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Blu-ray and HD DVD Unfurl Battle Plans at CES

8 Jan, 2007 By: Thomas K. Arnold

LAS VEGAS — Supporters of the two rival next-generation disc formats are slugging it out at the Consumer Electronics Show here this week with both HD DVD and Blu-ray Disc predicting imminent victory in the quest for a unified high-definition standard.

HD DVD is banking its prediction of success, in large part, on the arrival this year of low-priced players from China and other Asian countries. The Blu-ray Disc camp, meanwhile, believes the PlayStation 3 rollout, together with overwhelming studio and consumer electronics support, will boost software sales to such a degree that HD DVD will have no choice but to throw in the towel.

“Game over,” quipped Buena Vista Worldwide Home Entertainment president Bob Chapek, a leading Blu-ray supporter.

Both camps held lavish press events at the show. At the HD DVD press event Sunday night, the North American HD DVD Promotional Group announced that as of Jan. 5, more than 175,000 HD DVD players have been sold in North America. That figure includes computers with HD DVD drives as well as Xbox 360 game consoles with the HD DVD add-on.

Toshiba, which so far is the only consumer electronics manufacturer to produce dedicated set-top HD DVD players, announced that in the spring, it will ship a new 1080p unit, the $599 HD-A20, that will offer consumers the highest resolution possible. Toshiba also said it has developed a triple-layer 51 GB disc that can hold up to seven hours of high-definition content. The new disc is seen as a reaction to Blu-ray's dual-layer 50GB disc.

But the HD DVD camp's real trump card, backers say, will be the arrival this year of “competitively priced” HD DVD players from such companies as Alco, Jiangkui/ED Digital, Lite-On, Shinco, Meridian and Onkyo.

They cite the flood of cheap DVD players retailing for $99 or less as a key factor in bringing DVD to the masses.

“With the addition of new consumer electronics companies to HD DVD, we're predicting more than 2.5 million units in the market by the end of 2007,” said Yoshihide Fujii, president and CEO of Toshiba's Digital Media Network Co. “This growing level of manufacturer support is a clear result of HD DVD winning over enthusiasts and movie lovers alike.”

On the software side, more than 300 HD DVD titles are currently in the market, with an additional 300 planned for 2007. Based on a yearly attach rate of 28 movies per player and an installed based of 2.5 million players by the end of 2007, the North American HD DVD Promotional Group estimates 2007 movie sales to exceed $600 million, more than 40 times the 2006 tally.

“HD DVD is a well recognized brand name, and it's the best way for consumers to make the transition from DVD into the high-definition world,” said Craig Kornblau, president of Universal Studios Home Entertainment and chairman of the North American HD DVD Promotional Group. “HD DVD has the most reasonably priced players and drives on the market, the highest-quality picture and sound possible, and our hardware sales and attach rates are high. By the holidays, we'll have more than 600 movies available globally, and offer an advanced level of Internet connectivity to drive HD DVD sales.”

Still, HD DVD is facing an uphill fight. The format is supported by just three of the six major studios, and of those three Paramount Home Entertainment and Warner Home Video also are releasing titles in the Blu-ray Disc format. Universal is the only studio to release titles exclusively in HD DVD.

The Blu-ray camp took full advantage of these shortcomings at its press event Monday afternoon, distributing a 28-page mock newspaper with a front-page headline that declares, “Blu-ray Victory Inevitable.” The newspaper included a study from British research firm Understanding & Solutions that projects Blu-ray's market share to climb to 79% this year and 84% in 2008 even if HD DVD “sticks around.”

That prediction is based on the overwhelming studio and consumer electronics support for the format, as well as the Trojan Horse effect of PlayStation 3.

Even though only 400,000 units of the next-generation video game console were shipped at launch, within weeks of the PS3's November debut, Blu-ray Disc software sales began to outpace HD DVD software sales, according to proprietary research compiled by 20th Century Fox Home Entertainment.

“Blu-ray sales performance surpassed HD-DVD for the first time the week of Dec. 24 and did so by an impressive 20%,” said Mike Dunn, worldwide president of 20th Century Fox Home Entertainment. He said by the end of the first quarter of 2007, “our research shows Blu-ray outselling HD DVD by a 3.5-to-1 ratio.”

In a Sony survey of PlayStation 3 owners, 80% said they plan to buy moreBlu-ray movies (PS3 players came bundled with Sony Pictures' Talladega Nights), while 75% said they plan on using their new game console as their primary movie-viewing device.

With the console's installed base in the United States expected to soar — Understanding & Solutions sees 4.5 million households with PS3s this year and 14.6 million in 2008 — Blu-ray will soon gain an unbeatable edge, presidents of the four studios supporting only Blu-ray said.

“I really believe the format war is in its final phase,” said Fox's Dunn.

Blu-ray studios predict combined Blu-ray software sales of between 40 million and 70 million units this year, generating as much as $1.5 billion in consumer spending. Annual attach rates have been as high as 30 discs per player. On the hardware front, with more CE companies shipping Blu-ray players, Understanding & Solutions sees the high-def player market in the United States reaching 8.5 million units this year and 24 million units in 2008.

Both the HD DVD and the Blu-ray camps announced significant software titles in the pipeline. Among the high-profile titles headed for HD DVD in 2007 are Oscar contender Babel and the “Star Trek” TV series, from Paramount; and Happy Feet, the “Harry Potter” films and the “Matrix” trilogy, from Warner.

Dozens of heavy hitters are bound for Blu-ray. Buena Vista will release 20 titles on Blu-ray in the first half of the year, and will put some of its biggest movies on the higher-capacity 50 GB discs, including Chicken Little (March 20), both “Pirates of the Caribbean” films (May) and Cars (sometime this summer).

20th Century Fox announced 40 Blu-ray titles from Fox and MGM will be released in the first half of the year, including Castaway, MGM's Silence of the Lambs and Dances With Wolves, Master and Commander, I, Robot, Independence Day and current box office champ A Night at the Museum, the latter headed for same-day release as the DVD.

Sony Pictures fielded the largest slate of titles, with worldwide home entertainment president David Bishop saying between 90 and 100 titles are in the pipeline for 2007, including Casino Royale in March and current theatricals The Holiday, Rocky Balboa and The Pursuit of Happyness later in the year.

Warner Home Video president Ron Sanders wouldn't commit to a firm number, but said his studio will give Sony “a run for the money.” The studio will release many of the same films it has planned for HD DVD, including the “Harry Potter” and “Matrix” films. The Departed will be released the same day as the DVD, two weeks before the Oscars.

Kelley Avery, president of Paramount Home Entertainment, called the PS3 “a major driver” in pushing Blu-ray acceptance. Among the titles Paramount will release this year on Blu-ray Disc are Babel, Flags of Our Fathers and such catalog titles as Payback and Face/Off.Lionsgate, which like Buena Vista, Fox and Sony Pictures is only releasing movies on Blu-ray, has 40 to 50 titles in the pipeline for calendar 2007, including Saw III, Basic Instinct and season one of the TV series “Weeds.”

“This will be the year when Blu-ray establishes itself as the format of the future,” Lionsgate president Steve Beeks predicted.

Responding to questions at their press event, Blu-ray studio presidents said Hollywood's film community is excited about the format and may create exclusive content and other special features that take advantage of Blu-ray's heightened interactivity.

Managed copy initiatives, in which consumers who buy a disc also get downloads playable on computers or portable devices, also are in the wings, although Warner's Ron Sanders conceded, “We're just scratching the surface, and we still don't know the ultimate playout.”

“It's certainly part of our long-range plans,” added Sony Pictures' Bishop.

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