Paramount's move to release discs only in the HD-DVD format deals a blow to Sony's Blu-ray camp and makes the bigger battle too close to call
For a moment there, it looked as though the battle between the competing high-definition video formats was decided. In recent months, the camp backing Sony's Blu-ray technology announced a series of partnerships with rental and retail stores that left the rival HD-DVD format limping. But key support from Paramount Home Entertainment for HD-DVD make the next-generation video disc wars once again too close to call.
On Aug. 20, Paramount parent Viacom announced plans to release home movies from Paramount Pictures, DreamWorks, Nickelodeon, and MTV Films exclusively in the HD-DVD format, which is backed by Toshiba and Microsoft. Recent box-office blockbusters such as Transformers, Shrek the Third, and Blades of Glory will be among the first films to be released solely for HD-DVD players. Together, the three films brought in more than US$1.5 billion worldwide, making them among the highest-grossing movies of 2007, alongside Walt Disney's Pirates of the Caribbean: At World's End and Columbia Pictures Spider-Man 3. Both Disney and Sony-owned Columbia Pictures support the Blu-ray format.
Setback for Blu-ray momentumRob Moore, Paramount's president for worldwide marketing, distribution, and home entertainment, says the company favors HD-DVD because its supporting players are cheaper, on average, than Blu-ray players, making them more consumer-friendly. Toshiba's entry-level player is just under US$400. Sony's entry-level player is about US$100 more. "Ultimately, what we think is going to drive adoption is the price point," says Moore, adding that concentrating on one format will make it easier to release discs quickly.
Paramount's decision came as a surprise to some, especially Blu-ray supporters. Before the announcement, only NBC's Universal Studios was exclusively distributing HD-DVD discs. Many studios, including Time Warner's Warner Bros. Pictures and others, have been releasing films in both formats, waiting for a clear victor to emerge before choosing sides. And it had seemed Paramount was content to do the same. "We don't really understand the decision at this particular time because of all the momentum that Blu-ray has had over the past two months," says Andy Parsons, a chairman of the Blu-ray Disc Assn. in North America and senior vice-president for product development at Pioneer USA.
Blu-ray supporters had cause for optimism. Blu-ray discs were outselling HD-DVD discs by a factor of nearly 2 to 1, says Parsons, fueled in part by the popularity of Sony's PlayStation 3, which plays Blu-ray movies as well as games. The game system costs only US$600, compared with the US$900-plus price tag on some of the newest Blu-ray players.
The Blu-ray camp had also announced a series of deals that promised to further extend the dominance of Blu-ray technology. On Jun. 18, movie rental giant Blockbuster announced plans to expand the sale of Blu-ray discs, and only Blu-ray discs, to 1,450 more stores. Previously, only 250 company-owned stores rented high-definition discs. Soon after, BJ's Wholesale Club announced plans to stock only Blu-ray discs and Target said it would sell only Sony's Blu-ray player in stores--though it still planned to carry HD-DVD discs and the external HD-DVD drive companion to Microsoft's Xbox 360.
Will confused consumers stay away?So why did Paramount back HD-DVD? A Hollywood news blog, Deadline Hollywood Daily, reported that Toshiba & Co. agreed to pay Paramount US$150 million for "promotional consideration". Neither HD-DVD representatives nor Paramount would confirm or deny any such deal, saying only that they could not discuss specifics. "Any sort of price differential in 2007 is likely to evaporate by this time in 2008," says Forrester research analyst Josh Bernoff. "This is surprising, and it does make you wonder what is going on behind the scenes."
Regardless of how the deal was done, the question now is how the divided support among movie studios will influence consumer shopping this holiday season. Bernoff, for one, believes the renewed strength of the HD-DVD camp will confuse consumers--and unsure consumers keep their wallets shut while they wait for some sort of resolution that can guarantee they are not wasting money on the next-generation version of Betamax.
HD-DVD supporters hope Paramount's support will fuel sales by enabling the studio to focus on extra features that make next-gen DVDs worth the price and hassle of upgrading from a traditional DVD player. "The consumer today is very happy with their DVD, and they need to look at more than the better picture and the better sound quality," says Ken Graffeo, co-president of the HD-DVD Promotional Group and an executive vice-president at Universal Studios. "They need to see how this is going to change their movie-viewing experience. (Paramount)can now focus their communications on the benefits of this format."
Meanwhile, the Blu-ray camp is all the more determined to show why their discs alone--and not some hybrid version or dual-support player--deserves to win the format wars. "Either a single format wins, or nobody wins,"says Pioneer's Parsons. The smart money for the moment is on nobody.
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Posted by barrett63 on Wednesday, September 05 2007 04:42 PM