WEBVTT 00:00:00.000 --> 00:00:02.919 Welcome back to the Deep Dive. Today we are going 00:00:02.919 --> 00:00:05.339 to do something a little different. I want you 00:00:05.339 --> 00:00:08.199 to picture a shelf in a used video game store, 00:00:08.339 --> 00:00:10.419 or maybe, you know, the bottom rack at a Goodwill. 00:00:10.939 --> 00:00:13.779 You're scanning the spines of the DVDs, white, 00:00:13.859 --> 00:00:16.960 black, clear cases, and then suddenly you see 00:00:16.960 --> 00:00:20.579 it. A flash of translucent crimson red. The mark 00:00:20.579 --> 00:00:22.300 of the fallen. The mark of the fallen, indeed. 00:00:22.640 --> 00:00:25.600 We are talking about HD DVD. If you know the 00:00:25.600 --> 00:00:27.480 name, you probably know it as the punchline to 00:00:27.480 --> 00:00:30.800 a joke. It's the Betamax of the 2000s. Right. 00:00:30.899 --> 00:00:33.460 The format that took on Sony's Blu -ray and got 00:00:33.460 --> 00:00:36.039 absolutely crushed. It's often remembered as 00:00:36.039 --> 00:00:38.280 a cautionary tale of, you know, backing the wrong 00:00:38.280 --> 00:00:40.719 horse. But that narrative is actually incredibly 00:00:40.719 --> 00:00:43.820 reductive. When you really dig into the engineering 00:00:43.820 --> 00:00:47.039 papers, corporate memos and the timeline, HD 00:00:47.039 --> 00:00:49.539 DVD wasn't some cheap knockoff. In many ways, 00:00:49.539 --> 00:00:51.840 it was the superior product, at least initially. 00:00:52.380 --> 00:00:53.859 That's what we're doing today. We aren't just 00:00:53.859 --> 00:00:56.420 burying the body. We're doing the autopsy. We're 00:00:56.420 --> 00:00:58.820 going to look at the technology that was arguably 00:00:58.820 --> 00:01:01.920 ahead of its time, the corporate alliances that 00:01:01.920 --> 00:01:04.140 turned Hollywood into a battlefield, and the 00:01:04.140 --> 00:01:08.019 single month, January 2008. where a billion dollars 00:01:08.019 --> 00:01:10.620 effectively evaporated into thin air. And we 00:01:10.620 --> 00:01:12.219 have to talk about the Internet culture aspect 00:01:12.219 --> 00:01:14.540 of this, too. Oh, yeah. Because while the suits 00:01:14.540 --> 00:01:17.379 were fighting in boardrooms, there was a massive 00:01:17.379 --> 00:01:20.420 guerrilla war happening on forums and tech blogs. 00:01:20.780 --> 00:01:22.959 This was the first time the Internet really tried 00:01:22.959 --> 00:01:25.599 to break a physical format security, and they 00:01:25.599 --> 00:01:28.340 succeeded in spectacular fashion. Oh, the APS 00:01:28.340 --> 00:01:30.400 hack. Yeah. We're definitely getting into the 00:01:30.400 --> 00:01:32.359 dig revolt later. Yeah. But let's start with 00:01:32.359 --> 00:01:34.920 the context. It's the mid -2000s. We all just 00:01:34.920 --> 00:01:37.959 bought these heavy... expensive flat screen TVs. 00:01:38.060 --> 00:01:41.180 Well, it's the first plasmas and LCDs. They say 00:01:41.180 --> 00:01:43.480 HD ready on the box. We plug them in, turn on 00:01:43.480 --> 00:01:46.379 the cable box, and it looks like garbage. It 00:01:46.379 --> 00:01:49.420 looked awful. Right. You have this 720p or 1080i 00:01:49.420 --> 00:01:52.019 display, but you're feeding it a standard definition 00:01:52.019 --> 00:01:55.439 signal from a DVD or analog cable. The pixels 00:01:55.439 --> 00:01:58.140 are being stretched. It looked muddy. The hardware 00:01:58.140 --> 00:02:00.540 was there, but the content wasn't. We needed 00:02:00.540 --> 00:02:03.420 a new disc. But why did we need a new laser? 00:02:03.900 --> 00:02:06.719 This is the fundamental physics question. A DVD 00:02:06.719 --> 00:02:10.879 holds 4 .7 gigabytes. Why couldn't we just squeeze 00:02:10.879 --> 00:02:13.639 more data onto it? It comes down to the diffraction 00:02:13.639 --> 00:02:16.259 limit of light. Think of a DVD player, like a 00:02:16.259 --> 00:02:18.460 record player. You have a track spiraling out, 00:02:18.539 --> 00:02:20.479 and you have pits and lands representing the 00:02:20.479 --> 00:02:23.840 ones and zeros. To get high -definition 1080p 00:02:23.840 --> 00:02:26.500 video, uncompressed audio, you need to store 00:02:26.500 --> 00:02:28.860 about five or six times as much data as a standard 00:02:28.860 --> 00:02:31.120 movie. So you need smaller pits, denser spiral 00:02:31.120 --> 00:02:33.889 tracks. Exactly. But you can't read those smaller 00:02:33.889 --> 00:02:36.409 pits with the old laser. Standard DVDs use a 00:02:36.409 --> 00:02:39.289 red laser, which has a wavelength of 650 nanometers. 00:02:39.629 --> 00:02:42.770 If you try to read tiny HD data with a red laser, 00:02:42.889 --> 00:02:45.030 the beam is too fat. It's like trying to read 00:02:45.030 --> 00:02:47.110 a fine print contract with a thick Sharpie. You 00:02:47.110 --> 00:02:48.849 just blur everything together. So the industry 00:02:48.849 --> 00:02:50.830 had to move down the spectrum. Towards the blue 00:02:50.830 --> 00:02:54.569 violet end, both HD DVD and Blu -ray utilized 00:02:54.569 --> 00:02:57.729 a blue violet laser with a wavelength of 405 00:02:57.729 --> 00:03:00.689 nanometers. That shorter wavelength allows the 00:03:00.689 --> 00:03:03.729 beam to be focused much, much tighter. I remember 00:03:03.729 --> 00:03:06.110 reading about the specific beam spot size. It's 00:03:06.110 --> 00:03:08.289 significantly smaller. Oh, it's a huge difference. 00:03:08.370 --> 00:03:10.370 It allows for a track pitch, that's the distance 00:03:10.370 --> 00:03:12.889 between the spirals of data, to shrink from 0 00:03:12.889 --> 00:03:17.770 .74 micrometers on a DVD down to 0 .40 micrometers 00:03:17.770 --> 00:03:20.870 on HD DVD. Wow. That tightening of the spiral 00:03:20.870 --> 00:03:22.789 is where you get your capacity. And that capacity 00:03:22.789 --> 00:03:26.129 jump was massive. We went from roughly 4 .7 kilobyte 00:03:26.129 --> 00:03:29.050 on a DVD to 15 kilobyte on a single -layer HD 00:03:29.050 --> 00:03:31.650 DVD. And 30 kilobyte on a dual -layer, which 00:03:31.650 --> 00:03:34.030 pretty quickly became the standard for most movies. 