD-P1000, along with launch BD titles, for $999. The reviews were not so great for this player, as it deliberately softened the picture and its 1080p output was really the same 1080i output the Toshiba had, but put through a de-interlacer. It was also twice the price of the Toshiba competition. The poor BD launch continued when Sony themselves released The Fifth Element on BD, and it looked terrible, worse than the same title on DVD. Over a year later on AVSForum the BD folks admitted they launched BD about a year earlier than they were ready to, because they couldn’t let HD DVD be alone for that length of time. The Fifth Element proved such an embarrassment for Sony that they eventually re-mastered it in 2007 and offered the poor owners of the original free replacements.


While some of Daddy’s team continued work on the Toshiba code, Daddy moved on to help out with the Xbox version of the software. This was a full end-to-end solution, where we owned everything (unlike the Toshiba which ran their Audio-Video-Network stack), which was over 5 million lines of code. The Xbox HD DVD drive shipped at $199 and proved very successful: it quickly became most popular HD DVD player and remained so for over a year.


When Daddy was young there was a similar format war, between VHS and Betamax, but it was different in an important way: all the movie studios produced tapes for both formats. Only the player manufacturers “took sides”. Betamax (from Sony) eventually lost, so to make sure that didn’t happen again, Sony bought Columbia Studios. When the high definition format war came around, Sony didn’t want a level playing field like last time, as they knew they would have serious trouble competing on disc and player costs with HD DVD if everything else was equal. To avoid this they made their studios Blu-ray exclusive and then started trying to “persuade” other studios to do the same. They had some success, but Warner Bros, the biggest, stayed HD DVD exclusive for a while, though eventually produced discs for both formats. In the end it would be Warner that brought the war to an end.


Another thing that was different for this format war was the internet: the format war was a very hot topic on discussion forums and web sites, and news & rumors spread very quickly indeed (even when they weren’t true), generating huge amounts of discussions, taunting, abuse and FUD. Daddy participated in AVSForum, as did several of his co-workers and his VP, and so did a bunch of BD folks. However while us Microsofties were proud to show our names and employer, the BD folks all hid behind anonymizing screen-names, not revealing who they were, what they did or even who they worked for. While we all took great care in what we said and used respectful tones, they were free to say whatever they liked, how they liked, with no comebacks on them or their employers. The Industry Insiders Thread on AVSForum lasted for just over a year and ended with around 13,500 postings on that single thread.


The second Blu-ray player to come out was Sony’s PS3 which was really a games console with a BD drive in it. At $499 it was substantially cheaper than the other BD player and remained so for about a year, until BD player prices started to fall once the original ones started to become obsolete. Not only was the PS3 the cheapest player, it was the only one that could run the BD-J software at a vaguely decent speed, as well as play PS3 games of course. Although the attach-rate for PS3s (that is movies-per-player) was low, the sheer number of PS3s substantially helped the overall sales numbers of BD discs.


Due to the premature launch of Blu-ray, there were a bunch of features missing from the original players. They became known as Profile 1.0 players, and had additional problems when discs using BD+ appeared. BD+ was an attempt to add another layer of protection onto the discs, pushed mostly by Fox, but when the discs appeared many BD players had serious trouble playing them. The BD folks then created Profile 1.1, which added picture-in-picture, audio mixing, and persistent storage to Profile 1.0, in an attempt to catch up with the HD DVD feature set, but players didn’t have to conform until late 2007. They also created Profile 2.0 which made a network jack mandatory. Yes kids, I know it’s hard to believe, but in 2008 the BDA didn’t think that internet connectivity was important enough to include in every player. Of course HD DVD had all these features back in 1.0 and that was done in late 2005, with every player supporting every feature.


During 2007 things got a lot more interesting: new players from both side, with BD players consistently being around twice the price of HD DVD players, and still all Profile 1.0 (the most primitive version). Similar numbers of movies came out for each side, and much time was spent talking, ranting and misleading about the format war on the web. Daddy spent much of 2007 working on an HD DVD Emulator, which was a special version of the Xbox player that made it much easier for content creators to make cool HD DVD titles. I also helped out on the various updates that were done for the Xbox player itself. As a "thank you" to the team everyone got a special black Xbox HD DVD drive, and Universal also gave everyone a boxed set of "Heroes Season 1" (which Mummy & Daddy had previously missed on TV but got to really enjoy from those HD DVDs). Another perk of the job was access to the team's HD DVD library, which contained every HD DVD there ever was worldwide. Daddy so enjoyed his work that he even changed the license plate on his car to "HD DVD".


