Exex shuffle raises hopes for single HD DVD format

Developments come at critical time for industry, rival camps

WASHINGTON — Recent changes in the senior executive suites of Sony and Toshiba have raised hopes in Hollywood that a single high-definition DVD format may yet be possible.

No formal talks between the companies have taken place yet, but studio execs who’ve followed the situation closely say they are hopeful discussions could get under way by summer.

The new developments come at a critical time for the industry and for the rival camps.

Toshiba announced in January that it will introduce HD DVD players in the U.S. by the fourth quarter of this year, and three studios, Warner Home Video, Universal Studios Home Entertainment and Paramount Home Entertainment, said they would begin releasing movies in the format to support the launch.

That would virtually guarantee a format war given the commitment of Sony, Panasonic and other leading hardware makers to the rival Blu-ray Disc format. Sony Pictures Home Entertainment and Buena Vista Home Entertainment have said they will release movies in Blu-ray as soon as that hardware reaches market, probably by the second quarter of 2006.

Doubts have recently been raised about HD DVD’s fourth-quarter timetable, however. The six member companies of the Advanced Access Content System consortium had expected to complete work on the technical specifications and licensing scheme for the format’s copy-protection system by the end of March.

Work has been slower than expected, however, and it could be well into the summer before final specs are ready. Without those final specs, hardware makers cannot start building machines and replicators cannot start stamping out discs. Unless the copy-protection system is ready in the next couple of months, manufacturers will be hard-pressed to get product into the market by Christmas.

While the prospect of a delay may have made the HD DVD camp more open to talking with its rival, recent comments from a high-ranking Sony exec also have sparked hope in Hollywood.

‘Haven’t totally given up’

Speaking to reporters in Japan on March 23, incoming Sony president Ryoji Chubachi said, “Listening to the voice of the consumers, having two rival formats is disappointing, and we haven’t totally given up on the possibility of integration or compromise.”

Chubachi’s pending promotion to president of Sony, replacing Kunitake Ando, comes as Howard Stringer takes over as chairman-CEO of the Japanese conglom, replacing Noboyuki Idei.

Although the changes are not thought to be directly related to the high-def format battle, the new management is less personally invested in the long-running contest with Toshiba and its allies and more sensitive to Hollywood’s keen interest in having a single format.

As part of the reshuffling at Sony, executive deputy president Ken Kutaragi was stripped of his board seat and had his executive portfolio narrowed to concentrate on Sony’s PlayStation business. That took him out of any direct role in the format battle.

“Idei, Ando and Kutaragi were the three guys who were most dug in on Blu-ray,” said one source who has followed the situation closely.

A spokesman for Sony in New York cautioned against reading too much into Chubachi’s remarks.

“There may have been some misunderstanding of his comments,” the spokesman said. “He was speaking to the need to be focused on the customer, and in that context, he said a single format would be better for the customer.”

Toshiba shuffle

Meanwhile, Toshiba also has undergone a change at the top.

In February, the company named Atsutoshi Nishida to succeed Tadashi Okamura as president and CEO, effective in June.

“I think it’s great that you’ve got two new heads at these companies,” said a source hoping for a unified format. “Hopefully, they won’t be so arrogant.”

It’s too early to tell if the new tone will lead to a substantive breakthrough, but the recent movement carries a striking echo of the struggle over the current DVD standard.

Idei took over as chairman of Sony in April 1995, when the electronics company was still pushing its Multimedia CD format as the replacement for videocassettes.

At the same time, Toshiba and Time Warner were promoting the format that eventually became the DVD.

Although it looked initially as if the two were headed for a format war, Idei’s elevation helped change the political dynamic, as he was able to tap his previous relationship with then Warner Home Video president Warren Lieberfarb to broker a compromise.

Idei had previously headed Sony’s optical media unit, where he had worked on the earlier generation of videodisc with Warner and other studios.

Studios on both sides of the current format divide are encouraged by the recent signs, but no one has gone so far as to change their plans.

Any serious unification effort could push a plausible launch date back by as much as two years.

Still, the studios might accept a delay if it meant avoiding a format war.

(Paul Sweeting is a reporter for Daily Variety sister publication DVD Exclusive.)