Well, this isn’t really a surprise to anyone who has been watching their behavior, but it is official - Universal is deliberately sticking with HD DVD to prolong the format war.

In an interview with Scott Hettrick of HollywoodInHiDef.com, Universal’s president Craig Kornblau explicitly admitted to deliberately prolonging the format war.

Universal president Craig Kornblau told me this week that the studio actually wants the format war to continue.
He also said Universal is getting financial incentives to create exclusive HD DVD features such as the Xbox Live component for the upcoming “Heroes” release.
“I’m not going to tell you that we don’t cut financial deals with people every day,” he says.

Additionally:

However, now that the market has evolved as it has, Kornblau says the hi-def format war has been “the very best thing that ever happened for consumers, retailers, and, frankly, studios” — everyone except consumer electronics manufacturers — because it has driven prices down further and far more quickly than would have been the case if there had been only one format in the market.

Furthermore:

With Universal the only holdout in sticking with HD DVD exclusively, Kornblau reluctantly concedes that HD DVD’s position is just fragile enough that if Universal decided to release in Blu-ray now, it would have a serious, if not life-threatening impact on the future of HD DVD. So in addition to weighing how his decision will impact the studio, he now must also factor in the potential demise of the HD DVD format entirely if Universal would opt to release its movies in Blu-ray.

For now, that’s not something Kornblau is willing to risk.

This is mind-boggling, really. He’s the President of Universal, his responsibility is to the studio. He should not consider the potential demise of any format in his decisions, it isn’t his job to keep any format on life support. His job is to make the best decisions for the studio. If he’s making studio decisions designed to pump up other companies and artificially prolong the life of HD DVD, then he’s not doing his job.

There is still potential for Universal to change tack:

Even if, for the sake of argument, you go along with Universal’s belief that the format war is driving prices down more quickly, Kornblau admits that there is only a limited window of time for which this situation can be interpreted as beneficial for consumers, retailers, and studios. He says that window will start to close when players drop to a price of $200 and consumers start making their choice, which is what will guide Universal’s ultimate course.

Let me boil the interview down: “We know HD DVD is going to die, but if we admitted that now it would kill sales going into this holiday season. There isn’t enough time for Universal to realign itself and pump out BD, so our already terrible sales would be even worse. Instead, we’re going to prolong this war and see how many people we can sucker into buying a dead format walking. We’ll happily pocket their money, then next year we’ll announce that we’re adding Blu-ray support to our lineup. This will lead to the collapse of HD DVD, which will give us a graceful exit so we don’t lose too much face. The suckers who paid for HD DVD will be left high and dry, just like the suckers who bought DIVX instead of DVD 10 years ago.” Well, actually, most DIVX players could play DVD, so those weren’t a total loss. Maybe the suckers who paid for HD DVD players will be happy using them as upscaling DVD players.

I disagree with pretty much all of Kornblau’s arguments from the interview. He claims that only the format war has driven costs down - yet the PS3 is the best selling high-def capable player and still the lowest cost BD player (now tied with the Sony BDP-S300), and its pricing has nothing to do with the format war. At least not *this* one - it is all about competing with the Xbox 360. On top of that, as the interview points out, DVD player pricing dropped 20% in the first year and an additional 30% the second year - with no format war. Even without a format war there is competition between vendors that drives the price down, and there are strong incentives to bring the price down to increase market adoption. BD and HD DVD don’t just compete with each other, they also compete with DVD, VOD, etc.

He also argues that HD DVD’s interactive features are an important factor in Universal’s support. Yet Universal has done very little to *use* those features, so the argument is hollow. Warner and Paramount, who release both HD DVD and BD, have done more to use them than Universal has! If the features are so key - why aren’t you using them? And any advantage HD DVD has had is vanishing as updated BD profiles become mandatory with BD1.1 required for coming players and BD Live (connectivity) standard in many new players. On top of BD-J’s already superior capabilities compared to HDi.

And I simply think it is delusional to believe the format war is good for *anyone*, other than those invested in HD DVD.

The answer is simple: DO NOT BUY HD DVD.

Simply don’t buy HD DVD. Don’t buy players. Don’t buy media. *Especially* any releases from Universal. Do buy Blu-ray. Hit them in the wallet for deliberately prolonging this war. This holiday season buy Blu-ray, tip the scales even further toward BD. Starve HD DVD for money, punish Universal for their callous behavior in deliberately keeping the war going, and show them the error of their ways. If BD thoroughly trounces HD DVD this holiday season - which it shows every sign of doing - then Kornblau is going to have a lot of explaining to do to the shareholders. Especially if their releases tank. You can also let Universal know what you think directly.

Spending a dime on HD DVD simply prolongs the format war and puts off the inevitable. Think of it this way - the *best* you would get is a permanent split in the market. And then your HD DVD player would still be unable to play the majority of content out there. You’d still have to buy a BD player, or replace the HD DVD deck with some dual-format unit down the road. Whereas going with BD you get the vast majority of content - everything but Universal - and if the scales tip, you’ll inevitably get Universal’s content too when they switch to BD. Buying HD DVD is just wasting money in the long run - and probably not really that long a run at that.

(Picked up from Blu-ray.com.)

On July 31st, Warner Bros. released ‘300′ on both HD DVD and Blu-ray Disc, and it became the fastest selling high-definition disc title to date. Warner reports than over 250,000 high-def copies of the film were sold in the first week. Most interestingly, USA Today reports that the BD version is outselling the HD DVD version roughly 65% to 35%. It is hard to argue with the same film released on the same date, with BD outselling HD DVD roughly 2:1. Going into this holiday season there will be a number of blockbuster releases hitting BD, with more content coming to BD than HD DVD. (Spotted via Blu-ray.com)

And, in other Blu-ray news, two new independent Blu-ray plants have come online - one in the US and one in Europe. Blue Ray Technologies in Spokane, WA is now pressing BD. It is the first BD plant independently owned and operated in the US, and it will cater to independent studios and directors. And Infodisc of Germany is also preparing to press BD. They will be the first independent BD manufacturer in Europe.

There has been a lot of speculation about Blockbuster getting into the movie download business, especially since NetFlix launched their ‘Watch Now’ streaming feature. While the majority of consumers still rent their movies in physical stores, rent-by-mail services, video-on-demand, and, more recently, download services, have been eating into the retail rental market. It makes sense that Blockbuster would move to protect their market share. They started rent-by-mail to compete with Netflix, and it was just a matter of time until they got into downloads. The question was really how they’d get into the market.

The answer appears to be by jumping in feet first - via the acquisition of established player Movielink.

Backed by Universal, Paramount, Sony Pictures, MGM and Warner Bros., Movielink has a large library of available films. The main limitation for Movielink is that download playback is limited to Windows PCs and to watch on a TV you need to connect the PC to the TV directly, or use a Media Center Extender. It will be interesting to see what steps Blockbuster takes to close the gap in getting content on the TV. Amazon Unbox, of course, has TiVo to get content on the TV. The TiVo/Unbox relationship is non-exclusive, so it is possible Blockbuster could also do a deal with TiVo. Hopefully they won’t try to launch yet another STB.