High (def) anxieties

Dueling formats bring twin headaches to CES

LAS VEGAS — Walking around the Consumer Electronics Show in Las Vegas last week, it was impossible to miss two certain letters.

Banners proclaiming the “ultimate in HD,” “Full HD,” and “living in HD” made it clear the consumer electronics biz has gone gaga for all things high-definition.

But while tech companies fight over who has the biggest hi-def display (Sharp seemed to be in the lead at CES, as crowds surrounded its stunning and impractical 108″ LCD TV), studios seem to be moving further and further away from a single, uniform way to get hi-def movies onto those devices.

Just as last year, CES was marked by posturing and press releases from the dueling Blu-ray and HD DVD camps — plus two new potentially confusing options for consumers.

At a Jan. 9 press event, Warner trumpeted “Total Hi Def,” a new format it created that essentially glues a Blu-ray disc to an HD DVD disc, putting both formats on opposite sides of a single DVD. Standing in a room bathed in both blue and red — the colors of the two formats — and beneath the slogan “One world. One format,” Warner home entertainment group topper Kevin Tsujihara proclaimed his studio’s solution offers “all of the content with none of the risk.”

Electronics maker LG, meanwhile, showed off the first DVD player that can read both types of discs. While it lets consumers buy a player without worrying that it will become obsolete, it doesn’t support HD DVD interactive features . And that’s assuming they’re not put off by the $1,200 price.

“I never thought this would happen, but things are actually more confusing now than when we came into the show,” sighs Richard Doherty, director of consulting firm Envisioneering Group.

Whether they support one format, two, or neither, most in Hollywood agree dual formats are inhibiting the development of the hi-def DVD market, whichstudios had hoped would bolster flattening revenue from standard DVDs. That didn’t happen in 2006, when a paltry 175,000 HD DVD players were sold. More than 1 million Blu-ray devices were shipped, but almost all — a million — of them are PlayStation 3 consoles able to play Blu-ray discs. It’s not yet clear whether most gamers are using their consoles to watch Blu-ray movies.

Warner is counting on other studios to adopt Total HD and help break the stalemate between the dueling formats. “This looks like a way to try and give Disney and Fox a way to switch to HD DVD while saving face,” says one home entertainment exec.

Sony holds the Blu-ray patent so it isn’t likely to budge, while Universal has already pledged fidelity to HD DVD. Paramount and Warner are supporting both.

It doesn’t look like any of the studios are ready to switch allegiances anytime soon, however. Execs from the Mouse House and Fox joined Sony at the Blu-ray CES press conference to tout the superiority of their preferred format. Universal home entertainment topper Craig Kornblau, whose studio is the only one to back HD DVD only, had a prominent role at his format’s press conference.

If Warner can’t get any more studios to join it, but goes ahead and puts out its movies in True HD only, as homevideo prexy Ron Sanders promised, then it may appear to consumers to be a third format, thus making the high-def DVD section of Best Buy look even more confusing. The studio is already releasing combo HD DVD and DVD discs.

That’s why most observers at CES say dual format players look like a better solution than dual-format discs — provided they come down in price.

“My money is on the dual player rather than the (Total Hi Def) disc,” says Roger Kay, an analyst with Endpoint Technologies Associates, who notes that dual-sided discs will be harder to manufacture and thereby prone to quality-control issues. “To me, the dual player is the no-brainer solution. And it’ll come down in price over time.”

Another potential solution: high-def downloads. Microsoft’s Xbox Live is the only Internet service offering movies in HD. They can take nearly a day to download, however, are only available from Warner Bros. and take huge amounts of storage space. But gigantic hard drives that will likely be affordable in a few years were on display at CES, and broadband speeds are rapidly increasing; it’s a market that may be ready for “primetime” within a few years.

For now, however, DVDs remain the way 99% of people watch movies at home. And with the industry continuing to squabble over HD discs, one Hollywood leader expressed the wait-and-see attitude many consumers likely share.

“I’m holding back until it’s clear whether the answer is going to be one of the DVD formats or a player that will play both or a disc that carries both,” says DGA prexy Michael Apted, who appeared at a guild event sponsored by digital download store Movielink. “To be honest, I’m quite happy watching movies on a normal DVD right now.”

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