Warner Bros. dumps HD DVD, goes solely Blu-ray

On eve of annual CES show in Las Vegas, competition heats up between dueling high-definition video disc formats

Warner Bros., the only major movie studio to release titles on both of the rival high-definition video disc formats, has decided to drop HD DVD and exclusively back Blu-ray Disc, it said Friday.

The move could prove decisive in determining which of the two formats becomes the de facto DVD replacement for high-definition content. Currently, both formats are battling to secure a lead, but neither has managed to obtain a meaningful market share due to consumer indifference as a consequence of the battle. As a result, the market for high-definition movies has seen its growth stunted, and companies like Warner have lost potential sales.

Warner said the decision was made in part as a response to this situation.

"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.

Last year Paramount Pictures, which also released movies on both formats, jumped the opposite direction and adopted HD DVD in preference to Blu-ray Disc. With Warner's announcement only two major Hollywood studios are backing HD DVD: Paramount and Universal. The others have all put their weight behind Blu-ray Disc.

The move comes on the eve of the Consumer Electronics Show, which kicks off on Monday in Las Vegas, and is sure to light a fire under the HD DVD camp, which is chiefly backed by Toshiba and also includes Microsoft and Intel. In reaction to Warner's announced the group cancelled its CES news conference that was due to take place on Sunday evening. The rival Blu-ray Disc group is scheduled to speak the following day.

Companies from both sides of the format battle are expected to show their latest players and talk-up their own formats during CES.

Last year's CES saw the unveiling by Warner of a hybrid disc called Total HD. The disc attempted to break the format deadlock by offering one side compatible with HD DVD and the other side compatible with Blu-ray Disc. However, the disc never made it to market and Warner gave up on the hybrid format later in 2007.

This article was updated on Jan. 7, 2008.

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HD DVD backers reeling as Blu-Ray shines at electronics show

LAS VEGAS, Nevada (AFP) - HD DVD backers are reeling at the world's top consumer electronics show in the wake of a major blow by rival Blu-Ray in the battle to be the reigning format for high density DVDs.

Warner Brothers studio pulled out of an alliance with Toshiba's HD DVD camp and switched sides, announcing on Friday that Hollywood's largest distributor of DVDs will do so exclusively in Sony's Blu-Ray format.

HD DVD Promotion Group cancelled a press conference it had planned for the eve of Monday's formal start of the Consumer Electronics Show in Las Vegas.

Warner Home Video executives were to have joined those from Toshiba, Microsoft, Intel, Universal Home Studios, and Paramount Home Entertainment at a press conference in the Wynn hotel and casino.

"Based on the timing of the Warner announcement, we decided to postpone our CES 2008 press conference " the promotion group said in an e-mail to news reporters.

"We are discussing the potential impact of this announcement with the other HD DVD partner companies and evaluating next steps. "

Toshiba America Consumer Products chief executive Akio Ozaka said Sunday the Japanese electronics giant is "surprised and particularly disappointed " by Warner's decision but remains committed to the HD DVD format.

Toshiba rolled out the third-generation of its HD DVD players on Sunday in a preview to news reporters attending CES.

"As you can imagine, this is a tough day for me, " Toshiba vice president of marketing Jodi Sally said while unveiling the possibly endangered DVD player product line.

"It is difficult for me to read all the pundits declaring HD DVD dead. But, we have been declared dead before. We firmly believe HD DVD is the best format for consumers. "

Toshiba reported that its HD DVD player sales were the best ever in its last financial quarter.

Sony gleefully seized the momentum, unveiling a 200-dollar Blu-Ray disk drive that enables personal computers to play the disks.

"As you can guess, all of us at Sony are feeling blue today, " Sony of America chief executive Sir Howard Stringer quipped during the press conference.

"But, that's a good thing. We thank Warner for their decision. "

Sony introduced a line of Vaio laptop computers with built in Blu-Ray players. Sony said it expects a Blu-Ray win to bolster sales of its PlayStation 3 video game console, which doubles as a DVD player.

