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Page one of the Washington Post on Sunday, August 28, 2005, carried an obituary for VHS, the beloved videotape format that bravely won the war against Betamax and charmed millions of Americans by allowing them to enjoy mindless Hollywood entertainment without leaving their homes Although 947 million American households still owned VCRs, and more than $3 billion had been spent on VHS rentals and purchases in 2004, revenue from DVD sales and rentals was more than eight times greater The unprecedented success of DVD was pushing VHS off store shelves, out of customer storage cabinets, and into oblivion The pendulum swayed back on September 27, when Microsoft finally officially announced that it would back HD DVD along with Intel In an interview with the Daily Princetonian, Bill Gates sniped at Blu-ray, saying, it s that the protection scheme on Blu is very anti-consumer, referring to the added locks and lack of commitment to managed copy, unlike the HD DVD camp Gates and many other Blu-ray detractors glossed over the crucial point that managed copy was a feature of AACS so it applied equally to both formats He followed that with a prognostication that this is the last physical format there will ever be Everything s going to be streamed directly or on a hard disk So, in this way, it s even unclear how much this one counts Once again, having Bill Gates as a cheerleader resulted in faint praise indeed In October, Paramount decided it would firmly straddle the fence and offer movies on both HD DVD and Blu-ray Disc Warner Bros also climbed out of the HD DVD camp onto the fence, announcing it would also release titles in both formats At the same time, HP suddenly and publicly called for changes to the Blu-ray format, strongly suggesting that it would defect to the HD DVD format if its demands were not met HP specifically requested two features that were already part of HD DVD mandatory managed copy (to allow disc owners to copy content from their discs onto PCs and portable devices) and iHD (the XML and ECMAScript-based advanced interactivity format that Microsoft and others had developed in the DVD Forum) HP s cover story was that it did not want customers to have to choose between dissimilar competing formats Conspiracy theories blossomed Microsoft was paying HP off or had threatened to shortchange HP s access to the Windows OS The BDA s response came from spokesman Andy Parsons on November 16, 2005, Mandatory managed copy will be part of the Blu-ray format, but while HP s request [for interactivity] is being considered, at this point in time, the Blu-ray group is still proceeding down the path of Java, he told Reuters HP decided this was not good enough, and on December 16 announced that it would support both HD DVD and Blu-ray This was good news for Toshiba, which two days earlier had said that design work on its first HD-DVD player was complete, with factories ready to produce the players, but that it was held up waiting for the final version of AACS Remember AACS The content protection system that was going to be done the year before It was not for lack of effort, since the group had been gathering regularly for over a year, with meetings often dragging late into the night, but they had been unable to reach consensus on items such as managed copy and requests to add BD+ into the mix
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The big news at CES in January was from Bill Gates, who announced that Microsoft would offer an add-on HD DVD drive for the Xbox 360 console HD DVD supporters who expected a new version of the Xbox with an HD DVD drive built in were not exactly dancing in the streets, but at least it was some ammunition against the specter of millions of Blu-rayequipped PS3s The AACS group met on February 10 to crank out the final specifications, but once again came up empty-handed Reports stated that an important member of the Blu-ray Disc Association is still voicing concerns about the interaction of AACS and the additional BD+ protection for Blu-ray movies But there was a massive hitch Toshiba had planned for a March launch date, with a 40-city tour starting on February 22 to kick it off Likewise, Samsung and Pioneer had picked May launch dates for their Blu-ray players If AACS was not ready to go, everyone would be trapped at the starting gate Finally, on February 15, after working feverishly for days to come up with a compromise, the AACS group agreed to release an interim license that would permit hardware makers and disc manufacturers to sign up for the encryption keys they needed to make the discs and players work together with protected content The interim license would leave out elements such as managed copy and watermark detection On February 21, the ACCS LA (license administrator) announced availability of the interim agreement documents, saying, The final license agreement for AACS is expected to be announced in the coming months Hope sprang eternal In related news, on March 14 the Nihon Keizai Shimbun newspaper in Japan reported that Sony had pushed back the PlayStation 3 release date from early spring to November This was allegedly because of the delay in finalizing AACS, but some opined that it was just a handy excuse to cover Sony s inability to pull everything together for the complicated game system Meanwhile, the meteoric rise of UMD for the PSP (that s movies on tiny discs for Sony s tiny game player, for readers whose acronym buffer has overflowed) had turned into a disastrous tailspin Initial sales demand from a year earlier had evaporated, and in February, Sony Pictures, Paramount, Warner, and other smaller studios began delaying or cancelling UMD movie releases Sony had shipped more than 10 million PSP units worldwide since its release a year earlier, but average UMD sales of only 50,000 units mean that less than 1 percent of PSP owners were interested Various theories were put forth PSP owners bought a few movies when they first got their system to try it out, but it turned out that people really did not want to watch a movie on a tiny screen with tinny speakers while their arm muscles cramped from holding it; the first rush of titles purchased were from mothers and grandmothers who were overjoyed that they could buy something that was not a violent videogame for their teenager; prices were simply too high compared to DVDs; or people realized they should not have to buy what they already owned on DVD The latter theory was rooted in
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Consider other introductions in the US (each adjusted for inflation to 2006): 1939 TVs, $2900 to $8700; 1975 Betamax VCR, $8600; 1976 VHS VCR, $3100; 1978 laserdisc player, $2300; 1982 CD player, $2000 iSuppli, a market analysis company specializing in teardowns of products to inspect the components, estimated that the bill of materials for the HD-A1 came to $674, which revealed that Toshiba was heavily subsidizing the price in hopes of winning sales
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