Global Economics

Next-Gen DVD's Porn Struggle


Legend has it adult entertainment killed Sony's Betamax. Will porn producers' choice of HD-DVD spell trouble for the company's Blu-ray format?

One oft-recalled explanation for the failure of Sony's (SNE) Betamax videocassette format in the 1980s was the Japanese company's ambivalence towards producers of pornographic videos. By contrast, proponents of VHS, Betamax's rival, welcomed adult content with open arms and, the legend goes, caused Betamax's demise. The new gadget also spawned a multibillion-dollar porn video industry along the way.

Is a sequel in the works? There are some similarities in the current high definition disk format war for supremacy of next-gen DVD players.

HD-DVD, backed by Toshiba (TOSBF), and Sony's Blu-ray disks are battling it out in much the same way that Betamax and VHS did in the 1980s. Once again, there are early signs that one type of disk—HD-DVD—is emerging as the format of choice for the adult entertainment industry, which raked in $3.6 billion worth of video sales and rentals in 2006, according to Adult Video News.

Explanations for HD-DVD's lead are familiar, too. Producers of adult content complain about higher costs of producing content that syncs with Blu-ray—and that Sony declines to work with adult content vendors. "Sony equals no porn," Jackie Ramos, vice-president in DVD production at Wicked Pictures, a maker of adult videos, said earlier this month. "It's a lot less expensive to use HD-DVD." Ramos added that some members of the HD-DVD camp are more willing to help with access to "stampers" needed to make disks in large numbers.

Big Impact?

Other filmmakers admit to similar problems. Ali Davoudian, founder of Digital Playground, told Adult Video News in January that he was compelled to use HD-DVD because no Blu-ray manufacturer would make disks for his company. Sony doesn't deny that it won't produce X-rated Blu-ray disks. "Our stance at Sony is that Sony DADC does not replicate adult titles in Blu-ray," says George Boyd, a spokesman for Sony in Tokyo. Sony DADC, a division of Sony, is the world's largest provider of pre-recorded optical discs.

No surprise, then, that all high-definition adult titles already on the market use the HD-DVD standard. Wicked Pictures released the first high definition adult title, Camp Cuddly Pines Power Tool Massacre, in December. Other titles, such as Bangbros and Pink Visual, have also appeared using the HD-DVD format.

For all that, whether adult DVD producer choices will have a bearing on the battle between Blu-ray and HD-DVD is far from clear. For one thing, HD-DVD's early lead doesn't mean Blu-ray can't catch up.

Surviving Clean Living

While Sony is keeping it at arm's length, the Blu-ray Disk Assn. (BDA), of which Sony, as it happens, is a member, takes a more liberal view. "The BDA welcomes the participation of all companies interested in using and supporting the format," it says. In late March, Vivid Entertainment, another producer of adult content, plans to release Debbie Does Dallas…Again on Blu-Ray and HD-DVD. Vivid hasn't said which Blu-ray company it's working with.

Adult-oriented content has also appeared on Sony's PlayStation Portable handheld game consoles. In 2005 in Japan, two companies, h.m.p and GLAY'z, released adult titles, including The Nurse of a Big Breast, using the UMD disk format.

Perhaps more important, some analysts question the extent to which porn was responsible for VHS crushing Betamax in the first place. While VHS undoubtedly played a huge role in taking adult entertainment to a wider audience, other—admittedly more mundane—factors may have been important in establishing the dominance of VHS.

The PlayStation Effect

For example, when Betamax first appeared, cassettes only lasted an hour. VHS tapes first lasted two hours and later, four hours. Despite Betamax offering superior viewing quality, VHS quickly became the established standard in most homes and rental stores. There are also differences between Betamax versus VHS in the 1980s and Blu-Ray vs. HD-DVD today. Betamax and VHS were effectively battling to dominate a new market, but today's high-definition disks are essentially new generation of an existing market.

Whether fans of adult movies prefer cheaper DVDs or high-definition quality remains to be seen, but it isn't the case that these movies will necessarily decide the fate of Blu-ray versus HD-DVD. "It is true that content determines the winner, but I'm just not sure that adult is the defining factor," says David Gibson, an analyst at Macquarie Securities in Tokyo.

Then there's the role of the PlayStation3, which includes a Blu-ray player. Despite several missteps (see BusinessWeek.com, 11/14/06, "Sony's PS3 Issues Threaten Revival"), the PS3 is selling well and already responsible for putting far more Blu-ray players in people's homes than there are HD-DVD players. "I did read all the HD-DVD excitement, but I think they sold 60,000 players, and we actually put out a million Blu-ray players," Sony chief Howard Stringer told Cnet.com on Jan. 22.

With Hiroko Tashiro in Tokyo

Monsanto vs. GMO Haters
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