HD DVD: Buy, sell, or hold?

As you might imagine, after Warner's abrupt announcement in early January that it was going Blu-ray exclusive to help end the next-gen DVD format war, we've gotten a steady stream of HD DVD-buyers' remorse e-mails from readers, wondering what their next move should be. Here's a sample:

Dear David,

Over the holiday break I decided to take the plunge and make a decision in the HD format war. I decided on HD DVD primarily because of the cheaper price on the players and the deals on HD DVDs. I have no real preference either way between HD DVD and Blu-ray, so price and a large stash of Best Buy gift cards swung my vote. Unfortunately, not more then a week after I had purchased my player (which I am very pleased with, by the way) Warner and New Line drop their bomb and pull out of the HD DVD camp. My question now is what should I do with my HD DVD player and the 15 or so movies I ended up with after the holidays? Do I try and return everything, get my money back, and spend it on a Blu-ray player or a PS3; or should I hang on to HD DVD a little longer and see what happens? Also, if I should go Blu-ray, should I buy a PS3 or wait for a good standalone player to come down in price?

In need of advice,
Andrew

Well, Andrew, let me start by offering you my condolences. There are many of us in the same position, including a few CNET editors (I am the ambivalent owner of the HD DVD add-on for the Xbox 360). Every format war has its casualties, and while we've recommended all along that the smart bet was to sit on the sidelines until things got sorted out, we knew that each side would attract its fair share of early adopters willing, as you say, "to take the plunge"--and in some cases, plunge twice and buy both formats. But now that you feel like a sucker for choosing HD DVD, let's consider your options. Pardon the stock-market analogies, but they somehow seem apropos.

Option No. 1: Hold
The Web is a rather sensationalist place these days, so it would be easy to assume from the headlines surrounding the Warner announcement that that HD DVD was dead (plenty of people didn't know there was a war on, let alone the difference between Blu-ray and HD DVD, but that's another story). However, at the present, Toshiba hasn't surrendered, stores are still selling HD DVD players and discs, and more are on the way. (I recently received an e-mail from Universal's PR team saying Universal is shipping American Gangster on February 11 as planned.) Call it a last-ditch effort, but on January 13, Toshiba, as part of its "new marketing strategy for mass-market adoption," announced price drops on all of its HD DVD players.

But let's face facts. Unless something radically changes in the next few weeks or months--and it would have to be an almost unimaginable sea change, like Microsoft buying a couple of movie studios and forcing them to go HD DVD-exclusive--you're sitting on a depreciating investment. When Warner stops publishing its HD DVD titles in May, 70 percent of the studios will be aligned with Blu-ray, and it seems only a matter of time before the remaining HD DVD studios--Paramount and Universal--opt out of their exclusivity deals and jump ship. Under the new studio lineup, HD DVD simply isn't economically viable and the negative headlines have already taken their toll on HD DVD sales, with NPD data revealing that Blu-ray has grabbed 92.53 percent of hardware sales in the high-def disc player market from January 5 to January 12, just days after the Warner announcement.

Sure, you can hang onto your HD DVD player and movies with the rather faint hope that Warner might decide to change its mind (there is a petition going around, pleading with Warner to do just that) and that Paramount and Universal won't jump ship. It's not the end of the world, after all. If you bought in the fall of 2007, it's likely that your player didn't cost a ton of money. And you can watch the HD DVD library you've built until your player conks out and eventually replace it with a Blu-ray player or just jump to downloads--including some in high-def--with Apple TV, Vudu, the Xbox 360, or the upcoming Netflix box. (Sony probably has something in the works with the PS3 as well.)

But just say "dying format" a few times. Now say it again. How does that make you feel? A little empty, huh?

Option No. 2: Buy
OK, if I'm essentially saying you're foolish for hanging onto a rapidly falling stock, a terminal short, if you will, what would becoming a buyer of said stock make you? Marginally crazy, but there are those out there who see opportunity in misfortune and can't resist buying something on the cheap--especially if you're a fan of the format and just can't let go. (As anybody who follows this column knows, I've been accused of being a Blu-ray backer, but I maintain I have no allegiance to either side and would gladly part ways with Blu-ray if it were to be vanquished.)

As for the hardware, it's hard to make a case for buying an HD DVD player for more than $100, with the possible exception of the high-end Toshiba HD-XA2, which unfortunately still costs at least $600 ($300 refurbished) but makes a terrific upconverting DVD player. I'm using an upconverting DVD player as a benchmark because that's pretty much what you'll be left with if HD DVD goes away. Entry-level HD DVD models such as Toshiba's HD-A2 and HD-A3 are good upconverters for the price but don't offer some of the features, such as DivX playback, that even some of the more basic upconverting players offer.

I suspect that anyone who's in the "hold" camp has glanced at prices on Amazon and other sites that sell used HD DVDs. There are some deals to be had. But be patient. The price is only going down on these discs, so wait the sellers out. I wouldn't pay more than $10 for an HD DVD at this point. I have an urge to buy current HD DVD-exclusive titles The Sting and The Deer Hunter for some reason, but used copies are going for about $15 with shipping on Amazon, which I think is too much. Yes, I should wait for them to come out on Blu-ray or just stick with the crappy DVD copies I already own. But we all are irrational at times.

Option No. 3: Sell
If you truly believe HD DVD is cooked--which, unfortunately, I do--the smart move is to get what you can for what you've got while the gettin' is still relatively good.

Let's start with the newcomers like Andrew. Depending on where you bought your player, you may be able to return it within a certain time frame (sometimes, you have to pay a 10-to-15 percent restocking fee). Alternatively, some of the customer-service-oriented retailers--and that includes online retailers such as Crutchfield--are more forgiving about returns when you get upset with a purchase. You may not be able to get your money back, but you may be able to get a store credit. The other possibility is eBay, where several HD DVD players are on sale as we speak. Surprisingly, brand-new models of the Toshiba HD-A3 are garnering final bids not far off their new retail price ($150) and in some cases, more than what Amazon has the new player selling for ($125). Used models tend to go for less than $100.

Great, you say. But what about all those discs I got with the player, some free, some purchased? Well, you can sell those online fairly easily. Of course, you'll end up taking a loss--at least 50 percent in many cases--but prices are holding up a little better than I thought. We did a few test sales online and averaged anywhere from $10 to $14 (new HD DVDs tend to run about $20 to $25). A lot of people are selling discs, so you'll have to be aggressive about pricing if you want to close a deal. The bottom line is that, so long as you didn't purchase too many discs, you won't have to take a huge loss to cut your losses.

If you're lucky, you'll be left with just enough to buy a PlayStation 3 ($400)--or at least have a nice chunk of dough to subsidize your purchase. Personally, that's the only Blu-ray player I'd buy at this point. The standalone Blu-ray players are still too expensive and--as far as we know--the PS3 is the only current Blu-ray player that will be upgradeable to the latest Profile 2.0 Blu-ray standard coming later this year.

So, Andrew, there's your answer. Sell, sell, sell. And never look back.

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