00:03:34.129 --> 00:03:35.770 And Blu -ray was even more right. They were promising 00:03:35.770 --> 00:03:38.150 50 kilobyte. They were. Blu -ray had a slightly 00:03:38.150 --> 00:03:40.270 higher numerical aperture on its lens, which 00:03:40.270 --> 00:03:42.169 let them focus the beam even tighter. So their 00:03:42.169 --> 00:03:45.009 capacity was 25 kilobytes per layer. So 50 kilobytes 00:03:45.009 --> 00:03:47.150 for a dual -layer disc. Okay, so the physics, 00:03:47.349 --> 00:03:51.189 the blue laser. is the same for both HD DVD and 00:03:51.189 --> 00:03:54.590 Blu -ray. Sony and Toshiba both agreed, we need 00:03:54.590 --> 00:03:57.430 blue lasers. So why didn't they just high -five 00:03:57.430 --> 00:04:00.050 and build one format? Why did Toshiba peel off 00:04:00.050 --> 00:04:01.879 and say, no, we're doing our own thing? This 00:04:01.879 --> 00:04:04.180 is the billion -dollar question, and the answer 00:04:04.180 --> 00:04:06.900 isn't about lasers. It's about plastic molding. 00:04:06.900 --> 00:04:08.860 It's about the factory floor. The manufacturing 00:04:08.860 --> 00:04:11.819 process. Right. Toshiba looked at the global 00:04:11.819 --> 00:04:14.620 infrastructure for making DVDs. There were thousands 00:04:14.620 --> 00:04:17.040 of these pressing plants. Toshiba's engineers 00:04:17.040 --> 00:04:20.420 designed HD DVD to be physically identical to 00:04:20.420 --> 00:04:23.240 a standard DVD in terms of layer depth. How so? 00:04:23.459 --> 00:04:26.560 The data sits 0 .6 millimeters beneath the surface 00:04:26.560 --> 00:04:29.060 of the disc. Which is exactly where it sits on 00:04:29.060 --> 00:04:31.870 a regular DVD. Precisely. This meant that a factory 00:04:31.870 --> 00:04:34.129 owner could take a standard DVD production line, 00:04:34.250 --> 00:04:36.110 spend a few minutes swapping out the stamper 00:04:36.110 --> 00:04:38.790 and doing a quick recalibration, and boom, they're 00:04:38.790 --> 00:04:41.490 printing HD DVDs. Wow. The capital expenditure, 00:04:41.689 --> 00:04:44.209 the capex, was minimal. It was a software upgrade 00:04:44.209 --> 00:04:46.810 for the factory. Where's Blu -ray? Blu -ray was 00:04:46.810 --> 00:04:49.589 a radical redesign. Sony decided to put the data 00:04:49.589 --> 00:04:52.089 layer just 0 .1 millimeters from the surface, 00:04:52.329 --> 00:04:54.970 almost right on top of the disc. Why do that? 00:04:55.009 --> 00:04:57.209 What was the advantage? Theoretically, it reduces 00:04:57.209 --> 00:05:00.170 something called birefringence. which is when 00:05:00.170 --> 00:05:02.449 the laser beam splits as it passes through the 00:05:02.449 --> 00:05:05.050 plastic. By having the layer so close to the 00:05:05.050 --> 00:05:07.149 surface, they could use a more powerful lens 00:05:07.149 --> 00:05:09.550 and get that higher data density we mentioned. 00:05:09.829 --> 00:05:12.050 Okay, so there was an engineering reason. There 00:05:12.050 --> 00:05:16.050 was. But practically, in 2006, it was a nightmare 00:05:16.050 --> 00:05:18.149 because the data was so close to the surface, 00:05:18.209 --> 00:05:20.329 if you sneezed on it, you scratched the data. 00:05:20.490 --> 00:05:22.490 I remember the early prototypes had those caddies, 00:05:22.569 --> 00:05:25.930 like the old mini disks. Yes. They were terrified 00:05:25.930 --> 00:05:28.569 of scratches. They eventually developed a hard 00:05:28.569 --> 00:05:31.389 coat polymer to protect it, pioneered by TDK. 00:05:31.629 --> 00:05:34.129 But the manufacturing implications were huge. 00:05:34.269 --> 00:05:36.449 You couldn't use a DVD line. You had to build 00:05:36.449 --> 00:05:39.329 entirely new factories, new molding machines, 00:05:39.509 --> 00:05:43.009 new bonding processes. It was expensive. So Kashiba's 00:05:43.009 --> 00:05:45.069 pitch to the Hollywood studios and the replicators 00:05:45.069 --> 00:05:48.149 was, hey, we can give you HD and it won't cost 00:05:48.149 --> 00:05:50.370 you a fortune to retool your supply chain. It 00:05:50.370 --> 00:05:53.470 was a very compelling economic argument. Evolution, 00:05:53.550 --> 00:05:56.449 not revolution. And that's why initially the 00:05:56.449 --> 00:05:58.589 governing body of the industry sided with them. 00:05:58.670 --> 00:06:01.209 The DVD forum. This is where the politics start 00:06:01.209 --> 00:06:03.410 getting messy. The DVD forum is the group that 00:06:03.410 --> 00:06:06.389 holds the trademark for the DVD logo. If you 00:06:06.389 --> 00:06:08.129 want to put that DVD logo on your player, you 00:06:08.129 --> 00:06:10.529 answer to them. In the early 2000s, they had 00:06:10.529 --> 00:06:12.389 to choose a successor. And there wasn't just 00:06:12.389 --> 00:06:14.689 two options, right? There were a few. Oh, yeah. 00:06:14.730 --> 00:06:17.750 There was a Warner Bros. proposal to just use 00:06:17.750 --> 00:06:20.930 a special high density DVD nine disc. But it 00:06:20.930 --> 00:06:23.870 came down to two main camps, Toshiba and NEC 00:06:23.870 --> 00:06:26.550 with their advanced optical disc and Sony and 00:06:26.550 --> 00:06:29.050 Phillips with what was then called DVR Blue, 00:06:29.269 --> 00:06:32.240 which became Blu -ray. And in 2003, they voted. 00:06:32.360 --> 00:06:34.939 They did. And they voted to approve the advanced 00:06:34.939 --> 00:06:38.040 optical disc, which was renamed HD -DVD. So, 00:06:38.100 --> 00:06:41.240 legally speaking, HD -DVD was the official successor. 00:06:41.660 --> 00:06:44.259 Blu -ray was the rogue faction. It's funny to 00:06:44.259 --> 00:06:46.399 think of Sony as the rebel alliance here. They 00:06:46.399 --> 00:06:49.100 were. They broke away from the forum and created 00:06:49.100 --> 00:06:51.860 their own consortium, the Blu -ray Disc Association. 00:06:52.300 --> 00:06:54.360 But they had the weight of the PlayStation behind 00:06:54.360 --> 00:06:56.879 them, which we'll get to. But before the war 00:06:56.879 --> 00:06:59.639 fully broke out, there was a moment where peace 00:06:59.639 --> 00:07:03.600 seemed possible. The failed peace treaty of 2005. 00:07:04.019 --> 00:07:06.060 This is one of the great what -ifs of consumer 00:07:06.060 --> 00:07:09.500 electronics. In 2005, Kunitake Ando from Sony 00:07:09.500 --> 00:07:13.180 and Teraki Ryug from Toshiba actually met. They 00:07:13.180 --> 00:07:16.300 knew a format war would hurt sales. Consumers 00:07:16.300 --> 00:07:19.040 hate confusion. They tried to merge the formats. 00:07:19.100 --> 00:07:22.639 I've read about this. The idea was to maybe use 00:07:22.639 --> 00:07:25.920 the Sony physical disk. the 50 GB Blu -ray structure, 00:07:26.180 --> 00:07:28.939 but use the Toshiba software and file structure. 