Fact or Fiction: Microsoft and Blu-ray

I’ve gotten a fair amount
to the various articles I’ve posted on Microsoft and Blu-ray, and
it still seems the overall consensus on the web is that Microsoft will fall
head over heels for Blu-ray in their products.

I want to preface this post by saying that I’m not
advocating Microsoft not supporting Blu-ray. 
The fact is that Blu-ray won, while I think HD DVD had its clear
advantages those don’t matter anymore.  I
want Blu-ray support in any product that markets itself as part of a digital

Microsoft should support Blu-ray on the Xbox 360

I truly don’t understand why Microsoft would add Blu-ray
support to the Xbox 360 at this point. 
When Microsoft added HD DVD support they did so by adding some four
million lines of code to the Dashboard and had Toshiba manufacturer and sell
the HD DVD drives at a loss.  How do I
know it was at a loss?  Just look at the
fact that the standard IDE drive was selling for far less than any other IDE HD DVD
drive on market.

Toshiba didn’t make any money on the 300,000 that were sold
and neither did Microsoft.  Microsoft
took the development time to add support simply to counter Sony including
Blu-ray in the PS3.  This was an
extremely poor counter, but it provided a fairly cheap way for a consumer to
add support for a next gen DVD format on their Xbox.

As that was the only real reason, what reason does Microsoft
have now to do the same for Blu-ray?  The
war is over, Blu-ray won.  Your not fighting that anymore. The Xbox 360
is nearly two years old with an approximate four year total turn-over time for
the next console.  Why add Blu-ray in any
form to the Xbox 360?

The simple fact is that it’s not in Microsoft’s best
interest to provide Blu-ray support in the Xbox 360.  The drives are going to be too expensive as
there is no reason to sell them at a loss anymore.  Pair that with the development time for BD+
and BD-J, two technologies that Microsoft didn’t agree with in the
first place and you have a recipe for no Blu-ray on the Xbox 360.

As for internal drives, that’s even worse.  Going back to the drawing board, yet again
losing money for an integrated drive that can only be used for movie
playback.  Remember, developers can’t use
Blu-ray Disc’s as that you limit your market by some 18 million current Xbox
360’s (Microsoft also wouldn’t allow it either).

I strongly disagree that Microsoft already has some of these
things planned and working as Derek
Flickinger suggested on CE Pro yesterday
I don’t believe the Xbox 360 will ever have Blu-ray Disc support.  As for the Xbox 720 or whatever you want to
call it, I think it is too soon to say it won’t but I don’t think you can say
it will either.

Fact: Microsoft
should support Blu-ray playback on the PC

There is no doubt that Microsoft should support Blu-ray
playback on the PC, but as I’ve
talked about several times this comes with a major technical concerns

For native Blu-ray playback to happen in Microsoft
applications they will need to update Vista’s Protected Media Path to support
BD+.  This is a pretty significant change
to the system that already supports AACS, the only protection that was needed
for HD DVD.

It has always surprised me that BD+ never got the bad press
that any other DRM/content protection system does.  It runs code in a virtual machine within the
player, if that’s not something for the DRM opposed to get upset about I don’t
know what is.

The need for BD+ and the equal need for Java-based BD-J
interactivity support instead of the Microsoft developed XML-based iHD leaves a
huge shadow of doubt about what Microsoft is going to do.  No doubt Windows Media Player and Windows
Media Center users will suffer from having to use PowerDVD or alike to playback
their Blu-ray Disc’s.

This also leaves Media Center and the connected Extender ecosystem
in doubt.  Managed Copy in the still unfinished
AACS specs will give Blu-ray the ability to offer streaming too, but BD+ is
still an issue.  Microsoft might get
burned by the PS3 again as there is a good chance it will be the first product
to take advantage of such features.

