As many as 20 companies may leave HD-DVD

Fra TIMES ONLINE:

Up to 20 firms backing HD-DVD consider defection after Warner opted for Blu-Ray and Paramount is poised to follow

The sprawling consortium of technology and media companies assembled to promote the HD-DVD format of next-generation high definition discs faces a spate of defections to the rival Blu-Ray Disc consortium.

As many as 20 companies currently part of the HD-DVD Promotion Group could be preparing to remove their names from the alliance’s 130-strong membership list, The Times has learned.

Paramount yesterday emerged as the latest major Hollywood studio poised to switch allegiances.

Despite the huge armies of technology companies ranged against each other in the format showdown, Paramount has turned out to be a pivotal figure. Its decision in August to give exclusive backing to HD-DVD was seen as a potentially devastating blow to the prospects of Blu-Ray, and to the strategy of Sony’s president, Sir Howard Stringer.

Sir Howard consistently argued, though, that the Playstation3 games console, which includes a Blu-Ray disc player, would put the format in people’s living rooms around the world more quickly than HD-DVD players would be adopted by consumers. But Paramount, like other members of the HD-DVD group such as Fujitsu, Lenovo and Kenwood, has hedged its bets. It offered exclusivity in August on the basis that it could reverse the decision should Warner Bros switch to Blu-Ray.

The threatened exodus from the HD-DVD format follows last week’s decision by Warner Bros to back the rival Blu-Ray Disc format, whose main technology backers include Sony, Apple and Dell.

One Tokyo-based analyst said that the defections could represent the final nails in the coffin of Toshiba’s HD-DVD standard after a bitterly-fought “format war” that has run for a little over one year.

Eiichi Katayama, of Nomura Securities, said that the battle between the formats, which display films and video games more sharply in an era of ever-growing television screen sizes, was now “entering its final phase”.

Pony Canyon, a major Japanese music, animation and film studio and part of the giant Fuji Television media empire, said that although it was currently part of the HD-DVD Promotion Group, the decisions of US studios meant it would “choose Blu-Ray in the end”.

Several other Japanese firms – including content producers and electronics component makers – said that their support of HD DVD was “under review” and that they knew of many others in the same position. Others, who admitted that they had previously been waiting for “clear market momentum”, said that it had now probably arrived.

Backers of HD-DVD point to the relative ease of producing the discs, and the lower cost of building machines capable of reading them. Unlike previous format wars, particularly the notorious Betamax v VHS skirmish in the 1980s, the war between Blu-Ray and HD-DVD has effectively been decided in boardrooms, rather than electronics showrooms. The decisions of the major studios have come well before those of customers, who have generally held back from picking one format for fear of backing a loser.

Facing a future with only Universal Pictures as its major Hollywood supporter, Toshiba and HD-DVD, said analysts at the Consumer Electronics Show in Las Vegas, could quickly find itself isolated. But HD-DVD does retain a few potential trump-cards, most notably Microsoft. It is the presence of Microsoft on HD-DVD’s list of supporters, say many of the promotion group, that preserves hope that the format could yet prevail.

http://business.timesonline.co.uk/tol/business/industry_sect ors/media/article3153038.ece