Format foes flog high-def flaws

After Par embraces Blu-ray

By Paul Sweeting -- Video Business, 10/7/2005

OCT. 7 | With the possibility of more studio defections hanging over HD DVD like the sword of Damocles, supporters of the format tried last week to focus attention on what they claimed were weaknesses in the plans of rival Blu-ray Disc.

At the CEATEC electronics show in Japan, the HD DVD camp unveiled a new slogan for the format that declares “HD DVD is Real.” The line is meant as a dig at what they say are unproven claims about Blu-ray’s capacity, cost and readiness for market.

The HD DVD Promotion Group also displayed finished copies of 35 movies from 10 suppliers that it said will be available in Japan by the end of this year, including a few, such as The Aviator, that were released by major studios in the U.S.

The group reiterated its plans for a spring 2006 launch in the U.S.

Despite the brave face, much of what Toshiba and the HD DVD Promotion Group unveiled at CEATEC was overshadowed by the news from the U.S. that Paramount Home Entertainment, one of three major Hollywood studios nominally supporting the format, will also release titles on Blu-ray.

The announcement immediately set off speculation that Warner Home Video and Universal Home Entertainment would quickly follow suit, although neither studio would confirm those reports.

Thomas Lesinski, Paramount Pictures president of worldwide home entertainment, one of the staunchest supporters of HD DVD, said in a statement last week that the studio will release movies on Blu-ray in North America, Japan and Europe as soon as Blu-ray hardware launches in those markets.

“We have been intrigued by the broad support of Blu-ray, especially the key advantage of including Blu-ray in PlayStation 3,” Lesinski said in a statement. “After more detailed assessment and new data on cost, manufacturability and copy protection solutions, we have now made the decision to move ahead with the Blu-ray format. We believe the unique portfolio of Viacom content coupled with this format will provide great benefit for consumers and our shareholders alike.”

The Paramount announcement drew a quick but measured response from Toshiba.

“We understand that studios want to see precisely what will happen in the [consumer electronics] and [information technology] industries, and that they will want to support all potential markets for their products,” Toshiba said in a statement.

However, the statement added, “In terms of development, HD DVD is far in advance of Blu-ray. Volume production of discs will see decisive costs and productivity advantages in favor of HD DVD. On the strength of these facts, we are convinced that Hollywood studios and other content holders will eventually opt for commercialization in the HD DVD format.”

With the DVD market rapidly maturing and slowing to single-digit growth rates, media companies, which derive most of their studio revenue and profits from DVD, are pressuring their home video and consumer electronics units to get the next-gen format into the market as quickly as possible, whichever one it is, in order to rejuvenate sales of their vast libraries of TV, movie and music programming on discs.

“All we’re doing is guaranteeing a format war,” said a top exec at one studio DVD division about the Paramount announcement.

Sony Pictures Home Entertainment president Ben Feingold said that while the Paramount announcement is very important to the Blu-ray camp, “being on both formats will confuse the consumer.”

Several execs in each camp believe the Paramount announcement to publish in both formats—which is the direction Warner has been leaning for the past week or two with a similar announcement expected this week—is simply a temporary face-saving strategy and that ultimately all studios will shift completely over to Blu-ray by launch time.

“Launching with a single format is the only way to get back quickly to double-digit compound growth,” Feingold said.

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