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Lions Gate Tips Scales in Favor of Blu-ray

17 Aug, 2005 By: Thomas K. Arnold

Lions Gate Home Entertainment has jumped off the fence and thrown its support behind Blu-ray Disc, giving the Sony-developed, next-generation, optical-disc format yet another win in a string of recent victories over rival HD DVD.

Just two days before Lions Gate's Aug. 17 announcement, the Universal Music Group joined the Blu-ray Disc Association, joining existing member Sony BMG. Together, the two companies are said to represent 50 percent of all music releases.

Steve Beeks, president of Lions Gate Entertainment, said the studio was swayed by recent advances in Blu-ray's copy-protection capabilities as well as assurances by replicators that they would be able to manufacture Blu-ray discs in time for a first-half 2006 launch.

“The reason we decided to wait and not choose sides until now was we felt not enough information was available to back up claims for either format, both in terms of manufacturing ability and copy protection,” Beeks said.

“We've been working closely with both camps and with various replicators to get an understanding of the complexity of the manufacturing process, and only recently were we convinced that Blu-ray technology could be manufactured in a mass-production environment at an acceptable cost.

“It's going to be a lot — more than I'd really like it to be — but we're really looking at a time frame of years, three through five. And at that point, the cost will be acceptable.”

Current DVDs cost about 80 cents to produce, including packaging. Blu-ray discs are expected to cost just under $2 per disc — significantly higher than the 50-cent-per-disc surcharge supporters have been claiming, but a cost likely to come down to about $1 in time, after replication facilities have been retooled to produce the new discs, which have a proprietary 0.1 millimeter cover layer. HD DVD discs are more similar to existing DVDs, and backers of that format have long claimed the transition in replication facilities and equipment would be both easier and cheaper.

Beeks also likes Blu-ray's recently announced new security features that address studio concerns about piracy. The Blu-ray Disc Association said it would embed an identification mark on its software that can be read only by equipment that carries its technology and that disallows mass production of prerecorded Blu-ray media, including movies, music and video games.

“We believe these additional copy-protection measures really push that format over the edge in terms of fighting piracy,” Beeks said. “Piracy is one of the biggest challenges for our industry, and we believe the strong yet flexible measures Blu-ray has accepted will allow us to if not get the horse back in the barn, at least get it headed in the right direction.”

A third factor behind Lions Gate's decision to go with Blu-ray, Beeks said, is the strong hardware support — both among consumer electronics companies and computer manufacturers — and its planned use in Sony's upcoming PlayStation 3 video game system.

“Blu-ray also offers more capacity [than HD DVD],” Beeks said, “but that was not part of the equation in our decision.”

The addition of Lions Gate to the Blu-ray camp gives the format a decided edge over HD DVD, developed by Toshiba.

Until now, the two camps had each boasted support from three of the six majors. Blu-ray has Sony Pictures Home Entertainment, Buena Vista Home Entertainment and, since late July, Twentieth Century Fox Home Entertainment.

HD DVD has Paramount Home Entertainment, Universal Studios Home Entertainment and Warner Home Video.

But Lions Gate brings to the table a 5 percent share of the existing DVD market — and one of the biggest catalogs in the business. Accordingly, the studio already has earmarked some of its top DVD performers for Blu-ray release next year when the format launches, including Saw, The Blair Witch Project, Open Water, The Punisher, Rambo, Total Recall, Terminator 2, Stargate and Dirty Dancing.

Snagging Lions Gate is the latest coup for Blu-ray, coming just days after the Universal Music Group joined the Blu-ray Disc Association as a contributing member. UMG, too, was swayed by Blu-ray formalizing its content management and copy-protection standards.

The successful wooing of Fox in late July put an end to Blu-ray's protracted period as an underdog, and the recent announcement by HD DVD-supporting studios that their planned fourth-quarter launch would likely be postponed appears to give Blu-ray the upper hand in what many in the industry still see as an inevitable format war.

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