November 30, 2004
Hollywood Steps Into DVD Format Fight
LOS ANGELES -- Three top Hollywood studios are throwing their considerable weight behind one of two competing formats for the next generation of DVDs, citing in part the need to stem piracy.
Paramount Home Entertainment, Universal Pictures and Warner Bros., which includes New Line Cinema and HBO, said Monday that they would start releasing films in the HD-DVD format in time for the holidays next year.
The announcement escalates the battle between HD-DVD, developed by electronics makers Toshiba Corp. and NEC Corp., and Blu-Ray, backed by Sony Corp., Matsushita Electric Industrial Co., which makes the Panasonic brand, and Philips Electronics NV.
Monday's announcements are non-exclusive and the companies said they may produce DVDs in both formats if consumers demand it.
But the announcement also put pressure on electronics makers to produce devices that support both of the competing formats.
Privately, entertainment industry executives say they cannot afford a format war and do not want a repeat of the confusion that slowed the early adoption of videocassette recorders when consumers were faced with choosing between Betamax and VHS.
While the Blu-Ray format can store more digital programming than HD-DVD, proponents of the latter say it will be cheaper for manufacturers because it is uses technology that more closely resembles that used in current DVDs.
"We think HD-DVD has a clear advantage in cost of manufacturing, ease of manufacturing and it will offer the consumer a great quality product," Rob Friedman, chief operating officer at Paramount Pictures, said in an interview Monday.
Blu-Ray has the support of Columbia Pictures, which is owned by Sony, and Metro-Goldwyn-Mayer, which was recently purchased by a group led by Sony.
Blu-Ray also has wide support among consumer electronics makers and computer giant Hewlett-Packard, which said it will start selling PCs with Blu-Ray disc drives late next year, coinciding with movie releases.
Blu-Ray supporters said they did not see Monday's announcement as a setback.
"We're fairly early on in the time frame of these formats," said Andy Parsons, senior vice president of advanced product development at Pioneer, a major Blu-Ray backer. "We have discussions with studios on a regular basis."
News Corp.'s Twentieth Century Fox is a member of both the DVD Forum, which promotes HD-DVD, and the Blu-Ray Disc Association and has not said which format it would support.
Neither has The Walt Disney Co.
Both formats promise increased storage capacity and movie resolution superior enough to get the most out of high-definition TV sets. And both would contain stronger anti-piracy protection, a key factor in the studio's anxiousness to adopt a new format.
The software that protects current DVDs is easily circumvented.
Analysts say Monday's announcement could force a compromise between the competing standards.
"The studios should be pushing for compromise between Blue-Ray and HD-DVD and forget about trying to trump each other," said Harold Vogel, CEO of Vogel Capital Management in New York. "For sure the consumer is going to be very confused. It's a disaster for retailers if they have to carry two different formats."
Toshiba plans to start selling its first HD-DVD products, a player and a recorder, and a laptop with a built-in HD-DVD drive in late 2005.
Yoshihide Fujii, corporate senior vice president overseeing the digital media business for Toshiba, said it is targeting annual HD-DVD-related sales of $49 million in 2005.
Fujii said the spread of flat TVs is boosting the demand for high-quality digital movies and other content.
But Monday's backing by studios to release such expected blockbusters as Warner Bros. upcoming "Batman" and "Superman" sequels is critical to success.
"Even if we come out with the hardware, without content, it's just a box," he told reporters at a Tokyo hotel.
Tokyo Business Writer Yuri Kageyama contributed to this report.