Many have been predicting for some time now that Universal was preparing to go neutral and start releasing Blu-ray titles. Reports that the BDA and various Blu-ray proponents had spoken with Universal and made various offers have popped up with increasing frequency over the last several months. And yet... thus far, Universal still remains the only major studio not to release titles on the Blu-ray format.
In an interview with Scott Hettrick, recently posted to the Hollywood in Hi-Def website, Universal Pictures' president Craig Kornblau explained and defended the studios' seemingly bizarre reluctance to embrace the Blu-ray format. In the interview Kornblau acknowledges, for the first time, that if Universal were to start releasing discs on the Blu-ray format it would have a "serious, if not life threatening impact on the future of HD DVD."
This indicates that Kornblau knows that Universal is almost single-handedly prolonging the "format war" that, by most accounts, is preventing the widespread consumer adoption of high definition optical discs. One reason for this, also admitted to for the first time, is that Universal is receiving compensation for remaining HD DVD exclusive, as well as for releasing extras specific to the XBOX 360 system. This in itself isn't really a surprise, but given the deep pockets of the BDA, it seems reasonable that they could likely receive significant compensation just for releasing titles on Blu-ray disc as well.
As Universal, like all the studios who support Blu-ray exclusively (you know, Sony/MGM, Fox, Buena Vista/Disney, Lionsgate, Starz, etc.), originally wanted to avoid a format war, they initially chose just one high definition format to release on. Unlike all those others, however, Universal sided with HD DVD. It isn't entirely clear why Universal made that initial decision, however cost factors and interactivity features are mentioned as two leading reasons.
The situation since those initial alliances formed has changed considerably, of course. The other major studios who were initially in the HD DVD camp (Warner Brothers and Paramount) both decided to go "format neutral" and release on both formats, and Blu-ray has taken a commanding lead over HD DVD. So, why, then, would a company who never wanted a format war be single-handedly prolonging one?
According to Craig Kornblau, the answer is that Universal has had a change of heart. They now actually embrace the format war, and believe it to be good for both studios and consumers. According to Kornblau, player prices have fallen much more quickly due to the format war than they would have without it. While this case could be made (and it is often is by HD DVD proponents), the reality is that it's a hard claim to back up -- and it becomes a preposterous claim once you figure that in order to watch movies from all studios you actually need two players.
These frank admissions on behalf of Universal are definitely a change of pace for Universal, but most likely comes as a result of a spurt of bad news lately. Most notably, at the recent EMA conference, Universal Executive Vice President for Marketing, Ken Graffeo, implied that Universal's parent company, GE, was putting significant pressure on the heads of Universal to rethink their high definition optical disc strategy. Worse, an attendee specifically asked about the possible release of the Steven Spielberg titles that had been announced as "coming soon to HD DVD" earlier this year by Universal, only to be retracted shortly after, and an apology to Spielberg issued. Hi reply (as quoted by Bill Hunt):
In regards to the Spielberg... [sic] Steven wanted to wait for DVD till there was a higher penetration for that. [Sic] Right now, with 100... 200,000 players and 150,000... he wants to wait till there's more penetration. Because... you know when you do release... and Jaws was the first Steven Spielberg that we came out with, and at that time we released we sold a million units. More than we'd ever sold on VHS. But you have to have, sort of like... I don't want to say critical mass, because you had close to 3 or 4 million households that had players... but it's too early now. And I think we have to work very close with our filmmakers because they have a very big part in what we do.
Aside from not being at all prepared for the question and stumbling over himself, it actually was a fairly sensical answer. There simply aren't enough players out there for Spielberg to allow his films to be released yet. The implication was that neither HD DVD nor Blu-ray would get any Spielberg films any time soon.
That answer held for roughly a week, until Sony announced that Close Encounters of the Third Kind was going to be released this fall as a special edition Blu-ray set, complete with three versions of the film (using seamless branching no less), a transfer approved by Spielberg himself, and an exclusive interview the director made especially for the Blu-ray release. So, it seems, it's not that neither format has reached "critical mass" yet, it's just that HD DVD hasn't -- and, unless something big happens soon, it never will.
If Universal were the world's biggest movie studio, their unabashed egotism could perhaps pay off. Unfortunately for them, they most definitely aren't. In fact, of the six "major" movie studios, Universal ranks... 6th. In 2006, they made up 10.9% of the North American film revenue, barely half of what Sony made. As of 7/29/07, they were tracking to do even worse this year, making up just 9.1% of film revenue, again pulling in only half the revenue of larger studios such as Sony and Paramount. Though the film "The Bourne Ultimatum" will undoubtedly help Universal's struggling film revenue, it still won't be nearly enough to bring them up to the ranks of the bigger studios.
In many ways, Universal's downfall is rather tragic. At one time, film master's such as Steven Spielberg released exclusively with Universal, but in recent years their revenues have tumbled. A myriad of executive shakeups have taken place, none doing anything to restore the stature of the company. While "mini-major studios" (such as Lionsgate, Dreamworks, and New Line) and larger studios independent assets (like Sony Pictures Classics and Fox Searchlight) have come to represent a larger and larger portion of the gross film revenue, Universal is risking getting left behind in the "new Hollywood."
Given their struggling fortunes, the plan to remain format exclusive with the HD DVD format seems like just another bizarre decision in a growing line of bizarre decisions. Given the current state of the studio, as well as that of the format war, it seems unlikely that Universal will be able to continue their posturing for too much longer. Unless the financial "assistance" they are receiving from Microsoft and Toshiba is truly a phenomenal amount, the sales of Blu-ray discs this holiday season will almost certainly force Universal into a position where releasing on Blu-ray becomes a business necessity, whether certain executives within the company like it or not.
In the meantime, we'll all just have fun watching the numbers and debating exactly when Universal will come to its senses and end this "war" once and for all.
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