New disc may sway DVD wars

Warner Bros., which helped popularize the DVD more than a decade ago, plans to announce next week a single videodisc that can play films and television programs in both Blu-ray and HD DVD, the rival DVD technologies.

Warner Bros., a division of Time Warner, plans to formally announce the new disc, which it is calling a Total HD disc, at the Consumer Electronics Show in Las Vegas on Tuesday.

Two rival camps introduced high-definition DVD players last year: a consortium called Blu-ray, backed by Sony and others, and a group called HD DVD, backed by Toshiba and Microsoft. Retail and media executives say this clash of corporate titans and their incompatible machines has left some consumers bewildered and has slowed the introduction of what is intended to be the next great thing in home entertainment.

Executives at Time Warner and its Hollywood subsidiary hope to spur sales of new DVD players and movies by gaining the support of retailers and cajoling rival studios into making their film and television libraries available in both formats on a single disc.

In addition to reviving the ghost of the war that marked the introduction of videocassettes in the 1980s, the high-definition battle has been exacerbated by the decision of several major studios to support only one of the technologies.

Thus, for instance, a copy of 20th Century Fox's Ice Age: The Meltdown is available only on Blu-ray, while Universal's The Break-Up can be viewed only on a disc and player built with HD DVD technology.

Barry M. Meyer, the chairman and chief executive of Warner Bros., said in an interview that the company came up with the Total HD disc after concluding that neither Blu-ray nor HD DVD was going the way of Betamax anytime soon.

"The next best thing is to recognize that there will be two formats and to make that not a negative for the consumer," Meyer said. "We felt that the most significant constituency for us to satisfy was the consumer first, and the retailer second. The retailer wants to sell hardware and doesn't want to be forced into stocking two formats for everything. This is ideal for them."

In a world besotted with gadgetry, few consumer products have generated as much excitement--and head-scratching--as high-definition television. Flat-screen, high-definition TVs have been flying off the shelves for the last year and are now as common in homes as coffee pots. Yet few people are actually watching superclear high-definition programming.

Part of the disconnect is the lack of high-definition programming on cable and satellite television, and the additional outlay for decoder boxes and premium channels needed to get it. The rival movie player technologies have further blurred the outlook for high definition. Richard Greenfield, an analyst at Pali Capital, predicted in a recent report that this would be the first year since the introduction of the DVD that consumer spending on the discs would decline, putting pressure on the studios that rely heavily on them for profits.

For now, Sony; Metro-Goldwyn-Mayer, which is owned by private equity firms in partnership with the Comcast and Sony; 20th Century Fox, a division of the News Corp.; and Walt Disney Pictures are all exclusively releasing their DVDs in Blu-ray.

Universal Studios, which is owned by General Electric, is releasing only in HD DVD. Warner and Paramount Pictures, a division of Viacom, are issuing DVDs in both formats.

Behind these allegiances are complex strategic questions revolving around everything from manufacturing costs to profit margins, debates over each format's technical strengths and weaknesses, and how these players relate to Microsoft and Sony's video-game strategies.

(Blu-ray players are built into the new Sony PlayStation 3, while Microsoft is selling HD DVD drives that attach to its Xbox 360.)

Another wrinkle is plans by LG Electronics, and possibly other gadget makers attending the Las Vegas conference, to announce new DVD players with drives for both formats; however, such players will most likely be initially more expensive than other players.

Jeffrey L. Bewkes, the president of Time Warner, said the Total HD disc has a better chance of catching on than dual players. Research commissioned by Warner indicates that consumers are willing to pay several dollars more than current high-definition DVDs for a disc that works on both players. At the Web site for Best Buy, Warner's Superman Returns DVD was selling yesterday for $19.99 in its standard format, $29.99 for Blu-ray and $34.99 for HD DVD.

Still, it is not clear whether news of Warner's Total HD disc would convince the studio heads who are backing one format or the other to release their wares in both. Sony, of course, has placed a big bet on Blu-ray's success and does not want to relive the sting of Betamax's defeat. The number of studios committed solely to Blu-ray has been seen as a competitive edge, particularly because HD DVD came to market several months ahead of Blu-ray.

And HD DVD's boosters say they doubt gaming fans who have been snapping up the just-introduced PlayStation 3 will take advantage of its built-in Blu-ray player and buy movies as well as video games.

In recent interviews, executives at Fox and Disney were unequivocal in their support for Blu-ray. They said they believed that releasing DVDs in both formats would only prolong confusion and the emergence of a winning format. "I think the fastest way to end the format war is through decisiveness and strength," said Bob Chapek, the president of Buena Vista Worldwide Entertainment, the home video arm of Walt Disney.

Like other Blu-ray proponents and partners, Chapek said that he favors Blu-ray because of its greater storage capacity and other attributes. HD DVD offers the same vivid picture by storing less information on its disc, which means fewer minutes of video and other features. However, among its perceived advantages, HD-DVD players are less expensive. (Both formats can play standard DVDs.)

Because of manufacturing complexities, the Total HD disc will not contain a standard format version, said Kevin Tsujihara, the president of Warner Brothers Home Entertainment Group. However, several months ago the company filed patents for a new disc incorporating all three formats, which it could produce in the future.

Tsujihara described the new disc as an elegant way for studios to make their content available more widely "in a way that is not conceding defeat" for the format they have been backing.

In the short term, Total HD would actually add to the number of formats retailers will have to stock, raising it from three to four. However, Irynne V. MacKay, senior vice president for entertainment products at Circuit City, said she supported the idea because it took pressure off consumers puzzling over which format to invest in. "The simpler the future is for us, the better," said MacKay.