The fuzzy future of high-definition DVD came into sharper focus Friday after Warner Bros. said it would release movies for the home video market exclusively on the Blu-ray disc format.
The decision, announced on the eve of the influential Consumer Electronics Show, delivers a de facto knockout punch to the rival HD DVD format backed by Toshiba Corp. and others now supported by only two of Hollywood's six major movie studios.
It also averts a further costly format war that has been stymieing the growth of the next generation of DVD with promises of enhanced video images and digital audio to match the popularity of flat, big-screen television sets. For the first time, sales of movies on regular DVDs declined last year, jeopardizing a longtime and important source of profits for Hollywood. The studios hope the new, higher-quality format will spur consumers to restock their DVD shelves.
In addition to Warner Bros., studios supporting the Blu-ray format include News Corp.'s 20th Century Fox, Walt Disney Co., Sony Pictures and Metro-Goldwyn-Mayer. Taken together, they represent about 70% of the home video market. HD DVD is supported by General Electric's NBC Universal, Viacom Inc.'s Paramount Pictures and the independent studio DreamWorks Animation.
"Expect HD DVD to die a quick death," said Richard Greenfield, an analyst with Pali Research in New York, in a research note Friday.
Late Friday, the HD DVD group canceled a news conference scheduled for Sunday at the Consumer Electronics Show in Las Vegas. "We are currently discussing the potential impact of this announcement with the other HD DVD partner companies and evaluating next steps. We believe the consumer continues to benefit from HD DVD's commitment to quality and affordability," the group said in a statement.
The larger question, however, is how long even the winning high-definition DVD format may survive. Some analysts say the battle between Blu-ray and HD DVD may become irrelevant as high-speed Internet and on-demand video become the pipelines of movies into the home.
"I think the fat lady just sang," said Rob Enderle, principal analyst with Enderle Group in San Jose. "This gives Blu-ray a decisive lead. The question now is whether it is too little too late."
Enderle said consumers might have moved on to digital downloads to get movies rather than wait to buy them on next-generation DVDs. The next big chance to sell high-definition movie players won't be until next Christmas, he said. "By then, it may all be moot."