00:07:29.100 --> 00:07:30.980 That was one proposal. Another was to create 00:07:30.980 --> 00:07:33.439 a hybrid disk that contained both. But it fell 00:07:33.439 --> 00:07:35.800 apart over two main issues. First, the physical 00:07:35.800 --> 00:07:38.100 structure. Toshiba just did not want to give 00:07:38.100 --> 00:07:40.060 up that manufacturing advantage we just discussed. 00:07:40.279 --> 00:07:41.819 It was their ace in the hole. And what was the 00:07:41.819 --> 00:07:44.290 other issue? The second wedge was software. And 00:07:44.290 --> 00:07:46.410 this is where Microsoft enters the chat. Microsoft 00:07:46.410 --> 00:07:49.529 hated Blu -ray, like actively despised it. They 00:07:49.529 --> 00:07:52.009 did. Because Blu -ray chose Java, specifically 00:07:52.009 --> 00:07:54.589 a version called BDJ, as its interactive layer. 00:07:54.829 --> 00:07:57.370 Sun Microsystems Java. Right. And you have to 00:07:57.370 --> 00:08:00.029 remember, in the mid -2000s, Microsoft and Sun 00:08:00.029 --> 00:08:03.589 were not friends. Microsoft viewed Java as a 00:08:03.589 --> 00:08:06.009 platform threat to Windows. They didn't want 00:08:06.009 --> 00:08:07.949 Java becoming the standard operating language 00:08:07.949 --> 00:08:10.310 for the living room. So Microsoft threw its weight 00:08:10.310 --> 00:08:13.550 behind HD DVD. because Toshiba agreed to use 00:08:13.550 --> 00:08:17.029 IHD. Yes, later called HDI for High Definition 00:08:17.029 --> 00:08:20.029 Interactive. It was based on XML, HTML, CSS, 00:08:20.170 --> 00:08:23.290 and JavaScript. It was web tech. Stuff that web 00:08:23.290 --> 00:08:26.209 developers already knew. Exactly. Microsoft argued 00:08:26.209 --> 00:08:28.529 it was lighter, faster, and easier to code for. 00:08:28.670 --> 00:08:30.879 And honestly? They were right. We'll get to the 00:08:30.879 --> 00:08:32.799 user experience in a bit, but I remember early 00:08:32.799 --> 00:08:35.779 Blu -ray menus being sluggish disasters compared 00:08:35.779 --> 00:08:38.720 to HD DVD. Because Jada is heavy, it requires 00:08:38.720 --> 00:08:41.299 a virtual machine to run. Asking a 2006 Arrow 00:08:41.299 --> 00:08:43.720 disc player chip to run in Java VM was like asking 00:08:43.720 --> 00:08:45.840 a pocket calculator to run Photoshop. It was 00:08:45.840 --> 00:08:48.200 brutal. So the peace talks collapse in August 00:08:48.200 --> 00:08:51.480 2005. The lines are drawn. On the red side, Toshiba, 00:08:51.559 --> 00:08:54.179 NEC, Sanyo, Microsoft, Intel. A huge part of 00:08:54.179 --> 00:08:56.379 the PC ecosystem. And on the blue side, Sony, 00:08:56.519 --> 00:08:59.929 Philips, Panasonic, Pioneer, Dell, Apple. All 00:08:59.929 --> 00:09:03.429 the big consumer electronics giants. And HP was 00:09:03.429 --> 00:09:06.070 this interesting wild card. They tried to broker 00:09:06.070 --> 00:09:09.590 a deal demanding Blu -ray use Microsoft's IHD. 00:09:09.809 --> 00:09:13.090 When Blu -ray refused, HP threatened to support 00:09:13.090 --> 00:09:17.070 HD DVD. It was a mess. A massive corporate proxy 00:09:17.070 --> 00:09:20.409 war. The PC industry largely leaned toward HD 00:09:20.409 --> 00:09:22.769 -DVD because of the easier file structure and 00:09:22.769 --> 00:09:24.929 managed copy features. Which we'll get to. The 00:09:24.929 --> 00:09:27.169 consumer electronics giants leaned toward Blu 00:09:27.169 --> 00:09:28.590 -ray because they wanted the higher potential 00:09:28.590 --> 00:09:30.789 capacity and, frankly, the patent royalties. 00:09:30.970 --> 00:09:33.149 Oh, yeah. The royalties were a huge part of the 00:09:33.149 --> 00:09:35.110 calculation for Sony. So let's go to launch day. 00:09:35.289 --> 00:09:38.429 HD -DDD hits the market first. March 31st, 2006 00:09:38.429 --> 00:09:42.009 in Japan. April 18th in the U .S. They beat Blu 00:09:42.009 --> 00:09:44.470 -ray by a solid two months. The first player 00:09:44.470 --> 00:09:47.309 was the Toshiba HD -A1. It was a tank. Have you 00:09:47.309 --> 00:09:49.210 ever lifted one of these? It weighed nearly 20 00:09:49.210 --> 00:09:51.809 pounds. It was an absolute monster. I have, and 00:09:51.809 --> 00:09:53.330 I remember the boot time. You'd press the power 00:09:53.330 --> 00:09:55.909 button, go make a sandwich, come back, and maybe 00:09:55.909 --> 00:09:57.889 the tray would be open. That's because it wasn't 00:09:57.889 --> 00:10:00.870 really a consumer electronics device. It was 00:10:00.870 --> 00:10:04.110 a Pentium 4 computer stuffed into a VCR casing 00:10:04.110 --> 00:10:07.789 running a custom version of Linux. It was a prototype 00:10:07.789 --> 00:10:10.169 sold as a product. So it was literally a PC. 00:10:10.450 --> 00:10:14.710 It was. But... It worked. The first movies were 00:10:14.710 --> 00:10:17.409 The Last Samurai, Million Dollar Baby, and The 00:10:17.409 --> 00:10:19.649 Phantom of the Opera. And they looked amazing. 00:10:20.029 --> 00:10:22.809 It did, and it was $499. Which sounds like a 00:10:22.809 --> 00:10:25.129 lot, but the first Samsung Blu -ray player that 00:10:25.129 --> 00:10:28.169 launched a few months later was $1 ,000. $1 ,000. 00:10:28.470 --> 00:10:30.809 A grand. And the picture quality on the Toshiba 00:10:30.809 --> 00:10:32.929 was arguably better at launch because they used 00:10:32.929 --> 00:10:34.950 better codecs. Let's talk about that picture 00:10:34.950 --> 00:10:37.610 quality, because I think people assume Blu -ray 00:10:37.610 --> 00:10:40.519 won because it looked better. But in 2006, that 00:10:40.519 --> 00:10:43.019 wasn't true at all, was it? Not at all. In fact, 00:10:43.039 --> 00:10:45.559 the first batch of Blu -ray releases were disastrous. 00:10:46.179 --> 00:10:48.620 Sony was so rushed to get to market, they used 00:10:48.620 --> 00:10:50.759 the old MPEG -2 compression, the same stuff used 00:10:50.759 --> 00:10:53.399 on standard DVDs, just at a higher bitrate. But 00:10:53.399 --> 00:10:55.620 MPEG -2 is really inefficient for high definition. 00:10:55.960 --> 00:10:59.759 It's terrible for HD. So the launch title, The 00:10:59.759 --> 00:11:02.259 Fifth Element on Blu -ray, looked awful. It was 00:11:02.259 --> 00:11:04.879 grainy, full of compression artifacts. It was 00:11:04.879 --> 00:11:08.179 barely better than an upscale DVD. And HD -DVD. 00:11:08.379 --> 00:11:12.299 HD -DVD launched using VC1, which was Microsoft's 00:11:12.299 --> 00:11:14.799 advanced video codec, a descendant of Windows 00:11:14.799 --> 00:11:17.519 Media Video. It was hyper -efficient. So even 00:11:17.519 --> 00:11:20.440 though HD -DVD had less storage space, 30 GB, 00:11:20.620 --> 00:11:23.139 versus Blu -ray's potential 50 GB, the video 00:11:23.139 --> 00:11:25.139 looked cleaner because the compression was smarter. 