Microsoft should wait for digital downloads

Digital downloads are exactly what Microsoft wants.  Why? 
Because from VC-1 to WMDRM to Silverlight to Windows Server to Windows
Vista they can push their products from point A to point B and collect on them

The clear problem with this is the lack of bandwidth in the
US.  Streaming and downloading of large
files just isn’t an option for most US broadband users, and no matter how efficient
VC-1 is as a video codec.  The fact of
the matter is US ISPs are holding up streaming being a viable mass market

The best way to explain this is with a graphic from Vudu, another
streaming hopeful (via Dave
).  As you can see from the
graphic, those with broadband connections less then 2Mbps have up to a four
hour delayed wait before they can start enjoying an HD download.  It should also be noted that the audio/video
quality provided in these sorts of streams just can’t match what Blu-ray has
been delivering for the past year.  Highly
quality means higher bitrates with means larger file size which means longer
download times.


Those ISPs that do have the bandwidth (>10Mbps) charge a
pretty penny when compared to a basic lower bitrate DSL connection.  Are customers willing to both pay high dollar
for an Internet connection and then pay high dollar for an HD download that it
many cases has to be watched within 24 hours? 
There is still a lot of work that has to be done before digital
downloads can replace physical media for good.

Of course, itshould be noted that digital downloads already exist using Microsoft technologies.  The Xbox 360 has downloads via the Xbox Marketplace and the same basic concepts from above apply in terms of download times and bitrates.  Many are waiting for Microsoft to extend the reach of the Marketplace downloads to Windows Media Center (and thus Media Center Extenders) as well portable devices like the Zune.


Ramblings About Blu-ray & Xbox 360

22 thoughts on “Fact or Fiction: Microsoft and Blu-ray

  1. A fascinating piece Chris. I tend to agree that it is rather pointless adding Blu-ray support to the 360 at this stage, but I see it as an essential component of VMC.

    For me the holy grail is an MCX with a Blu-ray drive. I suspect I may have to be satisfied with a DMA2200 for the time being!

  2. Interesting…it just seemed to take so long for the V2 extenders to arrive that I am a little dubious as to whether this will ever happen. I hope I’m wrong!

  3. That’s true, and I don’t think you will see OEMs try and tackle this first. The first step is hardware with Profile 2.0 support. Once they do that and have a solid platform, I’d love to see an OEM step up and license the Extender bit from Microsoft (remembering the hardware is basically ready for it with little work) and sell the software update for ~$50. Not only would I buy that Blu-ray player, but I’d also buy the ~$50 update to add Extender support to it.

  4. The next XBOX 360 will be called XBOX1080. It’s a play on ‘360’ (which is 360 times 3, Microsoft’s 3rd console offering). 1080 is also a play on 1080p, the resolution of tomorrow.

  5. Great post Chris. Well thought out and presented.

    Xbox/PS3 issues are of little interest to me as I don’t own either format.
    I do however use MCE every day and agree that integrated Blu-Ray support is a must.

  6. The technical argument is compelling, but businesses that let technical reasons be blocking issues for sound business sense don’t do well.

    The battle b/w the two consoles isn’t so much about gaming as it is about being the digital hub; MS has a major deficiency in the console “war” when stacked against the PS3. From what I understand (and I’m not a gamer so forgive me if the facts are wrong, that the perception exists is still telling) they are roughly equivalent when it comes to gaming experience. The prices are close enough that anyone thinking about HD playback would be hard pressed to go for the 360, and that’s what MS has to combat.

    Unfortunately, while I would like MS to build native support for BR (and I think the lack of native HD-DVD support hurt it, and WMC, immensely) into WMC, I don’t think there’s as compelling a business driver for them to do it. Given the level of integration that is available with ArcSoft, OEM’s don’t have a reason to pressure MS to do anything for us.

