A blu(e) bee? Doesn’t look like it
Once upon a time there were two formats fighting about the future of high defintion DVDs: BluRay and HD DVD. Each of the formats was playing with al tricks it could do gain the upperhand, while the majority of us customers waited in the wings. Soon enough both formats got the idea to sign up studios exclusively to release their films only in one of the two formats. Disney signed up with BluRay which makes all the Disney fans rather happy - now that BlueRay has won and they know that their nifty BluRay players will be useful for more than only their collection of Disney releases.
Disney did gamble here by throwing their weight around - and won. What could have happened if Toshiba’s HD DVD would have won … well better don’t think about it. But if you are really curious - just take a look at the dismal situation DreamWorks is suddenly facing…
DreamWorks and Paramount (which handles the distribution of DreamWork’s DVD releases) waited till mid-2007 until the signed up with one of the formats and stopped releasing films in both formats. According to the New York Times the two of them got combined financial incentives of up to 150 million US-$ to release their movies exclusively on HD DVD for an 18 month period. One could have assumed that this exclusivity has ended, when Toshiba declared their own format HD DVD dead, afterall the players are sold of at bargain prices and shops are getting rid of the HD DVD as well (Walmart already announced to stock only BluRay discs).
But now DreamWorks Chief Executive Jeffrey Katzenberg told Reuters in an interview on Tuesday “We have a partnership with Toshiba and have an obligation to see this through [...] As you know, we have been well-compensated for our support. It really is in their court at this point to really declare what the next step will be. We’re poised either way to jump into the marketplace when the conditions are right to do so“.
And the time is counting for DreamWorks. After their animated feature “Bee Movie” bombed at the box office their had been (however faint) hope to make at least some money on the DVD and HD DVD market with a release - and the release date in March is getting closer and closer. According to Jeffrey Katzenberg in the interview with Reuters DreamWorks is still waiting to hear back from Toshiba on how to proceed with the DVD: “We said, we have a release coming up on ‘Bee Movie.’ What would you like us to do?“.
In other words: it seems as if DreamWorks is still contractually bound to release their movies on the not even dying but already dead HD DVD format and will loose out on a considerable amount of potential sales on the striving BluRay market. Too bad… or really? Even the market of the striving BluRay format is still rather small and JP Morgan analyst Barton Crockett mentions that DreamWorks might actually get more money from Toshiba under its 2007 agreement than it is loosing but not being able to release their movies such as the “Bee Movie” (who would buy it anyway??) on BluRay discs. On the other hand all the other studios that were releasing exclusive on HD DVD already announced their switsch to BluRay…
Anyway: Disney (and its fans) can be happy that Disney did bet on the right horse (sorry: format), here and thus the new problems of DreamWorks are more of an interesting business case study to follow from a distance. One could also ask, whether Disney really did bet on the right format or whether Disney’s betting wasn’t an essential element of determing the right format with its huge number of avid fans buying the Disney releases and its wide appeal to families around the globe. But this wasn’t todays question.