Blu-Ray movie DVDs outsold HD DVD disks two to one in 2007, according to Sony senior vice president of home products Randy Waynick.

"Blu-Ray has made incredible strides this past year, " Waynick said at a press conference in the Las Vegas Convention Center.

"The Warner announcement is in response to consumer demand. We believe this decision will further strengthen and accelerate the adoption of the Blu-Ray format. "

Industry analysts and electronics makers maintain the format war has stifled sales of high-density DVD players because consumers are waiting for a victor before plunking down money for the expensive new technology.

Warner's decision to switch to the Blu-Ray camp is seen by industry insiders at CES as a fatal blow to Toshiba's HD DVD format, which has vied for years with Blu-Ray to win a battle to become the industry standard.

The loser of the battle will become a mere footnote in consumer electronics history, much the way Betamax was forgotten after VHS became the technology of choice for home video players, according to industry analysts.

"The decision by Warner will finally resolve the issue, " Panasonic chief operating officer Joseph Taylor told AFP.

"The war is over, and this will speed things up. A lot of people have been standing on the sidelines and now it is clear where the future lies. "

Taylor agrees with analysts that say if Paramount and Universal also abandon HD DVD, the format is doomed.

Panasonic executives say they aim to be the "industry leader in Blu-Ray. "

Silicon Valley analysts feel HD DVD will die a quick death, but wonder whether the outcome will be rendered moot because people are shifting to downloading movies from the Internet instead of buying DVDs.

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Two days after it lost an important ally in the high-definition format battle, Toshiba put on a defiant face at the Consumer Electronics Show and declared the HD DVD format is a long way from being dead.

"We remain firm in the belief that HD DVD is the format best suited to the wants and needs of consumers, " said Akio Ozaka, head of Toshiba America Consumer Products, at a news conference. He said Toshiba was surprised by the announcement, which came on Friday, that Warner Bros. was dropping HD DVD and exclusively backing Blu-ray.   "We are especially surprised that this decision was made in spite of the significant momentum that HD DVD has gained in the U.S. market and other regions. "

Warner was the only major Hollywood studio releasing movies on both formats and the decision to go with Blu-ray Disc meant Toshiba has only two major studios, Paramount and Universal, backing its technology.

The decision also left Toshiba with a potential public relations disaster as it came just days before CES, the annual North American gathering of the consumer electronics industry that kicks off officially here on Monday. In response to the Warner news the HD DVD Promotion Group canceled its news conference, leaving some to conclude that backers of the format were ready to concede defeat.

"As you can imagine this is a tough day for me, " said Jodi Sally, vice president of marketing for digital audio and video products at Toshiba America Consumer Products. "It's difficult for me to read all the pundits declare that HD DVD is dead. Clearly the events of the last few days have led you to that conclusion but we've been declared dead before. "

But Toshiba might have a hard time convincing the analysts and media that follow the battle closely that HD DVD is still in the race.

"It's interesting the CEO said he was surprised. I think that's an understatement. Devastated would probably be more accurate, " said Peter King, an analyst at U.K.-based Strategy Analytics, who attended the Toshiba news conference.

"They really have an uphill battle, " he said. "They are left with a couple of the smaller studios but there is no doubt the major studios have voted with their feet. It's hard to see now what they can do. Maybe focus on the PC market as a format, but they have a major struggle and that was very clear today. "

King wasn't willing to call the battle over just yet but he said a lot would depend on comments made during CES by other industry leaders, like Microsoft founder Bill Gates, who is scheduled to speak in Las Vegas Sunday evening.

But if the battle is over then what's bad news for Toshiba will be good news for consumers and the consumer electronics industry, he said. "Everybody in the industry can get behind one format [and] start promoting. The message will be simple and clear, prices will come down and it's a good thing for the industry. "

Toshiba said 1 million HD DVD players are currently in the market in North America.

In a statement issued on Saturday the company also expressed surprise over Warner's move "despite the fact that there are various contracts in place between our companies concerning the support of HD DVD. " On Sunday it didn't elaborate on those contracts or what its next move may be in the march to make HD DVD the de facto replacement for DVD for high-definition content.