[Sonnie]

Paramount in HD DVD blow

By Matthew Garrahan and Mariko Sanchanta in Las Vegas

Published: January 8 2008 02:49 in the Financial Times

Paramount is poised to drop its support of HD DVD after Warner Brothers’ recent backing of Sony’s Blu-ray technology, in a move that will sound the death knell of HD DVD and bring the home entertainment format war to a definitive end.

Paramount and DreamWorks Animation, which makes the Shrek films, came out in support of HD DVD last summer, joining General Electric’s Universal Studios as the main backers of the Toshiba format.

However, Paramount, which is owned by Viacom, is understood to have a clause in its contract with the HD DVD camp that would allow it to switch sides in the event of Warner Bros backing Blu-ray, according to people familiar with the situation.

Paramount is set to have a bumper 2008 with several likely blockbusters, including the latest instalment in the Indiana Jones franchise.

Paramount joining the Blu-ray camp would leave HD DVD likely to suffer the same fate as Sony’s now obsolete Betamax video technology, which lost out to VHS in a similar format war in the 1980s.

Warners decision last week to throw its weight behind Blu-ray saw it join Walt Disney, 20th Century Fox and Metro-Goldwyn-Mayer as backers of the Sony format.

The Warners move gives Blu-ray about 70 per cent of Hollywood’s output, although the format’s grip on film content will increase further when Paramount comes aboard.

It is unclear whether DreamWorks Animation has the same get-out clause in its contract with the HD DVD camp.

However, Paramount and DreamWorks have a close relationship, with Paramount distributing DreamWorks Animation films. The two companies also signed their HD DVD contracts at the same time. Meanwhile, Universal has declined to comment on its next-generation DVD plans since the Warners move.

Sir Howard Stringer, chief executive of Sony, on Monday held out an olive branch, saying the company would be “open to dialogue” with the HD DVD camp to “grow the market”. The move came as new figures showed that Blu-ray had opened up a decisive lead over the rival home entertainment format.

Sir Howard said: “We are not going to push people around. We’ll talk to anyone ... we have a lot of work to do to grow the market. We’ll be systematic and open to dialogue at all times.”

He added that Sony still had “a lot of work” to do to get Blu-ray “widely accepted” among American consumers.

“With Warner’s support you saw billboards going up in different places and you saw television commercials getting more and more sophisticated and that’s what we’ll continue doing,” said Sir Howard.

From Times Online

January 8, 2008

Blu-Ray takes inside edge in war with HD-DVD

Up to 20 firms backing HD-DVD consider defection after Warner opted for Blu-Ray and Paramount is poised to follow

Leo Lewis, Asia Business Correspondent

The sprawling consortium of technology and media companies assembled to promote the HD-DVD format of next-generation high definition discs faces a spate of defections to the rival Blu-Ray Disc consortium.

As many as 20 companies currently part of the HD-DVD Promotion Group could be preparing to remove their names from the alliance’s 130-strong membership list, The Times has learned.

Paramount yesterday emerged as the latest major Hollywood studio poised to switch allegiances.

Despite the huge armies of technology companies ranged against each other in the format showdown, Paramount has turned out to be a pivotal figure. Its decision in August to give exclusive backing to HD-DVD was seen as a potentially devastating blow to the prospects of Blu-Ray, and to the strategy of Sony’s president, Sir Howard Stringer.

Sir Howard consistently argued, though, that the Playstation3 games console, which includes a Blu-Ray disc player, would put the format in people’s living rooms around the world more quickly than HD-DVD players would be adopted by consumers. But Paramount, like other members of the HD-DVD group such as Fujitsu, Lenovo and Kenwood, has hedged its bets. It offered exclusivity in August on the basis that it could reverse the decision should Warner Bros switch to Blu-Ray.

The threatened exodus from the HD-DVD format follows last week’s decision by Warner Bros to back the rival Blu-Ray Disc format, whose main technology backers include Sony, Apple and Dell.

One Tokyo-based analyst said that the defections could represent the final nails in the coffin of Toshiba’s HD-DVD standard after a bitterly-fought “format war” that has run for a little over one year.

Eiichi Katayama, of Nomura Securities, said that the battle between the formats, which display films and video games more sharply in an era of ever-growing television screen sizes, was now “entering its final phase”.

Pony Canyon, a major Japanese music, animation and film studio and part of the giant Fuji Television media empire, said that although it was currently part of the HD-DVD Promotion Group, the decisions of US studios meant it would “choose Blu-Ray in the end”.

Several other Japanese firms – including content producers and electronics component makers – said that their support of HD DVD was “under review” and that they knew of many others in the same position. Others, who admitted that they had previously been waiting for “clear market momentum”, said that it had now probably arrived.

Backers of HD-DVD point to the relative ease of producing the discs, and the lower cost of building machines capable of reading them. Unlike previous format wars, particularly the notorious Betamax v VHS skirmish in the 1980s, the war between Blu-Ray and HD-DVD has effectively been decided in boardrooms, rather than electronics showrooms. The decisions of the major studios have come well before those of customers, who have generally held back from picking one format for fear of backing a loser.

Facing a future with only Universal Pictures as its major Hollywood supporter, Toshiba and HD-DVD, said analysts at the Consumer Electronics Show in Las Vegas, could quickly find itself isolated. But HD-DVD does retain a few potential trump-cards, most notably Microsoft. It is the presence of Microsoft on HD-DVD’s list of supporters, say many of the promotion group, that preserves hope that the format could yet prevail.

I kept thinking with the money invested and what could end up costing businesses and consumers dearly, somehow all involved would come to their senses and work things out... that somehow both formats could survive. However, my thinking is always subject to change... and if these reports are in fact accurate, it really does look like the format war is about to be over.

I suppose all we can hope for now is that the consumers that lose out financially will somehow be compensated and not end up getting gouged by the powers to be (Sony). Those 10's of thousands of consumers who rushed out and bought HD-DVD players at x-mas time are going to have a poor attitude towards hi-def in general. It may be a long time before anyone ever gets them to invest in another HD player, especially when we will not likely see anymore HD players under $200 for a while to come and movie prices will probably ease back up.

Now I'm even on the fence as to whether to cancel my order on the Samsung BD-UP5000 dual format player and try to snag a 1400 before those prices go back up. People just thought things were confusing... I'm confused now for sure...