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Sunday, January 6, 2008

HD DVD supporters and vendors pause and regroup


Warner Bros. Entertainment unit will release its high-definition DVDs exclusively using Sony's Blu-ray DVD format (R) as of June 1 this year, according to U.S. media reports Saturday

Warner's Blu-ray Endorsement Boosts the Buzz at CES
HD DVD supporters and vendors pause and regroup after Warner's surprise vote in the format war.
The decision by Warner Bros. to drop HD DVD in favor of Blu-ray Disc for high-definition movies has set the electronics industry abuzz. Announced on the eve of the Consumer Electronics Show, the move put a single question in the minds of thousands of industry-insiders heading to the show in Las Vegas: Could the high-definition format wars be over?

Long Skirmish

Since both formats launched they have been locked in a battle that pitted some of the industry's biggest consumer electronics companies against each other. Backing Blu-ray Disc has been Sony, Panasonic and Samsung, while HD DVD's main supporters have been Toshiba, Microsoft and Intel.

The battle also divided Hollywood and left consumers with a difficult choice: their favorite movies were likely split between the two formats and there was a risk the player they bought would become irrelevant. As a result consumers kept away from the formats and sales have been sluggish.

Warner's decision will give Blu-ray Disc an advantage in terms of content. With the move, five of the big seven Hollywood studios now back Blu-ray Disc with only two, Paramount and Universal, backing HD DVD.

The Warner announcement certainly put the HD DVD Promotion Group's CES plans in disarray. Within hours of the announcement, the group cancelled its scheduled Sunday-evening news conference and subsequent media interviews at CES.

Consumer Benefit?
"They're definitely regrouping and considering their options at the moment, this could be extremely important," said Tom Coughlin, a storage analyst at Coughlin Associates. "This could be the beginning of a major pivotal turning point in the high-def format war, which if we could define the format which is going to win would be extremely important for the industry because this would free up consumers to start making decisions on the purchase of their systems."

Better sales would help consumer electronics manufacturers increase production and that would in turn lead to lower prices, said Coughlin. Those lower prices would then lead to better sales and that would help the entire industry, he said.

Warner touched on the format battle's impact on the consumer electronics industry in a statement announcing its move.

"A two-format landscape has led to consumer confusion and indifference toward high definition, which has kept the technology from reaching mass adoption and becoming the important revenue stream that it can be for the industry," said Kevin Tsujihara, president of Warner's home entertainment group in a statement.

Whether or not the fight is really over remains to be seen.

Toshiba said it was "quite surprised" by the announcement from Warner "despite the fact that there are various contracts in place between our companies concerning the support of HD DVD."

"We will assess the potential impact of this announcement with the other HD DVD partner companies and evaluate potential next steps. We remain firm in our belief that HD DVD is the format best suited to the wants and needs of the consumer," Toshiba said in a statement.

Just the Latest Win
For some, the Warner decision marks the end of the format battle.

"I think the war is over. HD DVD has lost. It really is game-over for Toshiba and the other vendors," said Robin Harris, an analyst with Data Mobility Group. "The basic issue is not technology. It's about distribution, it's about marketing, it's about content and Blu-ray has been winning the content war for sometime. I don't know why [Toshiba] keeps pouring money into it, it's time to stop."

Harris credited Sony's inclusion of Blu-ray Disc in the PlayStation 3 with being one of the instrumental moves in winning the fight for Blu-ray Disc.

"I think Sony's brilliant move and one of the few they have made in this effort is putting Blu-ray into PS3," he said. "Even though PS3 hasn't sold so well in the console wars, in terms of being a platform for Blu-ray distribution it's been a success for them and I think that's what really put Blu-ray over the top."

The praise comes as Sony has finally started to see PlayStation 3 sales pick-up after a year of sluggish sales. Ironically the company has been often criticized by analysts and the media for the inclusion of Blu-ray Disc in the device as that contributed to a high price that put many consumers off buying the high-def games console.

See PC World's ongoing coverage of the Consumer Electronics show at the CES InfoCenter.

Warner Bros. to release Blu-ray DVDs exclusively

Warner Bros. Entertainment unit will release its high-definition DVDs exclusively using Sony's Blu-ray DVD format as of June 1 this year, according to U.S. media reports Saturday.
Time Warner's Warner Bros., Hollywood's biggest seller of DVDs, represents about 18 to 20 percent of sales in the U.S. and was one of the few studios that backed both formats.

The news was announced by the company Friday afternoon, Warner, which had been supporting both formats, will drop HD DVD by the end of May in favor of Tokyo-based Sony Corp.'s Blu-ray.

"We believe that exclusively distributing in Blu-ray will further the potential for mass-market success and ultimately benefit retailers, producers, and most importantly, consumers," said Barry Meyer, chairman and CEO of Warner Bros.

This is seen as a major victory for Sony as it attempts to make Blu-ray the high-definition standard over rival Toshiba's HD-DVD format, according to the reports.

Warner Bros. studio, the second-largest in 2007 U.S. box-office receipts, joins Walt Disney Co. and News Corp.'s Fox in backing Blu-ray exclusively. The top studio, Viacom Inc.'s Paramount Pictures, uses HD DVD, as does DreamWorks Animation SKG Inc. and General Electric Co.'s Universal Pictures.

Some saw the move as an end to the war that has confused consumers about which standard to choose. Players using one standard are unable to play DVDs made using the other standard.

"We expect HD DVD to 'die' a quick death, versus a prolonged format war," Pali Capital analyst Rich Greenfield said.

Blu-ray and HD DVD players read DVDs with a blue-violet laser to play videos in high-definition. Blu-ray discs are generally able to process data at a higher rate than HD.

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