00:11:25.440 --> 00:11:27.200 This connects to the modern day, actually, the 00:11:27.200 --> 00:11:29.659 VC1 codec. That's the grandfather of the streaming 00:11:29.659 --> 00:11:32.090 codecs we use now. Absolutely. The codec war 00:11:32.090 --> 00:11:34.350 inside the format war was just as important. 00:11:34.590 --> 00:11:37.929 Eventually, both formats adopted AVC or H .264, 00:11:38.049 --> 00:11:40.389 which is what runs YouTube and Netflix and basically 00:11:40.389 --> 00:11:43.990 all internet video today. But HD DVD championed 00:11:43.990 --> 00:11:45.990 those advanced codecs first. And the audio was 00:11:45.990 --> 00:11:48.230 better too, right? Mandatory support for Dolby 00:11:48.230 --> 00:11:51.269 True HD and DTS HD high -resolution audio. Blu 00:11:51.269 --> 00:11:53.330 -ray's initial players didn't even have to support 00:11:53.330 --> 00:11:56.389 the best audio formats. It was chaos. So 2006 00:11:56.389 --> 00:11:59.769 rolls on. HD DVD is cheaper. It looks better. 00:11:59.889 --> 00:12:02.279 The cases are red. which is a nice distinction. 00:12:02.659 --> 00:12:04.919 But then in November, Two heavyweights under 00:12:04.919 --> 00:12:07.379 the ring, the PlayStation 3 and the Xbox 360 00:12:07.379 --> 00:12:10.519 HD DVD drive. This is the strategic divergence 00:12:10.519 --> 00:12:13.919 that probably decided the war. Sony took a massive, 00:12:13.980 --> 00:12:16.399 massive gamble. They put the Blu -ray drive inside 00:12:16.399 --> 00:12:19.480 every single PlayStation 3. Which made the PS3 00:12:19.480 --> 00:12:24.419 expensive. $599. $599 US dollars. I can still 00:12:24.419 --> 00:12:26.460 hear the meme. It was exorbitantly expensive 00:12:26.460 --> 00:12:29.600 and Sony lost hundreds of dollars on every unit 00:12:29.600 --> 00:12:32.039 sold. But it meant that overnight, millions of 00:12:32.039 --> 00:12:38.039 people accidentally owned a Blu -ray. It was 00:12:38.039 --> 00:12:43.879 a separate little white box that you plugged 00:12:43.879 --> 00:12:47.740 in via USB. It cost $199. And it came with a 00:12:47.740 --> 00:12:49.720 copy of King Kong. That's right, the Peter Jackson 00:12:49.720 --> 00:12:52.100 King Kong, a great demo disc. I remember the 00:12:52.100 --> 00:12:54.620 logic at the time was, we are giving gamers a 00:12:54.620 --> 00:12:57.220 choice. We aren't forcing you to pay for a movie 00:12:57.220 --> 00:12:59.080 player if you just want to play Halo. It was 00:12:59.080 --> 00:13:01.779 a respectful consumer choice, but a fatal strategic 00:13:01.779 --> 00:13:04.919 error. By making it optional, they ensured the 00:13:04.919 --> 00:13:08.620 install base would never match the PS3. If Microsoft 00:13:08.620 --> 00:13:11.529 had bitten the bullet, and put the HD DVD drive 00:13:11.529 --> 00:13:15.389 inside the Xbox 360, even if it raised the price 00:13:15.389 --> 00:13:18.950 by $50 or $100, HD DVD likely would have won. 00:13:19.129 --> 00:13:21.129 But the blue laser diodes were expensive, right? 00:13:21.210 --> 00:13:23.289 It was a big part of the cost. Incredibly expensive. 00:13:23.450 --> 00:13:28.179 Around $100 to $150 per unit initially. Microsoft 00:13:28.179 --> 00:13:29.860 didn't want to blow up the cost of the console. 00:13:30.059 --> 00:13:32.100 They were also already looking ahead to digital 00:13:32.100 --> 00:13:34.899 distribution. They saw discs as a temporary bridge. 00:13:35.080 --> 00:13:37.279 Whereas Sony saw discs as the future of their 00:13:37.279 --> 00:13:40.039 empire. Sony is a media company. They make movies, 00:13:40.120 --> 00:13:42.440 music, and the hardware to play them on. For 00:13:42.440 --> 00:13:44.720 them, owning the physical format was everything. 00:13:45.000 --> 00:13:47.700 So we move into 2007. The war is a stalemate. 00:13:48.059 --> 00:13:50.440 You have studios picking sides. Universal and 00:13:50.440 --> 00:13:53.019 Warner Bros. are strongly in the HD DVD camp 00:13:53.019 --> 00:13:56.320 initially. Universal was exclusively HD DVD for 00:13:56.320 --> 00:13:58.580 a long time. Disney and Fox are strictly Blu 00:13:58.580 --> 00:14:00.340 -ray. And then you have Paramount, who did this 00:14:00.340 --> 00:14:02.279 weird thing where they flipped. Paramount was 00:14:02.279 --> 00:14:04.639 the big shock of 2007. They had been releasing 00:14:04.639 --> 00:14:06.639 on both. And then in August, they announced they 00:14:06.639 --> 00:14:10.240 were going HD DVD exclusive. Why? Money. The 00:14:10.240 --> 00:14:13.740 HD DVD promotion group paid them a reported $150 00:14:13.740 --> 00:14:16.820 million in marketing incentives. So this was 00:14:16.820 --> 00:14:18.940 just studios being bought off left and right. 00:14:19.080 --> 00:14:21.299 It was. And this is where the user experience 00:14:21.299 --> 00:14:24.539 gap started to widen. If you were a film nerd 00:14:24.539 --> 00:14:27.720 in 2007, an early adopter, you probably preferred 00:14:27.720 --> 00:14:31.419 HD DVD for a few key reasons. Reason number one. 00:14:31.820 --> 00:14:34.720 Region free. Huge. Absolutely massive for collectors. 00:14:35.100 --> 00:14:38.220 Blu -ray maintained the old DVD region codes. 00:14:38.419 --> 00:14:41.000 Region A for the Americas and Japan. Region B 00:14:41.000 --> 00:14:43.320 for Europe and Australia. Region C for Asia. 00:14:43.639 --> 00:14:45.820 Right. If you imported a cool horror movie from 00:14:45.820 --> 00:14:48.220 France, which is region B, and tried to play 00:14:48.220 --> 00:14:50.779 it on your American PS3, which is region A, it 00:14:50.779 --> 00:14:53.299 would spit it out with an error message. Useless. 00:14:53.460 --> 00:14:56.220 HD DVD had zero region coding. The world was 00:14:56.220 --> 00:14:59.259 one region. A disc from Japan played in a player 00:14:59.259 --> 00:15:01.620 from Ohio? No problem. I remember. importing 00:15:01.620 --> 00:15:04.759 Pan's Labyrinth on HD DVD from Europe before 00:15:04.759 --> 00:15:06.580 it came out in the U .S., it felt like I was 00:15:06.580 --> 00:15:08.940 cheating the system. It was a feature that built 00:15:08.940 --> 00:15:11.500 immense loyalty among the early adopter crowd, 00:15:11.720 --> 00:15:13.919 the influencers of that era, the people posting 00:15:13.919 --> 00:15:17.679 on the AVS forum. Reason number two, the combo 00:15:17.679 --> 00:15:21.220 disc. I have a love -hate relationship with these. 