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High-Def DVD Era Set For Soft Launch

WWW- The battle between two formats seeking to become the high-definition successor to the DVD officially gets under way when Toshiba’s first HD DVD player hits the market April 18, at the same time as the first HD DVD movies arrive in stores.

Sony’s (SNE) rival Blu-ray Disc is expected to follow two months later. Then it will be up to consumers to pick a winner. The face-off of HD DVD and Blu-ray Disc promises to be the biggest format war since VHS beat Betamax in the videocassette market in the 1980s.

Analysts say consumers’ choice likely will come down to content. Hollywood movie studios are split on the two formats, but more side with Blu-ray.

Still, HD DVD has some big studios in its camp. They include Time Warner’s (TWX) Warner Home Video, Viacom’s (VIA) Paramount Pictures Home Entertainment and General Electric’s (GE) majority owned Universal Pictures.

Studios backing Blu-ray include News Corp.’s (NWS) 20th Century Fox Home Entertainment, Sony’s Sony Pictures Home Entertainment and Walt Disney’s (DIS) Buena Vista Home Entertainment.

Some studios that first backed HD DVD have decided to support both formats. Paramount and Warner said earlier this year they’d release movies on Blu-ray Disc as well as HD DVD.

“It still looks to me like Blu-ray is ultimately going to win this battle,” because it has more studio support, said Ted Schadler, an analyst with Forrester Research. But there could be a long way to go.

“If the studios start shifting their allegiance or if the volume of titles really ramps up on the HD DVD side and not the Blu-ray side, that would be notable,” Schadler said. “As far as I can tell, the studios are holding the line.”

HD DVD officials say their movie lineup includes such hits as “Batman Begins,” “Harry Potter and the Goblet of Fire” and “King Kong.”

Blu-ray Disc has “more players on their team. But the players we have hit a lot of home runs,” said Mark Knox, an adviser to the Toshiba HD DVD Promotion Division.

Warner Home Video said Thursday it was pushing back the release of its initial slate of HD DVD titles to April 18 from March 28, and Toshiba on Friday followed with a similar announcement for its HD DVD player. At that time, Warner will offer just three movies: “Million Dollar Baby,” “The Phantom of the Opera” and “The Last Samurai.” The studio will release 17 more titles in subsequent weeks.

Blu-ray Disc boasts seven big studios supporting its format compared with three for HD DVD.

“What matters most is availability of content,” said Andy Parsons, chairman of the Blu-ray Disc Association’s U.S. promotions committee. “If you’re a consumer, you’re looking at both formats and trying to evaluate which one is going to give you the maximum opportunity to enjoy the content you want to see. If you’ve only got less than half of the studios supporting your format, that’s not really a good starting position.”

But HD DVD has something Blu-ray doesn’t: support from the adult video industry. Executives from leading porn companies Digital Playground and Wicked Pictures told IBD last month that the HD DVD camp has been receptive to adult video firms, while Blu-ray hasn’t.

Adult video producers say they aren’t getting access to Blu-ray authoring technology and disc replication facilities, so the industry by default is turning to HD DVD.

But a Blu-ray Disc official says he doesn’t think there will be a problem getting adult content on Blu-ray Disc. “I don’t really see any big barriers,” said Parsons, who also is senior vice president at Pioneer Electronics USA.

The adult film industry has a history of helping new technologies get adopted. Its early support of VHS, digital video discs, broadband Internet and video on demand helped those technologies succeed.

HD DVD has several other advantages on its side, including its two-month head start on Blu-ray Disc.

Also, the initial HD DVD players cost far less than the early Blu-ray Disc players. Toshiba’s HD DVD players start at $499. The cheapest Blu-ray Disc players will cost about $1,000. Samsung expects to have the first Blu-ray Disc player out on May 23, along with content from at least two studios. HD DVD and Blu-ray Disc players both will be able to play standard definition DVDs.

HD DVD also benefits from its name. People understand right away that it’s high-definition DVD, Knox says. It provides much sharper pictures that can take full advantage of today’s HDTVs.

HD DVD players have been available for pre-order online from (AMZN) and Crutchfield since early January. Later this month, they will be sold at Best Buy (BBY) and Sears (SHLD) stores.

Some major consumer electronics retailers, including Circuit City, (CC) haven’t committed to carrying HD DVD yet.

The much-talked-about format war between Blu-ray and HD DVD could become a nonevent if consumer electronics makers follow the pattern of recordable DVD. In that case, hardware makers quickly developed products that could handle multiple formats.

LG Electronics of South Korea plans to make a dual-format Blu-ray Disc/HD DVD player.

“Probably the bulk of players a few years from now will be combination players,” Knox said. “And at that point, the studios are just going to make the version of software that’s the least expensive to manufacture.

So ultimately from that point of view, HD DVD would win just by the fiscal reality of how efficient it is to make.”

At stake for the two formats is a home video business that generated $22.8 billion in DVD sales and rentals in the U.S. alone last year, according to the Digital Entertainment Group.


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