One surprise was that Target announced they would not sell any HD DVD players except the Xbox, as a result of a deal with Sony. This was weird, as Sony were paying for a store to not sell a competitor's stuff. While Microsoft has been in trouble a bunch of times for anti-trust issues, no-one seemed bothered by this highly unusual behavior. Sadly it would not be the last time that Sony would do this.


In August 2007 we got another surprise: Paramount, which had been supporting both formats, announced that they were dropping Blu-ray and going to only produce HD DVDs, which also meant Dreamworks would do the same. This was fabulous news for us, but it got Sony very worried indeed. So worried that the Sony CEO (Howard Stringer) personally called up a bunch of other CEOs and tried to "persuade" them to ditch HD DVD. As the format war had just entered a new phase, a phase where the underdog (us) suddenly looked like it stood a chance of winning, everyone passed on his kind offer. However, about five months later, it looked like many of those same CEOs would return the call to Howard and see if the offer was still open.


Christmas 2007 went pretty well for HD DVD, with Toshiba reducing their 3rd generation player prices further and even forcing the BD companies to cut their heavy prices a bit. Rumours began to emerge that Warner was going to make a decision and pick a single format: as the largest studio they had some serious clout, and they knew it. After a lot of high-level wrangling among various CEOs, Warner was close to picking HD DVD (along with Fox, a long-time BD supporter), but Sony got wind of this and came calling again with their check book. After a rumored $300-$500 million deal (along with $120m for Fox) both companies decided instead to dump HD DVD on Janury 4th 2008, the day before CES opened. This was Daddy's Black Friday, a real shell-shocker of a day for him and his team. It was pretty much all downhill from there. CES was a glum affair for us and the cool demos the team had been working on never got a public showing.


In the weeks that followed we were told privately of what Toshiba's (and the HD DVD Promotion Group's) response would be, but only the first phases of that ever came about: both Toshiba and Microsoft cut hardware prices, but it wasn't enough. One by one other companies started dumping HD DVD (coincidentially it was the same companies that Sony's CEO had called in August after the Paramount deal) until the pressure got too much, and in February 2008 Toshiba had a board meeting and cancelled HD DVD. After that the remaining studios ( Paramount and Universal) had no choice but to give in too.


In the weeks that followed Daddy went out and bought up all the best titles on HD DVD and another Xbox player as a backup, so he could be sure of playing those titles for as long as he could. He also decided to add certain companies to the family "No Buy" list (which had consisted of just Apple for years up to that point), as well as adding Amazon, Universal and Paramount to the family "Favored Companies" list.


After doing HD DVD in, Blu-ray's next battle was with DVD. Unfortunately for them Sony couldn't just write checks to get people to stop making DVDs, so that battle proved to be a lot harder.


And that is how it all happened kids.


[with apologies to the Blake Edwards movie]



Comments (11)

  1. Mehar says:

    Inspiring post! It sucks that no anti trusts were issued when Sony "greased" a few palms! You probably won’t be able to mention alot of the specifics about the companies that were called and how they reacted to specific situations, right?

    I too have built myself a no buy list that is similar to yours.

    Whats your view about Steve Ballmer with the new Blu Ray announcment, or is their some sort of a big HDi-ish deal being worked out behind closed doors? Im suprised he’s announcing he a Blu Ray driver for Vista is being worked on now, even though no HD DVD driver was released for Vista when they were exclusive!

  2. Deniz says:

    Awesome post, Andy!  It is really too bad that everything went the way it did.  I am riding HD-DVD for a while and will only go to Blu-ray once the PS3 is less than $250 since I am a gamer after all 🙂  

    I’m still choked that Dreamworks canceled The Bee Movie…SD for me…

    What is in your future with Microsoft?

  3. Spylon says:

    Care to share what companies were added to the do not buy list?

    Great summary of the format war by the way.  In a level playing field Blu-Ray would never have survived, even with the PS3.

  4. Nicholas says:

    Still pisses me off to no end to hear about your guys’ hard work and dedication to a superior format, and still have it lose.

    Sony is a dirty player– both in the video market and the videogame market. I haven’t bought anything Sony in nearly 10 years because of my dis-trust/dis-satisfaction in their company.