00:15:21.320 --> 00:15:24.600 The flipper discs, a dual -layer DVD on one side, 00:15:24.720 --> 00:15:27.759 a dual -layer HD DVD on the other. The marketing 00:15:27.759 --> 00:15:30.789 pitch was genius. Buy it now. Play the DVD side 00:15:30.789 --> 00:15:32.889 in your bedroom. Play the HD side in your living 00:15:32.889 --> 00:15:35.230 room. It future -proofed your collection. It 00:15:35.230 --> 00:15:37.330 was smart. It was a bridge for consumers who 00:15:37.330 --> 00:15:39.889 hadn't upgraded yet. But physically, a nightmare. 00:15:40.009 --> 00:15:42.309 No label art, just small text on the inner ring. 00:15:42.610 --> 00:15:44.669 Fingerprints everywhere. And they were prone 00:15:44.669 --> 00:15:47.769 to rot or bonding separation because the glue 00:15:47.769 --> 00:15:50.750 chemistry was tricky. But again, it showed Toshiba 00:15:50.750 --> 00:15:52.629 was trying to bridge the transition for normal 00:15:52.629 --> 00:15:54.909 people. Blu -ray didn't really have an equivalent. 00:15:55.090 --> 00:15:57.470 Not really. They had some PlayStation 3 bundle 00:15:57.470 --> 00:15:59.850 discs, but nothing as elegant as the combo disc 00:15:59.850 --> 00:16:02.149 concept. Then you had the twin -format disc, 00:16:02.370 --> 00:16:04.889 which was a single -sided disc with three layers, 00:16:05.090 --> 00:16:08.730 one for DVD, two for HD DVD. That was even more 00:16:08.730 --> 00:16:11.289 clever, but harder to manufacture. The combo 00:16:11.289 --> 00:16:13.570 disc was the main one people saw. And then there 00:16:13.570 --> 00:16:16.049 was the 3X DVD hack. This is something I feel 00:16:16.049 --> 00:16:18.070 very few people knew about. This was the poor 00:16:18.070 --> 00:16:21.350 man's HD. Because the file structure of HD DVD 00:16:21.350 --> 00:16:24.049 was so flexible and the codecs were so efficient, 00:16:24.269 --> 00:16:27.649 you could actually burn 1080p video onto a standard 00:16:27.649 --> 00:16:30.149 red laser DVD -R you bought at Office Depot. 00:16:30.409 --> 00:16:32.250 Wait, explain that again. High definition on 00:16:32.250 --> 00:16:35.110 a standard DVD? Yes. A dual -layer DVD holds 00:16:35.110 --> 00:16:38.769 about 8 .5 gigabits. If you used the efficient 00:16:38.769 --> 00:16:42.850 AVC codec, H .264, you could fit a 90 -minute 00:16:42.850 --> 00:16:46.269 movie in 1080p on that disc. The official Toshiba 00:16:46.269 --> 00:16:48.789 players recognized it as an HD DVD file structure. 00:16:48.649 --> 00:16:51.149 structure and played it back in full HD. That's 00:16:51.149 --> 00:16:53.090 wild. It's like putting jet fuel in a lawnmower 00:16:53.090 --> 00:16:55.090 and having it actually fly. It was officially 00:16:55.090 --> 00:16:57.370 supported in the spec. It was called HD Rec. 00:16:57.529 --> 00:16:59.490 It was a brilliant engineer solution to expensive 00:16:59.490 --> 00:17:03.370 media. The blank HD DVD -Rs were pricey. Blank 00:17:03.370 --> 00:17:06.130 DVD -Rs were a dime a dozen. Okay, we have to 00:17:06.130 --> 00:17:07.789 pause here and talk about the biggest drama of 00:17:07.789 --> 00:17:11.309 the era. The ASES hack. The 09F9 number. This 00:17:11.309 --> 00:17:12.970 wasn't just about movies. This was an internet 00:17:12.970 --> 00:17:15.329 censorship war. This is one of my favorite stories 00:17:15.329 --> 00:17:18.980 in tech history. So ACS, Advanced Access Content 00:17:18.980 --> 00:17:22.839 System, was the encryption used by both formats. 00:17:23.380 --> 00:17:26.720 The studios were told it was unbreakable. Unbreakable. 00:17:26.759 --> 00:17:30.539 Famous last words. Of course. In late 2006, a 00:17:30.539 --> 00:17:33.900 hacker who went by the name Muzlik64 found a 00:17:33.900 --> 00:17:36.960 vulnerability. Not in the disc itself, but in 00:17:36.960 --> 00:17:40.000 the software player WinDVD running on a PC. He 00:17:40.000 --> 00:17:42.460 managed to scoop the processing key out of the 00:17:42.460 --> 00:17:44.259 computer's memory while the movie was playing. 00:17:44.359 --> 00:17:47.420 And this key... unlocked everything. It was the 00:17:47.420 --> 00:17:49.960 master key. With the 16 -byte number, you could 00:17:49.960 --> 00:17:52.640 decrypt any HD DVD released up to that point. 00:17:52.779 --> 00:17:55.259 It was a skeleton key for the entire format. 00:17:55.460 --> 00:17:56.940 And naturally, he posted it on the internet. 00:17:57.079 --> 00:18:00.079 On the Doom 9 forums, a haven for video enthusiasts 00:18:00.079 --> 00:18:03.259 and software crackers. And naturally, the AACS 00:18:03.259 --> 00:18:05.599 licensing authority, the lawyers, freaked out. 00:18:05.740 --> 00:18:07.680 They started sending cease and desist letters 00:18:07.680 --> 00:18:10.220 to everyone. Google, bloggers, forums. And then 00:18:10.220 --> 00:18:11.960 they made the mistake of going after Digg. For 00:18:11.960 --> 00:18:14.420 the Gen Z listeners, Digg was Reddit before Reddit. 00:18:14.480 --> 00:18:16.529 It was the front page of the internet. User posted 00:18:16.529 --> 00:18:19.029 the key. The dig admins, terrified of being sued, 00:18:19.230 --> 00:18:21.809 deleted the post and banned the user. Bad move. 00:18:22.029 --> 00:18:25.950 Terrible move. The community revolted. They realized 00:18:25.950 --> 00:18:28.230 the admins were censoring the information for 00:18:28.230 --> 00:18:31.210 corporate interests. So suddenly thousands of 00:18:31.210 --> 00:18:33.430 people started posting the key. I remember the 00:18:33.430 --> 00:18:36.210 front page. It was a wall of that number. 09 00:18:36.210 --> 00:18:46.009 F9 11 02 9D 74 E3 5B 41 56 C5 63 56 88 C0. It's 00:18:46.009 --> 00:18:48.859 burned in my brain. They embedded it in haiku. 00:18:48.980 --> 00:18:50.900 They made songs about it. They photoshopped it 00:18:50.900 --> 00:18:53.220 onto t -shirts. There was a famous image of the 00:18:53.220 --> 00:18:55.980 key printed on a flag being waved by a Revolutionary 00:18:55.980 --> 00:18:58.660 War soldier. It was the Streisand Effect nuclear 00:18:58.660 --> 00:19:01.180 explosion. By trying to hide it, they made it 00:19:01.180 --> 00:19:02.980 the most famous number on the internet. Exactly. 