Microsoft comments on Xbox 360 HD DVD future, possibility of a Blu-ray Disc add-on

Amidst the recent barrage of stories regarding the future plans of HD DVD supporters Toshiba, Universal and Paramount, some may have overlooked Microsoft – another big power behind the ailing format.

The Xbox 360 is currently linked to HD DVD, as the console can attach to an add-on peripheral drive that enables the playback of HD DVD software. The drive, manufactured by Toshiba, also operates on a PC.

According to tracking firm NPD, the Xbox 360 HD DVD add-on drive accessory has sold a collective 269,000 units in the U.S., making for a 3.4 percent attach rate with the console. Examining that number against the total number of HD DVD players sold in North America, the Xbox 360 accessory accounts for more than one-third of all HD DVD hardware.

Regarding sales of the HD DVD peripheral, Microsoft said it was the “biggest-selling accessory” ever sold for the console – likely measured in terms of revenue. The HD DVD drive launched in 2006 for $199, dropped to $179 in July 2007, settling today at $129.

Despite the added functionality afforded by the HD DVD add-on, Microsoft appears unconcerned about the fate of the format’s effect on the Xbox 360.

“We do not believe the recent reports about HD DVD will have any material impact on the Xbox 360 platform or our position in the marketplace,” Microsoft said in a statement. “As we've long stated, we believe it is games that sell consoles and Xbox 360 continues to have the largest next-gen games library with the most exclusives and best selling games in the industry.”

For now, Microsoft is taking a wait-and-see attitude regarding its biggest-selling accessory. “We will wait until we hear from Toshiba before announcing any specific plans around the Xbox 360 HD DVD player,” the statement read. “HD DVD is one of the several ways we offer a high definition experience to consumers and we will continue to give consumers the choice to enjoy digital distribution of high definition movies and TV shows directly to their living room along with playback of the DVD movies they already own.”

Such comments from Microsoft may draw attention to earlier conspiracy theories shared by director Michael Bay and 20th Century Fox’s president Mike Dunn.

Michael Bay, director of action blockbusters such as Transformers, accused Microsoft of sabotaging both high-definition disc formats. More specifically, according to Bay, Microsoft chose HD DVD to intentionally confuse the customer into giving up both optical formats for digital downloads – which Microsoft sells on its Xbox Live Video Marketplace.

“What you don't understand is corporate politics. Microsoft wants both formats to fail so they can be heroes and make the world move to digital downloads,” wrote Bay. “That is the dirty secret no one is talking about.”

Another possible alternative for Microsoft would be to offer a Blu-ray Disc add-on to open the Xbox 360 to the ability of playing both formats. Smarthouse cited supposed insiders at Microsoft saying that a Blu-ray Disc peripheral for the Xbox 360 is pending marketing and sales approvals.

Michael Ephraim, managing director of Sony Computer Entertainment Australia said in the report that the company would welcome Microsoft to with open arms to the Blu-ray Disc family. “We would welcome Microsoft to the Blu-ray stable,” said Michael Ephraim. “In fact it is quite logical for them as the PS3 has been very successful in driving consumers to Blu-ray. In fact we believe that it has done more to win the format war than traditional Blu-ray player.”

Microsoft responded, “It is premature to speculate about Blu-ray but we do know from market data that HD movie playback is not a primary purchase driver for consumers buying video game console. It continues to be games that drive purchase and that has consistently been a strong point for the Xbox 360 platform.”

The software giant never completely ruled out the possibility that it might someday support Blu-ray Disc, including on its Xbox 360 console.

At CES 2008, Microsoft corporate VP Jeff Bell told the media that the company always had open lines of communication with the Blu-ray Disc camp: “We've been talking to Blu-ray all along because we have the best piece of software in the business, called HDi. It is the backbone that powers interactivity in HD-DVD and we have that available to potentially partner with others.”

Albert Penello, group marketing manager for Xbox hardware, said that it would consider a Blu-ray Disc option should its consumer base demand it. “It should be consumer choice; and if that's the way they vote, that's something we'll have to consider,” he said.

Microsoft Europe’s Senior Regional Director, Neil Thompson, expressed similar sentiments in March 2007: “Whatever format wins it is highly likely we will offer a solution. The only debate is if you want to watch Blu-ray movies and pay the extra money for that feature. We prefer to offer the consumer choice.”

"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA

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