Studio bridges next-gen DVD divide

First moviemaker hedges its bets in format war. Will other studios follow suit? Photos: HD DVD and Blu-ray battle in Tokyo

With one studio at last breaking ranks to support multiple next-generation DVD formats, industry eyes are now turning to Hollywood to see if other moviemakers will try to defang an impending format war.

Seeking to hedge its bets in the tussle between two incompatible high-definition DVD formats, each of which have the backing of powerful technology and media companies, Hollywood studio Paramount Pictures said late Sunday that it would release movies in both new formats.

Previously, the studio had said it would release films only in the HD DVD format, along with Warner Bros. and Universal Pictures. By also agreeing to release an unspecified number of films in the competing Blu-ray format, backed by Twentieth Century Fox, Sony Pictures and Disney, Paramount becomes the first studio to support both sides.

"We have been intrigued by the broad support of Blu-ray," Thomas Lesinski, president of the studio's home entertainment division, said in a statement. "After more detailed assessment and new data on cost, manufacturability and copy-protection solutions, we have now made the decision to move ahead with the Blu-ray format."

With considerable momentum building behind Blu-ray--checked somewhat by last week's announcement that Microsoft and Intel would support HD DVD--many in the industry are now watching for signs of similar compromise from Universal or Warner. Executives at both studios could not be reached for immediate comment on the issue.

Paramount's move is nowhere near a truce in a format battle that holds the potential to be as painful as the old Betamax versus VHS debates. But the announcement is a welcome sign for consumers wary of the consequences of picking sides.

Both formats, each of which will provide enough space to store crystal-clear high-definition movies, are expected to launch next year. The prospect of having two separate formats, with different content available for each, has sent a chill through consumers and video rental store owners unwilling to risk investing in a technology that could be rendered quickly obsolete.

The split is the result of two separate technology initiatives, both with the goal of replacing today's popular DVD format, maturing at roughly the same time.

The HD DVD camp, led by consumer electronics giant Toshiba, vows that its format will be easier and cheaper to produce, because it is closer to today's existing DVD format and can draw from some of the same manufacturing techniques. It will come in one-layer 15GB and double-layer 30GB formats, with a 45GB version also planned.

Blu-ray, which is backed by Sony, is a more substantial reworking of the old DVD format, and will provide 25GB and 50GB versions. Both camps say they will provide a "hybrid disc," with a high-definition disc on one side and a traditional DVD on the other, so that consumers can play movies on their old DVD players.

No truce in sight
It's rare to find anybody in either camp who thinks the split is a good idea. Analysts routinely say that the battling formats will keep consumers away from store shelves, leery of buying the DVD equivalent of the Betamax, and finding their expensive new machines become quickly obsolete.

Indeed, analyst firm Sanford C. Bernstein recently predicted that media companies could forgo as much as $16 billion over seven years if they wind up in a format battle, instead of taking an extra two years to work out a compromise.

Some hope of a truce did emerge earlier in the year, as executives from both camps publicly said they wanted to find a way to merge the two formats. The two sides have been unable to reach agreement, however.

Paramount's announcement has been the single ray of compromise in several weeks of bitter words and hardening support on both sides.

Last week, Microsoft and Intel added their weight to the HD DVD camp, saying that the Toshiba format would have more capacity available in the early days, and would work better with their vision of movie copy protection.

Blu-ray backers, including Dell and Hewlett-Packard, immediately contested the two companies' claims, saying that the copy-protection capabilities were equivalent, and that Microsoft and Intel were out of step with the "vast majority of the computer industry."

HD DVD format leader Toshiba, which is showing off its technology this week at the CEATAC Japan trade show in Tokyo, met Paramount's announcement Monday with similarly dismissive words.

"We understand that studios want to see precisely what will happen in the CE (consumer electronics) and IT (information technology) industries, and that they will want to support all potential markets for their products," the company said in a statement. "However, once HD DVD comes to will not take long to know which format really delivers the benefits of high definition to the consumer."

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