Four studios support HD DVD, Toshiba says

In the battle over next-generation DVD technology, Toshiba says the standard it backs is making gains against rival Blu-ray.

Toshiba said Monday that it has won support for the HD DVD optical disc standard from Warner Bros., Paramount Pictures, Universal Pictures and New Line Cinema, advancing its cause in the battle for the next-generation DVD.

Toshiba is promoting HD DVD, a next-generation DVD technology, with NEC and Sanyo Electric, while Sony and several other giants of the electronics, computer and movie industries are backing a competing standard dubbed Blu-ray.

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Support from U.S. film studios is seen as vital in this format battle, just as it was when the VHS standard prevailed over Sony's Betamax two decades ago.

"After extensive research and careful consideration...we have determined that HD DVD has the highest quality of performance and offers key advantages in the areas of durability and reliability," Warner Bros. said in a statement.

Warner Bros. and New Line Cinema are units of Time Warner. Universal Pictures is a division of General Electric, and Paramount Pictures is a unit of Viacom.

They represent about 45 percent of Hollywood's prepackaged DVD sales in the United States, Toshiba said.

Those studios are expected to release movie titles in the HD DVD format in time for the planned launch of HD DVD players in the last quarter of 2005.

Both HD DVD and Blu-ray technologies use blue lasers, which have shorter wave length than the red lasers used in current DVD equipment, allowing discs to store data at the higher densities needed for high-definition movies and television.

At stake is pole position in the $10 billion-a-year DVD player and recorder market, and a PC-drive market of similar size. The winner would be able to license its technology, meaning billions of dollars in royalty income is also up for grabs.

Toshiba, Japan's second-largest electronics conglomerate, alone expects its HD-DVD-related sales to grow to $2.92 billion (300 billion yen) by 2010 from an estimated $48.6 million in 2005.

Battle just gearing up
"We think this carries a great impact," Toshiba Corporate Senior Vice President Yoshihide Fujii told a news conference.

"There is a strong desire in Hollywood for a single format" for next-generation DVD, he added. "Support from studios whose DVD sales account for nearly half of the market means, in our view, Hollywood has started moving toward the single-format" HD DVD.

Toshiba, however, said it was too early to declare victory over the Blu-ray camp, whose members include such heavyweights as Dell, Samsung Electronics, Philips and Matsushita Electric Industrial, maker of Panasonic brand products.

Blu-ray has the support of Sony Pictures and the tacit backing of Metro-Goldwyn-Mayer, recently obtained by a Sony-led consortium. It is also counting on Twentieth Century Fox, which recently joined the Blu-ray Disc Association board.

With the same physical structure as current discs, HD DVD allows makers to use much of their existing DVD equipment, keeping fresh investment minimal and curbing manufacturing costs, Toshiba has said.

The Blu-ray companies say their format is better because a single-layer disc can hold about 25 gigabytes, enough to record up to three hours of high-definition TV, versus 20 gigabytes for HD DVDs. Blu-ray says the possibility of even higher capacities in the future would give its technology a longer life span.

Ahead of the announcement, Toshiba shares closed up 1.64 percent at $4.23 (435 yen), while Sony gained 1.9 percent at $35.56 (3,760 yen), outperforming the Tokyo stock market's electric machinery index, which was up 1.52 percent.

Story Copyright  © 2004 Reuters Limited.  All rights reserved.

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