00:19:03.180 --> 00:19:05.799 And practically, what did this mean for HD DVD? 00:19:06.200 --> 00:19:08.880 It meant HD DVD was cracked wide open. You could 00:19:08.880 --> 00:19:10.579 rip the movies to your hard drive easily with 00:19:10.579 --> 00:19:13.160 a tool called backup HD DVD. Blu -ray was also 00:19:13.160 --> 00:19:15.619 cracked eventually, but Blu -ray had an extra 00:19:15.619 --> 00:19:18.109 optional layer of security. called BD +, which 00:19:18.109 --> 00:19:20.250 was a tiny virtual machine that ran on the player 00:19:20.250 --> 00:19:22.390 and could dynamically change the encryption code 00:19:22.390 --> 00:19:24.710 on the disc. It was much harder to break. HD 00:19:24.710 --> 00:19:27.430 DVD didn't have that. No. Once the processing 00:19:27.430 --> 00:19:30.509 key was out, the game was over. So the studios 00:19:30.509 --> 00:19:33.190 looked at HD DVD and saw a format that was wide 00:19:33.190 --> 00:19:35.869 open to piracy. Exactly. Fox and Disney were 00:19:35.869 --> 00:19:38.869 terrified of piracy. The fact that HD DVD security 00:19:38.869 --> 00:19:41.960 was obliterated so publicly. Definitely made 00:19:41.960 --> 00:19:44.160 them cling tighter to Blu -ray. It was a PR disaster 00:19:44.160 --> 00:19:46.339 for the format, even if it was a victory for 00:19:46.339 --> 00:19:49.359 internet freedom. So, late 2007, the hackers 00:19:49.359 --> 00:19:51.079 have the key, the prices are dropping, Toshiba 00:19:51.079 --> 00:19:54.940 does a fire sale. The HD A2 player hits $99. 00:19:55.740 --> 00:19:58.900 This was the final push. Toshiba was losing a 00:19:58.900 --> 00:20:01.259 ton of money on every player trying to buy market 00:20:01.259 --> 00:20:03.740 share. They sold a ton of units. I bought one. 00:20:03.920 --> 00:20:06.220 I think a lot of people did. It was the cheapest 00:20:06.220 --> 00:20:08.839 way to get into HD media. At the end of 2007, 00:20:09.160 --> 00:20:12.240 things were looking... okay for them not great 00:20:12.240 --> 00:20:15.019 but okay by some metrics there were arguably 00:20:15.019 --> 00:20:18.660 more dedicated hdd dvd players in homes than 00:20:18.660 --> 00:20:20.500 dedicated blu -ray players if you don't count 00:20:20.500 --> 00:20:22.880 the ps3 and that's the big asterisk isn't it 00:20:22.880 --> 00:20:26.039 the ps3 it's the 800 pound gorilla in the room 00:20:26.039 --> 00:20:30.019 but still it felt like a real fight and then 00:20:30.019 --> 00:20:35.349 january 2008 ces The Consumer Electronics Show 00:20:35.349 --> 00:20:38.410 in Vegas. The atmosphere was tense. Everyone 00:20:38.410 --> 00:20:41.029 knew something was going to give. Warner Bros. 00:20:41.230 --> 00:20:43.690 was the linchpin. They were the only major studio 00:20:43.690 --> 00:20:45.930 still consistently releasing on both formats. 00:20:46.089 --> 00:20:48.430 They accounted for something like 20 % of the 00:20:48.430 --> 00:20:50.549 entire home video market. Whichever way Warner 00:20:50.549 --> 00:20:53.210 went. The war went. Totally. And there were rumors 00:20:53.210 --> 00:20:55.809 that Warner was going to side with HD -DVD. I 00:20:55.809 --> 00:20:57.730 remember that. There was a leaked ad for a promotion 00:20:57.730 --> 00:21:00.490 with Toshiba. Exactly. Toshiba had a massive 00:21:00.490 --> 00:21:02.089 party planned. They had promotional materials 00:21:02.089 --> 00:21:03.930 printed. Their press conference was one of the 00:21:03.930 --> 00:21:06.549 big events on the schedule. And then January 00:21:06.549 --> 00:21:10.329 4th. A Friday? Just before CES officially kicks 00:21:10.329 --> 00:21:12.789 off, the press release drops. Warner Bros. to 00:21:12.789 --> 00:21:15.230 distribute high -definition DVD releases exclusively 00:21:15.230 --> 00:21:18.190 in Blu -ray disc format. Boom. It was a bomb. 00:21:18.430 --> 00:21:20.789 The Toshiba executives reportedly found out about 00:21:20.789 --> 00:21:22.990 it just hours before the public did. They had 00:21:22.990 --> 00:21:25.349 to cancel their entire CES press conference. 00:21:25.410 --> 00:21:28.710 It was humiliating. They were blindsided. Why 00:21:28.710 --> 00:21:31.329 did Warner switch? The press release said consumer 00:21:31.329 --> 00:21:33.890 confusion. That was the official line. That's 00:21:33.890 --> 00:21:36.230 the PR answer. We are doing this for you, the 00:21:36.230 --> 00:21:39.559 people. The real answer. We need to follow the 00:21:39.559 --> 00:21:42.609 money. The briefcase full of cash. It was a very, 00:21:42.650 --> 00:21:45.369 very big briefcase. There have been credible 00:21:45.369 --> 00:21:47.789 reports and industry analysis suggesting that 00:21:47.789 --> 00:21:51.150 the Blu -ray Association, led by Sony -paid Warner 00:21:51.150 --> 00:21:53.230 Bros., somewhere in the neighborhood of $400 00:21:53.230 --> 00:21:57.170 to $500 million. Half a billion dollars. In promotional 00:21:57.170 --> 00:21:59.930 fees and other incentives to switch. They basically 00:21:59.930 --> 00:22:03.109 bought them. To end the war. Essentially. Fox 00:22:03.109 --> 00:22:05.470 also reportedly guides some incentives to stay 00:22:05.470 --> 00:22:08.950 blue. It was a checkbook war. Sony looked at 00:22:08.950 --> 00:22:11.380 their bank account. looked at the potential royalty 00:22:11.380 --> 00:22:13.440 stream from Blu -ray licensing for the next 10 00:22:13.440 --> 00:22:15.660 years, and decided it was worth paying half a 00:22:15.660 --> 00:22:18.240 billion to kill the competition. And once Warner 00:22:18.240 --> 00:22:20.700 tipped... The dominoes fell instantly. Within 00:22:20.700 --> 00:22:23.339 days, Netflix said, we're phasing out HD DVD 00:22:23.339 --> 00:22:26.519 rentals. Best Buy said, we're recommending Blu 00:22:26.519 --> 00:22:28.839 -ray to our customers. And then the biggest one 00:22:28.839 --> 00:22:31.759 of all, Walmart. The king of retail. Walmart 00:22:31.759 --> 00:22:33.599 announced they were going Blu -ray exclusive. 00:22:34.039 --> 00:22:37.259 And you can't survive without Walmart. No. Once 00:22:37.259 --> 00:22:39.809 Shell Space is gone... You are dead. That was 00:22:39.809 --> 00:22:44.029 the final nail. So on February 19, 2008, Toshiba 00:22:44.029 --> 00:22:46.910 officially surrenders. They announce they are 00:22:46.910 --> 00:22:49.329 ceasing development and manufacturing of all 00:22:49.329 --> 00:22:53.829 HD DVD products. The war ends. Total duration, 00:22:54.069 --> 00:22:57.509 less than two years. Toshiba wrote off nearly 00:22:57.509 --> 00:23:00.690 a billion dollars in losses. It was a financial 00:23:00.690 --> 00:23:03.269 catastrophe for their consumer electronics division. 