With vast fortunes clearly at stake, the HD home video format war took a new twist last week when two Hollywood studios endorsed the underdog HD-DVD format.
Viacom’s Paramount and DreamWorks Animation announced they would exclusively back the HD-DVD format for the release of HD movies on optical disc.
The move came at a time when it appeared the rival Blu-ray format was pulling ahead in the race. Blu-ray titles have been outselling HD-DVD releases for the last few months. Blockbuster recently announced it would carry Blu-ray titles exclusively. Major retailers like Target are also stocking only Blu-ray players.
Until last week’s announcement, Paramount released titles in both HD-DVD and Blu-ray. DreamWorks Animation has yet to release a movie in either format.
The deal was no accident. Paramount and DreamWorks Animation together will receive about $150 million in financial incentives for their commitment to HD-DVD, two unidentified Viacom executives with knowledge of the deal told the “New York Times.”
The incentives include a combination of cash and promotional guarantees. Toshiba, for example, will use the release of “Shrek the Third” as part of an HD-DVD marketing campaign, the newspaper reported.
Studios that have lined up behind Blu-ray, including Disney and 20th Century Fox, said the move would heighten consumer confusion at a point when Blu-ray appeared to be emerging as the best choice. “This is not in the best interest of consumers,” Bob Chapek, president of Disney’s home entertainment unit, told the “Times.”
Overall, DVD sales are expected to be especially strong this holiday season, the newspaper said. Both camps are hoping that the format war will not cause consumers to tune out entirely, perhaps deciding that standard DVDs are good enough.
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