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Format Wars, Episode II: The DVD

Competing visions of high-definition viewing head for a showdown on store shelves.

June 26, 2005|Alex Pham and Jon Healey | Times Staff Writers

Movie buffs, brace yourselves for another round of Betamax versus VHS.

Two decades after the competing video formats battled for space in American living rooms, a new war is looming between two incompatible types of high-definition video discs scheduled to hit the market later this year.

One, called HD DVD, is the official choice of the group that backs conventional DVDs. The other, called Blu-ray, is spearheaded by more than a dozen big-name consumer-electronics and high-tech companies.

The two camps are trying to strike a last-minute deal and agree on common technical standards.

But with the first devices and discs slated to hit stores this Christmas, the window for an agreement is closing fast.

In addition to the money and egos involved, the physical differences in the two disc formats are keeping the two sides far apart.

"The train is going to start leaving the station shortly," said Josh Peterson, director of strategic alliances for Hewlett-Packard Co., which backs Blu-ray. A format war "looks more and more inevitable every day. We're approaching the point of no return."

Major Hollywood studios exacerbate the problem by splitting their support between the two formats, each of which promises to deliver richly detailed pictures and cinema-quality sound. Both types also will play current DVDs. Guided by differing visions for the high-definition future, half of the studios have announced plans to release HD DVD discs, and the other half are expected to back Blu-ray.

Although HD DVD players are expected to be in stores for the all-important holiday shopping season, the backers of Blu-ray think they have the advantage: Sony Corp. plans to include a Blu-ray drive in its hotly anticipated PlayStation 3 video game console. The game console won't arrive in the U.S. until next year, but the popularity of the PlayStation franchise may inspire buyers to wait for it.

If sales of PlayStation 3 repeat the performance of PlayStation 2, there could be Blu-ray players in several million homes in a matter of months.

If one format quickly becomes obsolete, casualties could include consumers who spend about $1,000 on the losing disc player. Analysts say a format war would also slow the transition to high-definition discs, reducing sales for consumer-electronics manufacturers and studios alike.

At stake is a multibillion-dollar market for next-generation DVDs.

Since their introduction in 1997, DVD players have become the fastest-selling consumer electronics devices of all time and are now in two-thirds of U.S. homes. Americans spent more than $20 billion buying and renting DVDs last year.

But sales of players are slowing, prompting technology and entertainment companies to lay the groundwork for a replacement.

The audience for high-definition discs is relatively small today. Viewing the new discs requires a high-definition TV set, and fewer than 13 million homes in the U.S. had one by the end of 2004, according to the market research firm In-Stat.

That number is rising rapidly, helped in part by the growth in TV programs aired in high definition. The main piece missing for these viewers has been an improved version of the DVD that could bring high-definition pictures to home video.

Consumers like Mike Fujii from Emeryville, Calif., are prepared to spend $1,000 on a new DVD player -- as long as the picture quality makes a significant leap over his current player.

"If the difference in picture quality is that great, then yeah, I'll buy one fairly soon," said Fujii, 41, who bought a 52-inch rear-projection HDTV two years ago to watch high-definition satellite TV broadcasts. "If not, I would just use the DVDs I have now. A thousand dollars is a lot to spend on a player. Right now you can get a DVD player for under $100."

Still, prettier pictures may not be enough to persuade the masses to embrace high-definition discs, said Bob Chapek, president of Buena Vista Home Entertainment, a division of Walt Disney Co. "You'd better be chock-full of features" that are not available on DVD, Chapek said.

That is why Disney is backing Blu-ray, which offers at least 25 gigabytes per disc, compared with 15 gigabytes for basic HD DVD discs and 4.7 gigabytes for conventional DVDs.

Executives at Warner Bros., which plans to release HD DVD discs, counter that the Blu-ray group has not been able to answer crucial questions about manufacturing costs, their discs' resistance to warping and other reliability issues. They say the HD DVD group has proven its ability to mass-produce double-layer discs and hybrids that combine a conventional DVD on one side with a high-definition movie on the other -- a key product for movie fans who have yet to buy an HDTV.

In spite of the format dilemma, many consumer-electronics executives are eager to shift to high-definition discs because profit margins have shrunk dramatically on conventional DVD players and sales have started to drop.

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