  5. Charles says:

    I am absolutly shocked to read this and it just confirms what I had already felt about Sony and their dirty doings.  I’m really sad because HD DVD to me was the better format.  After buying a player after the news just so I could get a good DVD Upconverter, I was amazed at the quality and the features that HD DVD provided.  I’m even a bit pissed off that this format was the one to die after doing some research and realizing that BD-J was bug filled and not as good as HDI.  I was going to buy a PS3 later when the price comes down but after reading this I will stick with my XBOX 360 exclusively.  I will buy a stand alone Blu-ray player but it won’t be a Sony.  It’s too bad that Sony forced our Hands and that the real general public did not make the decision. I do have to say though that Not putting the HD DVD in the Xbox after people were asking for it since since late 2006 was a dumb Idea.  I also felt that the people who stood behind HD DVD did not do a good job af making sure the format was the one to have and did not define the differences.  All I know from internet searches and comparison was that Blu-Ray had more disk space and had longer download speeds and cost more.  Now that I have a HD DVD Player I now know that the features were better then Blu-ray. When coments are made that HD DVD is causing confusion in the market, why was there no response.  You guys just sat back and let Blu-ray roll right over you.  I really think had you stuck it to them you wouldn’t have been even writing this.  It’s just a shame.  Listen to your customes next time and don’t be so slow to react.

  6. Andy-Pennell says:

    Charles: good points you make there. In retrospect I agree with most of them.

  7. Mehar says:

    Andy: Did Microsoft ever attempt to universally bundle the drive with the Premium or elite? Has in the drive is in the same box as the 360 comes in, but its not internal. That way Microsoft could have satisfied themselves and the consumer, the 360 sold like crazy last year, if those console came bundled, even for the last few months at the same price point, we would probably still be in this. Instead of bundling in the 2 or 3 games it should have been a HD DVD drive + movies for the same price.

    A company has big and respect worthy as Microsoft can’t possibly think that Digital Downloads will rule the Xbox 360, especially when a majority of their customers only have less then the given 12 or so GB to use! I wouldn’t have minded the revisions so much if Microsoft had a sort of traded in program ex, Give your old non HDMI 360 to Microsoft + $20 for a HDMI console.

    With decisions like these I think Microsoft has gone a bit senile over the years, first you let Apple run you over, now Sony!

  8. Andy-Pennell says:

    Mehar: No, the HD DVD drive was too slow as a DVD drive to run Xbox games so an internal option was never realistic.

    Apple may be beating us, but Sony aren’t. See the PS3, or the PSP, or UMD. Apple are kicking everyone’s butt, including Sony’s (see the Air).

  9. Mehar says:

    Andy: I didn’t mean a internal drive, but one bundled into the packaging the 360 came it, meaning the cardboard box, I know its a bit confusing.

    By me saying Sony beat you I meant with this Blu Ray war since they had a lot to do with it. They popped Microsoft’s "formwat war cherry", for lack of a better term.

    But I will give Microsoft and the other backers this, they stayed with it until the end and even then some, despite rumors coming out stating early withdrawls, loyalty is a good trait 🙂

  10. Andy-Pennell says:

    Mehar: My bad, I misunderstood your Q. No, I am not aware of any bundling as you describe.

  11. Mark says:

    Hey I read your blog and postings about the HD DVD projects you worked on.

    What a truly revealing insight into the inner workings of someone who was working hard on key projects for delivering HD-DVD to us the consumer.

    I do feel sorry for you, since 2005 you have worked hard on this and for it to come so harshly to an end in a very short period of time (like 6 months or so?) must be hard to come to terms with.

    Sony were very aggressive and sadly HD-DVD has lost.

    It will be of no consolation really to you, but I picked up a HD-DVD player recently here in the UK with some films to try. As I wanted to try it for myself now the equipment is really cheap.

    This was my first experience of HD movie viewing and I was blown away – the interactive menus, the picture quality, the online features, the audio.  We watched our first HD film this weekend with my parents who happened to be visiting, they were also really impressed. It felt very 21st century, a real leap from VHS/DVD to the next level.  I know nothing about blu-ray, but I know now as an implementation of HD home movie viewing, HD-DVD is superb to a simple user like me.

    Its a shame it did not work out.

    Good luck with your next projects and thanks for publishing this extremely interesting blog.

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