  7. Your points are well founded Chris, but from a business perspective MS has to worry a little here now. The 360 has dominated the battle with the PS3 in sales the last 2 years due mainly to its price point (helped by the EXCLUSION of an HD drive), game library, digital downloads, and its superior online experience… however the next year or so (until the next xbox is released) MS will no longer have these edges because the PS3 has mostly caught up. It’s obvious that this will be the year of the PS3. The 360 is aging now and SO many people have been putting off a PS3 purchase until the price came down. Now it has, and now it has the winning HD format drive built in. You’d be hard pressed to convince a potential console buyer this year to purchase a 360 over a PS3. If MS doesn’t want their 360 sales to plummet this year then I would think that they would have to do SOMETHING to counter the PS3’s BR edge. MS wants to be the dominant console. They want to bury Sony. If they want their next-gen console dominance to last and carry that momentum through to the next xbox launch then I would think that would be motivation enough to offer something in the BR market. Maybe not.

  8. I get your points, but my question is still what benefit does Blu-ray give Microsoft. Think about it, if you do external then your price for Xobx 360+external Blu-ray is going to be higher then the PS3 with included Blu-ray (unless Microsoft can somehow get sub-$100 BD drives, I doubt that but we will use it for an example).

    Taking the average of the Xbox 360 SKUs ($360)+even an external $100 Blu-ray drive is still $460 which is more than the $400 40GB PS3. Again, why is the benefit to Microsoft if the price is the issue. Sure, it’s great for existing Xbox 360 owners but if you are talking about losing marketshare then existing owners don’t apply.

    The only way the Xbox 360 is cheaper then the PS3 when you mix in a money losing $100 external Blu-ray drive is the $280 Arcade and even then it’s just $20 cheaper and you lose the hard drive from the picture (not to mention the Arcade is marketed at the casual gamer, not the big media user).

    So the only way to do Blu-ray at a price that beats the PS3 with Blu-ray is to do it internal for all SKUs at a huge loss per unit. Did I mention the Xbox 360 just became profitable a month or so ago?

    I’m sorry, but I just don’t see how it makes sense from Microsoft’s perspective to loss all that cash. I think they will continue to push games in front, XNA will start to become bigger, digital downloads will get more studio support, and no Blu-ray drive will be offered.

    Maybe I’m wrong, and if I am I’d gladly pick up an Xbox 360 w/ Blu-ray. While the PS3 is a great BD player, the lack of an IR remote option doesn’t make it nice for my Harmony.

  9. Yes I agree with you on the costs. MS will lose money either way, either in adding a BR drive or leaving it alone and losing money when the 360 sales drop sharply this year. Maybe this will motivate them into putting some money into getting the next xbox out sooner. In all after thought, I feel that MS will probably not mess with a BR drive and will instead try to promote the benefits of digital downloads on the XBLMP. Like you I feel that the US is in no way ready to put their trust (and $) into digital downloads over physical media. The DRM ghosts are just too strong, to say nothing of the sad state of broadband in the US.

  10. I’ve used my 360 as an extender since launch. I love it. I even played games on it from time to time (although I’m mainly a PC gamer). I still agree with Chris. It just doesn’t make sense with an aging system. They do have great games and XBL is great as well. These things do sell the system to people that are familiar with the system. The problem is that most people assume that the PS3 and 360 are equivelant gaming platforms and that’s not really the case. MS should drop the price on the 360 as low as they possibly can. They should drop HD download costs as low as they can. This will keep their numbers up until they can get the next gen XBox out the door. Of course, at that point they will need to have BR if they want to be the digital hub.

  11. Just as a point of interest, MS is adding a teeny, tiny bit of Blu-Ray support in Vista SP1. The SHGetStockIconInfo function allows you to retrieve known icons (such as folder, document, drive, CD, etc).

    For SP1, it’s being updated to also return Blu-ray Disc BD-ROM, Blu-ray Disc BD-R and Blu-ray Disc BD-RE icons.






  12. I already know two people who bought PS3 instead of the XBOX360 and both were XBOX360 fans. Why? Blu-Ray.

    If Microsoft does not include Blu-Ray in the future they will lose their market share. Game consoles and next will be licensing fees.