00:23:03.650 --> 00:23:06.789 The HD DVD promotion group was formally dissolved 00:23:06.789 --> 00:23:09.960 on March 28. It was over. And for the consumer, 00:23:10.099 --> 00:23:11.700 I want to go back to the guy who bought that 00:23:11.700 --> 00:23:15.220 $99 player in December 2007. Two months later, 00:23:15.299 --> 00:23:17.039 he owns a doorstop. It was a feeling of betrayal. 00:23:17.279 --> 00:23:19.740 I remember the forums. People were furious. I 00:23:19.740 --> 00:23:22.119 backed you and you quit. Now, to be fair, the 00:23:22.119 --> 00:23:24.359 player still worked. The discs you own still 00:23:24.359 --> 00:23:27.269 played. But no new movies were coming. And firmware 00:23:27.269 --> 00:23:28.869 updates continued for a while, right? They did. 00:23:29.089 --> 00:23:30.809 Toshiba was pretty good about that. But what 00:23:30.809 --> 00:23:32.809 good is a player with no new content? Warner 00:23:32.809 --> 00:23:35.630 Bros. did offer an exchange program, right? Eventually, 00:23:35.730 --> 00:23:39.410 in mid -2009, it was clunky. You had to mail 00:23:39.410 --> 00:23:43.630 in the paper cover art from your HD DVD case, 00:23:43.890 --> 00:23:46.509 literally rip the paper out. So you destroyed 00:23:46.509 --> 00:23:49.859 your old copy. You had to. And you had to send 00:23:49.859 --> 00:23:53.700 a check for $4 .95 plus shipping for each disc. 00:23:54.059 --> 00:23:56.480 And they would mail you the Blu -ray disc. But 00:23:56.480 --> 00:23:59.160 not the Blu -ray case. Nope. Just the disc in 00:23:59.160 --> 00:24:01.640 a paper sleeve. And crucially, they didn't give 00:24:01.640 --> 00:24:03.720 you a Blu -ray player. So you had a stack of 00:24:03.720 --> 00:24:06.400 blue discs and a red player. It was a token gesture 00:24:06.400 --> 00:24:09.180 at best. Let's look at the long tail here. Because 00:24:09.180 --> 00:24:10.759 the format didn't just vanish from the earth 00:24:10.759 --> 00:24:13.259 the next day. There were some weird zombie releases. 00:24:13.740 --> 00:24:16.019 The release schedule takes time to stop. The 00:24:16.019 --> 00:24:18.680 last major U .S. releases came out in May 2008. 00:24:19.099 --> 00:24:21.259 Things like Into the Wild, P .S. I Love You, 00:24:21.319 --> 00:24:23.559 and Twister. Twister was a late release. Wow. 00:24:23.779 --> 00:24:27.500 Yep. But my favorite story is Freedom 6, the 00:24:27.500 --> 00:24:30.240 anime. Yes. Bandai Visual had released the first 00:24:30.240 --> 00:24:33.839 five volumes of this OVA series on HD DVD. The 00:24:33.839 --> 00:24:36.500 sixth volume was scheduled for June 2008, months 00:24:36.500 --> 00:24:38.579 after the format died. They released it anyway. 00:24:38.759 --> 00:24:40.640 Just to finish the set for the fans. That's kind 00:24:40.640 --> 00:24:42.480 of classy. Out of honor. They knew they wouldn't 00:24:42.480 --> 00:24:45.460 make money. The press release literally acknowledged 00:24:45.460 --> 00:24:47.799 the format's demise, but they couldn't leave 00:24:47.799 --> 00:24:50.599 the fans with five -sixths of the show. But here 00:24:50.599 --> 00:24:54.099 is the kicker. There was a volume seven. Oh, 00:24:54.099 --> 00:24:56.880 no. And volume seven was never released on HD 00:24:56.880 --> 00:25:00.240 DVD. So even with that noble gesture, the set 00:25:00.240 --> 00:25:02.660 remains forever incomplete on the shelf. It's 00:25:02.660 --> 00:25:04.559 like a perfect little tragedy. That is heartbreaking. 00:25:04.680 --> 00:25:06.380 But there were even later releases than that, 00:25:06.420 --> 00:25:08.680 right, from some indie companies. Oh, yeah. A 00:25:08.680 --> 00:25:11.000 company called Amphim Films released Deadlands 00:25:11.000 --> 00:25:15.720 2. Trapped and Deadlands? The rising on HD -DVDR 00:25:15.720 --> 00:25:18.740 as late as 2010. They were limited runs of like 00:25:18.740 --> 00:25:21.779 500 copies. True collector's items now. But there 00:25:21.779 --> 00:25:24.940 is a place where HD -DVD lived on in disguise. 00:25:25.519 --> 00:25:28.839 We have to talk about China. Ah, CBHD. The China 00:25:28.839 --> 00:25:31.299 Blue High Definition Disc. This sounds like a 00:25:31.299 --> 00:25:33.079 bootleg, but it was an official government -backed 00:25:33.079 --> 00:25:35.220 standard. It was. China looked at the format 00:25:35.220 --> 00:25:37.900 war. They saw Blu -ray won. But Blu -ray licensing 00:25:37.900 --> 00:25:40.900 fees were expensive. Sony wanted a cut of every 00:25:40.900 --> 00:25:43.519 disc and player made. Chinese manufacturers didn't 00:25:43.519 --> 00:25:45.480 want to pay that. So they looked at the wreckage 00:25:45.480 --> 00:25:49.339 of HD DVD. And said, we'll take that. They licensed 00:25:49.339 --> 00:25:52.660 the HD DVD physical specs from the DVD forum 00:25:52.660 --> 00:25:54.660 because, remember, those factories were cheap 00:25:54.660 --> 00:25:57.440 to convert. That original advantage still held. 00:25:57.559 --> 00:26:00.380 They tweaked the modulation code, added their 00:26:00.380 --> 00:26:03.319 own Chinese -owned audio and video codecs called 00:26:03.319 --> 00:26:06.880 AVS to avoid paying royalties to Dolby and others, 00:26:07.099 --> 00:26:11.339 and launched CBHD in 2008. Just as it was dying 00:26:11.339 --> 00:26:14.019 here, it was being reborn there. And it was successful. 00:26:14.180 --> 00:26:17.640 For a few years, CBHD outsold Blu -ray in China. 00:26:18.029 --> 00:26:21.150 Warner Bros., the same studio that killed HD 00:26:21.150 --> 00:26:24.049 DVD in the U .S., actually released Harry Potter 00:26:24.049 --> 00:26:27.059 and Blood Diamond on CBHD in China. Because money 00:26:27.059 --> 00:26:29.420 is money. Exactly. It proved that the technology 00:26:29.420 --> 00:26:31.559 wasn't flawed. It was perfectly capable. It just 00:26:31.559 --> 00:26:33.279 needed a different business model without the 00:26:33.279 --> 00:26:35.400 crushing royalty fees. We also saw some hardware 00:26:35.400 --> 00:26:37.640 mutations right at the end. The universal players. 00:26:37.900 --> 00:26:40.539 LG and Samsung both tried this. The LG BH100 00:26:40.539 --> 00:26:43.359 Super Multi Blue. It played both formats. I remember 00:26:43.359 --> 00:26:45.980 that thing. It was a beast. And it was expensive. 