Why Warner Went Blu: It’s the PS3 Stupid.

Now that Warner Bros and subsidiary New Line have gone Blu-Ray exclusive, the expected torrent of commentary and analysis has hit. Naturally, everyone has jumped on the rumour of a huge payout – with some numbers going as high as $500 million – and, even though Warner president Kevin Tsujihara has denied it, I think it’s a fair bet that some serious cash was exchanged.

But when we actually step back and take a look at why the decision was made, one obvious answer is that Blu-Ray titles have consistently outsold HD-DVD ones. While the actual numbers are minuscule in comparison to DVD, there is a simple business proposition at the root of this switch: go with growth and go with what more consumers want. But given that HD-DVD standalone players outsold their Blu-Ray counterparts (until 4Q of 2007), what is it that actually accounts for Blu-Ray’s sales advantage? Well – you’d have to be insane or a little dim not to recognise the Playstation 3 at the root of Warner’s switch, and the lack of this simple fact from the blogosphere’s reaction to the news has been astounding. Even though sales of the PS3 have been comparatively lacklustre, the simple fact that there are millions of them out there – far more than any standalone drive – has been enough to give Blu-Ray the sales victory so far. That Warner went Blu-Ray is exclusively due to the presence of the high-def drive in the PS3. While the outlook for the Playstation 3 as a consumer device is still murky – it’s unclear whether Sony will be able to return the Playstation group to profitability any time soon -  we can still be assured that, even if it fails as a games console, it will sell many times more than any standalone HD disc player. Sony took a risk and, for the time being, it seems to have paid off.

Still, we shouldn’t get too ahead of ourselves. While people are ready to call Blu-Ray the ‘victor’ (God, this military language is getting really stupid) there is no guarantee that physical formats will continue to have the same centrality to home video that they once did. As a very smart post on Mashable suggests, there is a good chance that HD video downloads and the infrastructure necessary to deliver them will surpass Blu-Ray before it has gotten a chance to become the successor to DVD. For the time being though, anything that brings this stupid format war to a close is probably a good thing. Now if the Blu-Ray camp can just get their act together and get out their final Blu-Ray 2.0 spec, then perhaps we’ll be getting somewhere.