The format war over next-generation DVDs appeared to have a clear winner, but the picture just got fuzzier.
Paramount Pictures and DreamWorks Animation SKG Inc. said Monday that they would offer movies exclusively in the HD DVD format rather than in that of the better-selling Blu-ray -- a surprise move that complicates the technology battle that Blu-ray had been clearly winning.
"I am very late to this party because I was skeptical about high definition," said Jeffrey Katzenberg, chief executive of DreamWorks Animation, "but what is happening in the marketplace is a game changer."
Not included are director Steven Spielberg's films, which the companies said were "not exclusive to either format." Spielberg, Katzenberg and mogul David Geffen sold their DreamWorks SKG live-action operation to Paramount parent Viacom Inc. last year.
Both HD DVD and Blu-ray players produce much sharper pictures than conventional DVD players. Because most people still have standard machines, high-definition discs are just a fraction of the overall DVD market. From Jan. 1 through Aug. 12, consumers bought 2.1 Blu-ray discs and 1.1 million HD DVD discs, compared with nearly half a billion standard DVDs, said Judith McCourt, research director of Home Media Research.
But HD DVD players now retail in some cases for $299 and could be headed as low as $199 by the holiday season, Katzenberg said, making them affordable to families just as a diverse group of hi-definition movies is going on sale. He further predicted that this summer's Hollywood blockbusters -- including installments of the "Shrek," "Pirates of the Caribbean" and "Harry Potter" franchises -- would make the fourth quarter the biggest ever in home entertainment.
Blu-ray players have come down to $499 today from about $1,000 a year ago.
Despite being more costly, Blu-ray discs have outsold HD DVDs by 2 to 1 this year, and retailers including Blockbuster Inc. and Target Corp. are lining up on the Blu-ray side, according to the Blu-ray Disc Assn.
"Blu-ray is going to win," said Andy Parsons, spokesman for the trade group. "It's just a question of how much longer it's going to take now."
He said the decision "seems oddly timed given Blu-ray's tremendous momentum both with consumers and with retail."
Target will start selling a Blu-ray device this fall for the holiday shopping season, although it will still offer discs in both formats. Blockbuster now stocks Blu-ray discs exclusively at most of its outlets.