00:26:46.019 --> 00:26:49.269 It was $1 ,200. And it was buggy. It couldn't 00:26:49.269 --> 00:26:52.349 even decode Dolby True HD. If that player had 00:26:52.349 --> 00:26:56.029 launched in 2006 for $300, do you think the war 00:26:56.029 --> 00:26:57.890 would have even happened? I think we would have 00:26:57.890 --> 00:27:01.670 ended up in a DVD audio versus SACD situation 00:27:01.670 --> 00:27:06.170 or Dolby Vision versus HDR10, where both formats 00:27:06.170 --> 00:27:08.609 coexist because the hardware hides the difference 00:27:08.609 --> 00:27:11.289 from the consumer. Yeah. If universal players 00:27:11.289 --> 00:27:13.990 had been cheap and available early, consumers 00:27:13.990 --> 00:27:16.069 wouldn't have cared which color the case was. 00:27:16.269 --> 00:27:19.390 They'd just buy the movie. But the chips to read 00:27:19.390 --> 00:27:21.650 both formats from companies like Broadcom and 00:27:21.650 --> 00:27:24.069 NEC came too late. And there were computer drives, 00:27:24.190 --> 00:27:26.849 too. Yeah. Laptops with HD DVD drives. Yeah, 00:27:27.029 --> 00:27:29.789 Peshiba had their Quasimodo line. HP had some 00:27:29.789 --> 00:27:31.849 pavilions. They were pretty rare, but they existed. 00:27:32.369 --> 00:27:34.650 Which brings us to another part of the legacy. 00:27:34.950 --> 00:27:38.549 Which is? The digital copy. Every HD DVD seemed 00:27:38.549 --> 00:27:40.529 to come with a way to move the movie to your 00:27:40.529 --> 00:27:43.089 PC. That was the managed copy feature Microsoft 00:27:43.089 --> 00:27:45.230 pushed. They saw the future. They knew people 00:27:45.230 --> 00:27:46.910 wanted to watch movies on laptops and portable 00:27:46.910 --> 00:27:49.369 devices. It was built into the HDI spec. You 00:27:49.369 --> 00:27:51.309 could put the disc in your computer, authenticate 00:27:51.309 --> 00:27:53.710 it, and get a standard Windows media file you 00:27:53.710 --> 00:27:56.210 could put on your Zoom. Ah, the Zoom. Another 00:27:56.210 --> 00:27:59.230 fallen soldier. A topic for another day. But 00:27:59.230 --> 00:28:01.470 Blu -ray eventually caught up with their digital 00:28:01.470 --> 00:28:04.930 copy disks. But HD DVD was natively designed 00:28:04.930 --> 00:28:07.029 to integrate with your home network and your 00:28:07.029 --> 00:28:09.710 PC. It was more forward thinking. Which brings 00:28:09.710 --> 00:28:11.910 us to the ultimate irony of this entire story. 00:28:12.049 --> 00:28:15.269 The irony of timing. We spent 2006, 2007, and 00:28:15.269 --> 00:28:18.609 2008 obsessing over bitrates, disk layers, and 00:28:18.609 --> 00:28:21.470 red versus blue cases. billions of dollars were 00:28:21.470 --> 00:28:24.269 spent meanwhile in 2007 netflix launched its 00:28:24.269 --> 00:28:26.769 watch now service to streaming the quality was 00:28:26.769 --> 00:28:30.170 terrible at first standard def postage stamp 00:28:30.170 --> 00:28:33.630 sized video But the pipe was opening. And the 00:28:33.630 --> 00:28:36.410 iPhone launched in 2007. The whole paradigm was 00:28:36.410 --> 00:28:38.630 shifting under their feet. Exactly. We were fighting 00:28:38.630 --> 00:28:40.809 a vicious trench war for control of physical 00:28:40.809 --> 00:28:42.970 media right at the moment that physical media 00:28:42.970 --> 00:28:45.430 was beginning its slow march toward obsolescence. 00:28:45.630 --> 00:28:47.890 Warner Bros. switched to Blu -ray to unblock 00:28:47.890 --> 00:28:49.809 the market and get people buying discs again. 00:28:49.910 --> 00:28:52.089 And they did, for a while. Blu -ray had a good 00:28:52.089 --> 00:28:54.630 run. But it never reached the sales heights of 00:28:54.630 --> 00:28:58.690 DVD. Never. DVD was the peak. It was a cultural 00:28:58.690 --> 00:29:01.589 phenomenon. Blu -ray was a profitable plateau 00:29:01.589 --> 00:29:05.390 for enthusiasts. But today, physical media is 00:29:05.390 --> 00:29:08.170 a niche market for collectors, people like us 00:29:08.170 --> 00:29:11.529 who want the absolute best bitrate and uncompressed 00:29:11.529 --> 00:29:14.109 audio. The average person hasn't bought a disc 00:29:14.109 --> 00:29:16.609 in a decade. So in a way, Microsoft was right. 00:29:17.000 --> 00:29:19.160 They were. They treated the optical drive as 00:29:19.160 --> 00:29:21.319 an optional accessory because they knew the future 00:29:21.319 --> 00:29:24.240 was a downloaded file on a hard drive. They lost 00:29:24.240 --> 00:29:26.759 the battle of 2008, but they won the war of the 00:29:26.759 --> 00:29:29.259 2010s with Xbox Live and digital distribution. 00:29:30.029 --> 00:29:31.849 So let's wrap this up. If you're listening to 00:29:31.849 --> 00:29:34.829 this and you have an HDA -1 sitting in your attic 00:29:34.829 --> 00:29:36.930 or maybe you find a copy of the thing in a red 00:29:36.930 --> 00:29:39.130 case at a garage sale. Pick it up. It's a piece 00:29:39.130 --> 00:29:41.910 of history. It represents a moment where a perfectly 00:29:41.910 --> 00:29:44.630 viable, cheaper, more consumer -friendly technology 00:29:44.630 --> 00:29:47.470 was crushed by a massive alliance of industry 00:29:47.470 --> 00:29:50.009 titans and a half -billion -dollar check. And 00:29:50.009 --> 00:29:52.569 the red cases just look cool on the shelf. They 00:29:52.569 --> 00:29:54.529 really do. They pop. It's a beautiful design 00:29:54.529 --> 00:29:56.519 object. So here's the final thought to leave 00:29:56.519 --> 00:29:58.859 you with. We talked about the Xbox 360 add -on 00:29:58.859 --> 00:30:02.299 drive. What if Microsoft had gone all in? What 00:30:02.299 --> 00:30:05.440 if they had put an HD DVD drive inside every 00:30:05.440 --> 00:30:09.099 single Xbox 360 from day one? Would the extra 00:30:09.099 --> 00:30:11.240 30 million players in the market have been enough 00:30:11.240 --> 00:30:13.740 to save the format? Would we all be watching 00:30:13.740 --> 00:30:16.940 movies out of red cases today with region -free 00:30:16.940 --> 00:30:19.900 disks and menus built on web tech? It's the great 00:30:19.900 --> 00:30:22.740 what if, but perhaps the most provocative thought 00:30:22.740 --> 00:30:25.950 is this. The whole war, this billion -dollar 00:30:25.950 --> 00:30:28.849 fight over plastic discs, felt incredibly important 00:30:28.849 --> 00:30:31.349 at the time. But in hindsight, it was a battle 00:30:31.349 --> 00:30:33.890 for a shrinking kingdom. Streaming was just around 00:30:33.890 --> 00:30:35.750 the corner, preparing to make them all obsolete 00:30:35.750 --> 00:30:37.789 anyway. Thanks for joining us on this deep dive 00:30:37.789 --> 00:30:39.509 into the format war. We'll catch you on the next 00:30:39.509 --> 00:30:39.630 one.