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Dying format war is the talk of CES

Blu-ray gets boost but HD-DVD keeps spinning

For anyone in Las Vegas last week, the message was hard to miss.

Banners at the airport, ads atop half the taxis in town and big signs outside the Las Vegas Convention Center all proclaimed the same thing: “HD DVD: the ultimate HD movie machine.”

To the uninformed, it may have looked like the HD DVD format was moving into 2008 confidently, ready to finally best Blu-ray and penetrate the mass market. But to those following the week’s news, all those ads were more like a sad irony — format backer Toshiba had apparently committed millions of dollars to the same confab where journalists and industryites were busy signing the format’s death warrant.

Warner Bros. decision to switch from supporting both formats to go exclusively with Blu-ray just two days before CES seemed to put the nail in the coffin of HD DVD, since the move gave more than 70% market share to the competition, the Sony-backed Blu-ray.

Toshiba seemed to confirm that view when it canceled a press event at CES that, insiders say, was planned to be a pricey, celebrity-filled extravaganza.

Instead, HD DVD was left with its booth inside CES, just a few feet away from the one for Blu-ray. Though both booths were about the same size, crowds were significantly bigger at Blu-ray’s, which was dominated by a replica of the Black Pearl from Blu-ray backer Disney’s “Pirates of the Caribbean.”

Over at the HD DVD booth, crowds gathered to watch demos, but foot traffic was noticeably more sparse. And those who did come by regularly asked staffers how their format would survive.

“Ultimately, consumers are going to be the ones who decide,” one HD DVD booth host was heard telling an inquisitive attendee. “A lot of them are still waiting it out. We’ll see which format wins in time.”

In an interview at CES, Viacom topper Philippe Dauman, whose Paramount studio is one of two still backing HD DVD along with Universal, offered only a tepid show of support.

“We have made a commitment and we will live up to it,” he told Variety. “As the marketplace evolves, there will be more clarity.”

It quickly became clear why Dauman seemed to be hedging his bet. As the week went on, word emerged that both Par and Universal had outs in their contracts with HD DVD that could pave the way for a Blu-ray switch soon, although both sides say they have no plans to do so at this point.

Sources close to the HD DVD camp insist there are still a lot of unanswered questions surrounding Blu-ray’s viability, but they didn’t provide answers as to how they could stay viable, at least in the United States.

But while Blu-ray had much to crow about, execs from its backing studios and manufacturers stayed relatively subdued. Sony topper Howard Stringer happily noted at CES, “All of us are at Sony are feeling Blu today.”

He then added, “I’m sure you all want me to say more. But I won’t.”

And at a Blu-ray press event, studio execs behind the format acted like a presidential candidate who just won a primary state, ignoring their competitor and casting themselves as the only viable option.

“2008 will be the first year that all the wasted energy spends battling the competing format can be put into unifying consumers around HD entertainment,” crowed Lionsgate prexy Steve Beeks.

Diane Garrett contributed to this report.