Latest twist in format war, Paramount drops Blu-ray

In the latest twist of a heated battle over next-generation DVD technology, Paramount Pictures and DreamWorks Animation SKG announced Monday that they will release high-definition movies in the HD DVD format rather than Blu-ray.

The two studios’ decision to drop the rival Blu-ray format and embrace high-definition DVD would certainly be a blow to Blu-ray camp. They cited HD DVD’s “lower manufacturing costs" as a main factor behind their decision to support HD DVD format.

Blu-ray format, backed by a group led by Sony Corp. and the rival HD DVD format, backed by a consortium headed by Toshiba Corp., have been indulged in battle for the $24-billion-a-year home video market share since their launch in Year 2006.

Sony’s Blu-ray format, which has dominated the HD DVD format in terms of storage space capacity, has support of Samsung, Hitachi, and JVC, while Toshiba’s HD DVD format, that allows storage capacities of 15GB and 30GB, is backed by Microsoft, Intel and NEC. The Blu-Ray format currently provides a maximum storage capacity of 50GB.

Both the standards are promising and provide increased data storage on the same disc dimensions to allow higher definition multimedia, but at the same time, they are incompatible, forcing consumers as well as the dealers to choose between the two standards.

Paramount, a film studio owned by Viacom Inc., was once a high-profile supporter of the Blu-ray format, and previously released movies in both Blu-ray and HD-DVD formats. Now, Paramount has settled exclusively on HD DVD after deciding that HD-DVD format offered better quality, lower-priced players and lower manufacturing costs, said Kelley Avery, president of Paramount Home Entertainment.

Besides the upcoming blockbuster "Shrek the Third", all movies distributed by Paramount Pictures, DreamWorks Pictures, Paramount Vantage, Nickelodeon Movies and MTV Films, as well as movies from DreamWorks Animation, which are distributed exclusively by Paramount Home Entertainment, will be released solely in HD DVD, the companies said yesterday in a statement.

"Part of our vision is to aggressively extend our movies beyond the theater, and deliver the quality and features that appeal to our audience," said Brad Grey, chairman and chief executive of Paramount Pictures. "I believe HD DVD is not only the affordable high quality choice for consumers, but also the smart choice for Paramount."

DreamWorks Animation, whose titles are distributed on home video and DVD by Paramount, had though not committed to either high-def format but bent to HD DVD only because of the low manufacturing cost.

"They have a high-quality consumer experience that is now being offered at a price point that we believe is going to connect with the consumer," said DreamWorks Animation Chief Executive Officer Jeffrey Katzenberg said. "This seems to us to be the right product at the right price at the right time."

Yesterday’s announcements by the two companies have added fuel to the high-definition DVD formats war. The prices of HD-DVD players are well below Blu-ray, which has been an advantage for the former. However, the Blu-Ray camp has outshined its rival in the first half of 2007.

Blu-Ray has lagged behind its arch-rival HD DVD in the United States in the first half of the current year by selling 2.2 million Blu-Ray based DVDs out of overall sold 3.7 million high-definition discs. According to Home Media Research’s estimates, 1.5 million HD DVDs have been sold through July.