    PS3 only disadvantage is developers. Will that change when they can implement BD+ features?

    Game consoles is one area that Microsoft does not have the market cornered so they will have to adapt to the user needs.

  13. Yeah, I read the whole article until my eyes started to glaze over about half way thru… the tech stuff is all fine and dandy but in the end it does come down to market forces and what the public wants.

    MS needs to make the 360 quieter, they need to add blu-ray and they need to improve the video playback quality.

    If they don’t they will continue to slide against the PS3.

  14. In my opinion, it would be more beneficial for Microsoft to loss money on the Xbox 360 by just dropping the price, rather than adding Blu-ray. Drop all SKUs by $30-$60/each, loss money that way.

    The sad thing is, consumers might demand Blu-ray just because it’s a buzz word now. How many who bought the PS3 with the intent to game even have more than the one BD title that shipped with it? Consumer demand might be one thing, realizing that your customer base is wanting needless technology is anyone.

    Give an an Xbox 360 Arcade for $220. Beat the Wii, beat the PS3 in price not in features the majority of gamers don’t use.

  15. @Chrisl: Yes, the PS3 has a Bluetooth remote control, but with an IR dongle it can be perfectly controlled by a Harmony. Do it every day.

    And I agree with your reasoning while it will be very hard for MS to build a cost effective XBOX 360 with BR, so maybe indeed they won’t.
    I only think that if MS does not take losses on a XBOX360/BR combo that can compete with the PS3 on price, they will give the console market completely away until the XBOX 720/1080/whatever is introduced.

    So the question is: how many losses is MS willing to take to block Sony game console domination?

    BTW: I own an XBOX360, Wii, PS3 and two Windows Media center PCs (one HTPC, one normal desktop PC).

  16. Xander: Can you turn it on/off via IR? IIRC the USB ports are not active when the system is off, so you either need to turn it on manually at the unit or via the BT controller. If your doing it via IR, please let me know what you bought.

  17. @Chrisl: Indeed turning it on and off is not possible via IR. ut to me this is not an issue as you will need to go to the player anyway to put the Bluray disc in or out. And the PS3 automatically turns on when you insert a disc.

    But for the other controls the IR dongle I use (the Logic 3 IR control) together with my Harmony 885 (European version of the 880) works just fine (altough a bit sluggisch compared to the BT remote).

    BTW: Even for the on/off per IR now a solution exists, but did not try it myself: check http://schmartz.com/product.sc?categoryId=1&productId=4

  18. I just don’t buy the view that the 360 needs a BR drive to compete with the PS3. It would definitely be nice, but my Wii doesn’t even play DVDs and it’s pretty popular around my house. I think good games (exclusives) and a low (lower than today’s) price would definitely keep the 360 in the market. This weekend I almost purchased a PS3 just for Blu-ray support (plus I love to try out new gadgets), but changed my mind when I saw a $130 Lite-on Blu-ray drive listed at the Egg. I think I’d rather just drop the drive in my existing HTPC and not add the additional console to my crowded setup. For those that don’t have a HTPC, if MS comes out with good exclusives then they’ll buy both (PS3 and 360).

  19. They still haven’t fixed the 3 blinking red lights.

    And you think they will do blue ray anytime soon?

    Lets focus on the immediate problem, getting peoples consoles to work again.

  20. microsoft could care less about blu ray at this time. sony cant be making money over microsoft at this point as they are losing money everytime they sell a console with a blu ray player that is worth close to $1000. Thats not to mention the problems with PS3 to begin with. i have an xbox and u cant play halo 3 on playstation. Id have a PS3 if i could but at the same time the average consumer doesnt own a 1080p television or blu ray discs. Blu ray will catch on in the future video game platforms…PS4 and sooner with the newer xbox108 or whatever but now its a small few that have blu ray movies and 1080p televisions. less the 5% i guarentee

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