Last Gasps, or the Format War that Wasn't

The theater industry had better figure out quickly what to put in all those multiplexes. Rather than aiming nasty comments at Robert Iger and Steven Soderbergh for "turning coat," they should examine reality. The numbers, both at the box office and more alarmingly at the DVD store, don't lie. Home theater is fast overtaking the "theatrical experience" as the way to watch a film. It doesn't matter that the screen isn't as big and the picture isn't as pristine. The advantages add up: no screaming kids, no annoying talkers, no cell phone issues, no nearby customers with b.o., no one kicking the back of your chair, no missing two mintues of the movie for a bathroom break... Need I go on?

And the multiplexes are about to lose one of their few remaining selling points. HD is on its way with a vengeance, and there's nothing to stop it. This holiday season will see a dramatic upswing in HD TV sets sold. Front screen projectors can easily provide a 10-foot image. Not only are we talking about size, but clarity (both audio and video) of a kind never available in a home for a reasonable price. By the end of 2006, you will be able to purchase for $10,000 a similar system to what cost $100,000 just a few years ago. Die-hard film-lovers will argue until they are blue in the face that video isn't celluloid, but it's a losing argument, and one I have long since given up advancing. The more I see where digital technology is going, the more impressed I am. Film as we know it is a dying medium.

One thing that looked like it was going to inhibit HD - and help the multiplex industry - was a looming format war. 2006 was to see the debut of two competing (and incompatible) high def DVD fomats: Toshiba's HD-DVD and Sony's Blu-Ray. Toshiba argued that their version was better because it required minimal re-fitting of existing DVD factories. Sony countered that Blu-Ray compressed a lot more memory on the same size disc. The arguments went round and round. Then Sony delivered the first real punch.

PS3, a gaming system sure to be coveted by millions of people, will be Blu-Ray. This means everyone who buys a PS3 will, by default, own a Blu-Ray player. That doesn't just represent a market advantage. It means potential market dominence. HD-DVD's counter-annoucement that Microsoft was endorsing HD-DVD rang hollow, because the statement from Bill Gates' company was worded in such a way that if Blu-Ray won out, Microsoft would act like John Kerry and flip-flop.

Then, while Toshiba was reeling, the death blow came. Two of the biggest HD-DVD supporters, Warner Brothers and Paramount, defected to Blu-Ray, leaving Universal as the sole supporter of HD-DVD. And, just like that, the format war was over. Hiroshima and Nagasaki, and all that's left is signing the treaty. The ultimate "compromise" format will be at least 90% Blu-Ray. The details will be ironed out in the next few months. We should see players and software in stores before the middle of 2006. Sony, loser of the last major format war (Beta vs. VHS), learned their lessons. Given another chance, they have emerged victorious... without a shot being fired.

That's when the real home video revolution will begin. And that's when theater owners will start to panic, knowing that, for some, their last gasps are about to begin.

(Note: I do not believe that home video will eliminate multiplexes. They are too valuable as teen hangouts, and exhibitors will eventually find a way to make them viable. But the number of screens will be greatly reduced, with all but the most high-end multiplexes closing due to a lack of business and/or product. IMAX has the best chance of survival. And if digital 3D can be expanded to a large enough number of venues, it may catch on. But that's a subject for a future ReelThoughts.)

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