LOS ANGELES (AP) - Warner Bros. Entertainment said Friday it will
release movie discs only in the Blu-ray format, becoming the latest studio to
reject the rival HD DVD technology and further complicating the high-definition
landscape for consumers.
Warner Bros., owned by Time Warner Inc., was the only remaining studio
releasing high-definition DVDs in both formats.
It is the fifth studio to back Blu-ray, developed by Sony Corp. Only two
support the HD DVD format, developed by Toshiba Corp.
Both formats deliver crisp, clear high-definition pictures and sound. But
they are incompatible with each other, and neither plays on older DVD players,
which means consumers seeking top-quality playback face a dilemma.
Warner said it decided to go with Blu-ray because consumers have shown a
stronger preference for that format than HD DVD.
"The window of opportunity for high-definition DVD could be missed if format
confusion continues to linger," Warner Bros. chairman and Chief Executive Barry
Meyer said in a statement.
"We believe that exclusively distributing in Blu-ray will further the
potential for mass market success and ultimately benefit retailers, producers
and, most importantly, consumers," the statement said.
The company said sales of Blu-ray discs in the U.S. generated $169 million
last year, while sales of discs in the HD DVD format totaled $103 million.
About 60 percent of Warner's sales of U.S. high-definition discs were
Blu-ray titles and the other 40 percent were HD DVS, said Kevin Tsujihara,
president of Warner Bros. Home Entertainment Group.
Outside the U.S., the divide was far wider, with Warner's Blu-ray discs
outselling titles in HD DVD in Britain and Japan, among other markets, Tsujihara
said.
Sales of set-top high-definition disc players in the fourth quarter of 2007
also factored into Warner's decision.
The company saw an acceleration in sales of Blu-ray players at the end of
the quarter, particularly in December, Tsujihara said.
"We always viewed set-tops as the most significant indicator" of consumers'
format preference, he said.
Still, one alarming trend Warner keyed on was that consumers didn't appear
motivated by price reductions on high-definition disc players.
"When we saw that was not impacting sales in the level that it should have,
and the consumer research that we did indicated that the consumers were holding
back from buying either one of the two formats ... we thought it was the right
time to act," Tsujihara said, noting that even sales of standard DVDs were
affected because consumers appeared unsure over which format to go with.
"That was kind of the worst of all worlds for us," he said.
There are some differences between the formats. Blu-ray discs can hold more
data -- 50 gigabytes compared with HD DVD's 30 GB -- but the technology's new
manufacturing techniques boosted initial costs.
HD DVDs, on the other hand, are essentially DVDs on steroids, meaning movie
studios can turn to existing assembly lines to produce them in mass.
Warner Home Video will continue to release new titles in HD DVD until the
end of May.
Pali Capital analyst Rich Greenfield said in a Web posting Friday that he
expects the HD DVD format to "die a quick death, versus a prolonged format war."
"While we still expect overall consumer spending on DVDs to decline at least
3 percent in 2008, the risk of an even worse 2008 DVD environment has most
likely been avoided by Warner's early 2008 decision," Greenfield wrote.
The North American HD DVD Promotional Group Inc., a trade association that
promotes the HD DVD format, did not have an immediate comment Friday.
Studios and retailers have been choosing sides in the high-def format war in
recent months.
Blu-ray got a big boost in June when Blockbuster Inc. announced it would
stock only Blu-ray titles as it expands its high-definition offerings.
Target Inc., the nation's second-largest retailer, decided in July to sell
only Blu-ray DVD players.
Among the other major studios that have decided to go with Blu-ray: The Walt
Disney Co., Sony Corp.'s Sony Pictures, News Corp.'s Twentieth Century Fox and
Metro-Goldwyn-Mayer.
Viacom's Paramount Pictures, which also owns DreamWorks SKG, dropped its
support for Blu-ray and said it would start distributing films exclusively in
the HD DVD format.
Universal Pictures, a unit of General Electric, also releases films only in
HD DVD.
Time Warner shares slipped 42 cents, or 2.5 percent, to $15.91 Friday.
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