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Strategy Suggestion for Toshiba and Microsoft for HD DVD January 16, 2008

Posted by hdanalysis in HD.
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Problem Statement:

Issues: 1) Not enough mass adoption yet. 2) Not enough studio support.

Goal: 1) Get hardware out to the masses. 2) Gain back studio support. 3) Future proof with digital download capability. 4) GIVE CONSUMER THE CHOICE as it’s always popular when consumers feel they have the choice and power

Advantages: 1) Minimize additional recurring cost for everyone including studios, Toshiba, Microsoft, and other technology companies, and especially CONSUMERS. 2) Utilizing existing infrastructure of movie distribution and HDi technology

Strategy:

Background Information on Core Competencies:

For MS: Software technology. Their Live Marketplace can be used to HD DVD’s advantage and I will explain later on how.

Toshiba: Getting cheap hardware out to people. They are an electronics manufacturer.

Things that needs to be done:

1) Offer a wireless adapter to these Toshiba HD DVD players

2) Enable USB to attach say an NTSF formatted harddrive (since microsoft is NTSF based mostly)

3) Load firmware to all these HD DVD players to allow an additional menu option, which is accessing MS Live Market Place for digital downloads.

4) Since HD DVD player is really like a computer, it can be almost used as one. Use this advatnage and allow downloadable movies. Give it two types.

a) Cheaper version of HD movie without HDi. This will allow non-HD DVD supporting studios to still release their movies on high definition through MS Marketplace for those who still do not want to buy future obsolete blu-ray players. Suggested price of $7.99 (as with BOGO, average HD DVDs cost $9.98 through amazon

b) Allow add on content like HDi enabled Picture in picture for additiona say $2.99. (Must own original movie download to access these additional PiP pictures). This is enabled because of HD DVD’s second video encoder. All the special features can take advantage of toshiba’s remote control and continue to allow Bookmarking of a scene in a movie. These add-ons should be available from HD DVD supporting studios as they have released it on HD DVD already. There’s no recurring cost as the movie is already remastered and HDi is already coded.

c) Toshiba should continue selling HD DVD players at affordable prices because not everyone wants to buy a 360 in order to access Marketplace. Marketplace exists for MS so no additional cost other than initial set up of allowing HD DVD players access. These HD DVD hardware will still play HD DVDs when they are released, upconvert DVDs, and allow consumers to buy digitial download IF THEY WANT TO. Since it’s future proof with ability for digital download, many people do not mind a $150 dollar player with 320gb hard drive for say 69.99. Movie for 7.99+2.99+6.99(320gb say average allow download of 30gig per movie)

Potential problems?:

Price of harddrives, and speed of digital download. But no worries. Technology is only going forward. Harddrives will be cheaper (and USB can be enabled for memory card reader and when these flash memory is cheap enough and has protection, you can store these movies on there for the go. Yes, we’re still a while before we reach there, but that’s why this strategy is future proof). Also, speed of downloads will only get faster as well and encoding of movies will only get more efficient.

Reiteration of Advantages:

Hardware doesn’t make money all the time due to recurring and maintenance costs. It’s technology/movie licensing and software that makes the big bucks. And advertising for others too.

Toshiba: Hardware probably makes no money. Royalties/Licensing fees to their technology is there the $$ is.

Microsoft: They have existing software interface allowing download movies. They get distribution rights from studios but in turn, sell it to consumers. They make money there for that technology and distribution.

Studios: BD only studios: Since they already remastered movies to 1080p, they just give distribution rights to MS for movie with HD video and HD sound. No extra cost; HD DVD only studios: Same. They already did it on HD DVDs, all they have to do is transfer the files to MS for digital download. And the HDi file too. They will get money for both. No additional logistic cost there.

Consumers: Given the choice. If they don’t have 360, they still got cheap HD DVD players that can be expanded to include harddrive for digital download if they CHOOSE. And they have a choice to purchase HDi if they want it. Cheap hardware allows mass market. If enough people demand the HDi on MS marketplace, eventually studios may want to make money off of that too. HDi is not hard to program. Studios have the video for future picture in picture already and all they need to do is dump in the file, and software will output an HDi capable PiP file. Post it, those who want to buy it can pay $2.99. Digital downloads have ALL studios support basically. Yes, people still want physical medium. That’s why we have HD DVD exclusive studios. But if we get mass market through this strategy, eventually studios will start producing HD DVDs again since the install base is there.

Date: 1/16/2008 (Copywright TYK 2008)

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