‘Proud That We Fought,’ Says Toshiba’s Ex-HD DVD Point Man
Negotiations proceeded smoothly in 2005 to unify HD DVD and Blu-ray and avert a costly format war, so much so that the two camps at the peak of their optimism stood a “50-50” chance of reaching a settlement, Toshiba’s former HD DVD point man told us in an interview. Ultimately, the talks collapsed in the summer of 2005 because the sides were too far apart on form factor and other issues and because the Blu-ray Disc Association was incapable of talking with a single voice, Yoshihide Fujii, now CEO of the New York-based Toshiba America holding company, told Consumer Electronics Daily.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
If there were “just one lead company” in the BDA, “it would have been much, much easier for us to talk with them,” Fujii said. “Unfortunately, I cannot say how many companies” spoke on BDA’s behalf in the unification talks, he said. Within the BDA, there was significant “difference of opinion.” Each of the “five major companies” within the BDA -- LG, Panasonic, Philips, Samsung and Sony -- “had their own opinions on unification and on the fight and battle over future strategies,” he said. It made finding common ground with HD DVD “very difficult,” he said.
To help broker a compromise, Fujii, as Toshiba’s lead negotiator in the talks, was willing to make a major concession by proposing to adopt Blu-ray’s 0.1-mm-thick disc form factor in a unified format, he told us. However, objections from hawks within Toshiba ultimately doomed that proposal, he said. It also didn’t help that BDA didn’t answer with concessions of its own, he said. Still, Fujii said he never personally approached the unification talks with a “take or leave it” attitude. “I was very much flexible,” he said. As for the BDA negotiators, they were “not so flexible as me,” he said.
At any given stage in the talks, as many as 20 companies within the BDA “had different interests” insofar as what a unified format should look like, he said. As for what finally doomed the talks, Fujii cited as one important “trigger” a May 2005 Nikkei story he says was planted by Blu-ray partisans that Toshiba had capitulated in the format fight (CED May 11/05 p1). That story caused such rancor between the two sides that it brought the talks to a “standstill,” he said. In the end, Sony needed a cutoff point in the talks because it wanted to build Blu-ray into PS3, and couldn’t delay product development any longer by holding out for a compromise, he said. But he emphasized he held no grudge against Sony and doesn’t to this day. Sony’s PS3 dilemma was a consideration “I fully understand,” Fujii said.
"I'm proud that we fought,” Fujii said, citing that as his single most positive takeaway from the format war. Fujii said he was personally “shocked” to learn of Warner’s decision just before the 2008 CES to withdraw its HD DVD support. One reason was HD DVD’s sales success through 2007’s Black Friday promotions when HD DVD products outsold Blu-ray, he said. Another was because Warner and Toshiba were “real friends with each other,” he said. He also regarded Time Warner “as the most reliable partner for us,” he said. In the days and weeks following Warner’s announcement, Best Buy and Walmart each announced they would phase out HD DVD. And in mid-February of 2008, Toshiba announced it was abandoning the HD DVD business for good (CED Feb 20/08 p1).
Fujii since has fielded many phone calls from many of “the studio guys” expressing regret that they didn’t listen more seriously to Toshiba’s arguments on the merits of HD DVD over Blu-ray, he said, without identifying who he has heard from. Toshiba had long argued that HD DVD was a better evolutionary alternative to the more revolutionary Blu-ray proposal because the life expectancy of the next-generation packaged media format would be “short” as more and more of the public would gravitate to digital forms of content delivery, he said. Blu-ray “foolishly” made the argument that its disc capacity was superior to HD DVD’s, he said, conceding that the argument gained traction with the studios. Today, affordable, ultra-capacity hard drives for downloading content to small devices like tablets and smartphones have rendered Blu-ray’s old arguments moot, he said. When Toshiba predicted those trends at the time when Blu-ray was gaining support over HD DVD, Fujii said, “I tried to explain this to the studios and the retailers, but unfortunately my capability was too weak to convince them.” Fujii thinks studios “lost a couple of years” establishing their digital distribution businesses by concentrating too much on breeding Blu-ray as a successor to DVD, he said. Several studios we queried for comment didn’t immediately respond.
Though Blu-ray might well make inroads in the world of packaged media, and likely will be around for many years to come, “I don’t think BD will completely replace DVD,” Fujii said. On the off chance it does, older DVD content will have already shifted to “new formats” of digital delivery, he said. “Anytime, anywhere” content will be the key, while Blu-ray will operate in the space largely confined to the living room, he said.