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Paramount goes HD DVD exclusive

Studio nixes Blu-ray format for future releases

The high-definition DVD format war took a strange twist Monday as Paramount and DreamWorks Animation announced that their future releases will be exclusively in HD DVD.

Move is the third by Par in the ongoing format war. In 2004, studio announced that it would release its movies in HD DVD. A year later, with HD DVD seemingly waning, it decided to release in Blu-ray as well.

DreamWorks Animation, for its part, hasn’t released any movies in HD DVD, and company topper Jeffrey Katzenberg has been dismissive of the concept. “Blu-Ray and HD DVD are a niche business,” he said in March on a conference call with Wall Street analysts. “They’re not going to become the next platform. I think for the general consumer, there is not a big enough delta between the standard DVD in terms of where it is today and the next generation.”

That’s a far cry from the statement he put out on Monday: “We believe the combination of this year’s low-priced HD DVD players and the commitment to release a significant number of hit titles in the fall makes HD DVD the best way to view movies at home.”

Announcement is a tide-turner for the HD DVD camp, which had seen its titles outsold by Blu-ray in the U.S. and Europe by a ratio of about two to one.

But HD DVD backers say the two-to-one ratio shows that Blu-ray’s huge advantage in players isn’t translating into disc sales. Warren Lieberfarb, who consults for HD DVD backer Toshiba, noted that there are more than 1.5 million Blu-ray players in the U.S. — most of them PlayStation 3s — and fewer than 200,000 HD DVD players. “That ratio should be something like 8 to 1,” he argued.

Blu-ray supporters, which include Sony, MGM, Disney, Fox and Lionsgate, along with dual-format backer Warner Bros., had touted the availability of more movies as the format’s key selling point. Defection of Par weakens that argument.

U homevid topper Craig Kornblau — who heads the HD DVD Promotions Group — took the opportunity Monday to echo a refrain often heard from his rivals in recent months. “There are more of the top movies available on HD DVD than on Blu-ray now,” he said.

Some were speculating that Universal, which was previously the only HD DVD-only distrib, would soon begin a dual-format approach, thus tipping the battle decidedly in Blu-ray’s favor.

But the HD DVD format’s backers, led by Toshiba, apparently reached a deal with Par, which distributes DreamWorks Animation films on homevideo, to switch back to their side. Just as with the Blu-ray-only studios, Par and DWA almost certainly will be receiving multimillion-dollar financial commitments to support one format over the other.

Some of the financial details may later be disclosed by DreamWorks Animation, which is a public company.

Given the strong sales advantage Blu-ray has enjoyed in the marketplace, most industryites said only a behind-the-scenes deal could have motivated the switch.

“Nothing seems to support this,” said consumer electronics analyst Richard Doherty. “It seems to fly in the face of normal retail and consumer forces.”

Par will make the switch starting with the Aug. 28 homevid bow of “Blades of Glory,” followed by the “Transformers” release later this year. DreamWorks Animation, which has yet to release a title in either flavor, will tout the HD DVD debut of “Shrek the Third” in the fourth quarter. All three releases will be distributed by Paramount Home Entertainment and will be released day-and-date with their standard-def DVD counterparts.

All Par and DreamWorks pics will be released in the format in the future, with the notable exception of those directed by Steven Spielberg.

Par marketing topper Rob Moore cited HD DVD’s price advantage on Toshiba-manufactured stand-alone set-tops as key. Players retail now for about $250 on the low end, several hundred dollars cheaper than Blu-ray.

There are more people who own Blu-ray players, he acknowledged, since every PlayStation 3 is also a Blu-ray player. However, he said, it’s consumers with set-top devices that Par covets.

“When we looked at the data so far, buy rates for people who have bought stand-alone players are much higher than when someone buys a player embedded in a game system,” Moore said.

That’s a 180-degree turn from the studio’s position when it started backing Blu-ray in 2005. “We have been intrigued by the broad support of Blu-ray, especially the key advantage of including Blu-ray in PlayStation 3,” then-homevideo topper Thomas Lesinski said at the time.

Warner is now the only studio to publish in both formats. In fact, it said at the Consumer Electronics Show that it would start publishing discs compatible with both Blu-ray and HD DVD players. However, as consumers have begun to expect that more bonus material be committed to these next-generation releases, Moore said it would have been difficult for Par to maintain a dual-platform approach.

“There’s a cost to that strategy,” he said. “You have to make content for both formats.”

Current Par homevid topper Kelley Avery noted that the distrib has had “the opportunity to take a full look at the marketplace for over a year with both formats. We think the combination of low-cost players and quality is going to break open the marketplace.”

Far from remaining silent, Blu-ray studios let loose Monday with a flurry of title announcements, with Fox touting upcoming day-and-date bows for “Fantastic Four: Rise of the Silver Surfer” and “Live Free or Die Hard,” and Sony trumpeting a September slate that includes “The Replacement Killers,” “A Few Good Men” and “Memoirs of a Geisha.”

“Given that Blu-ray has consistently outsold HD DVD all year, and this is the case for any titles released by any studio in both formats, we believe that the time is right for us to accelerate our activities and help convert the nearly 60 million high-definition households worldwide into Blu-ray households,” noted Mike Dunn, worldwide prexy for Fox Home Entertainment.

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