Tekrati picked up my post last week on the death of VHS, and implied that I said that Blu-Ray and HD-DVD killed off VHS. Nothing could be further from the truth! I often question whether there's any mass market demand for a high definition format in the first place (and before I get flamed, yes, there is strong enthusiast demand. I certainly want to go beyond 480p). But only 11% of households have an HDTV, and anamorphic ("enhanced for widescreen") DVD looks pretty darn good on those sets. We're also going into the format war without clear and massive support from the content providers (many of the titles expected to launch this Christmas season for HD-DVD have been pulled). In my opinion, the real key will be Sony's PS3, which is supposed to have a Blu-Ray drive. Will it ship on time? Will it be affordable? Will it be a huge hit based on its gameplay, and build an installed base of Blu-Ray players with consumers who would be reluctant to buy a high definition disc player on its own merits?
Regardless, the Blu-Ray/HD-DVD format war is a fiasco of the first order, and doesn't affect existing formats in any way. Plain old DVD killed VHS. DVD sales are slowing, but that's just a natural consequence of format saturation; in other words, once people build up their initial library of DVD titles, they stop buying as often. But we aren't seeing consumers holding off on DVD purchases because they anticipate the high definition release of the material.
I was somewhat surprised that Beuna Vista's backing away from VHS didn't receive more press. But this week Video Business reported that LucasFilm is releasing Star Wars Episode III: Revenge of the Sith on DVD only. It seems that the recent Star Wars movie releases performed spectacularly on DVD, but did so poorly on VHS that many retailers sent back their VHS stock to the distributor and had to be destroyed. Also worth noting: Video Business says Buena Vista will eliminate VHS entirely next year; I expect the rest of the studios to follow.