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Hi-def rivals in CES war of words
By Thomas K. Arnold The Hollywood Reporter Jan 9, 2007
LAS VEGAS -- Supporters of the two rival next-generation disc formats are slugging it out this week at the Consumer Electronics Show, with HD DVD and Blu-ray Disc predicting 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 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 news events at CES. At the HD DVD event Sunday, the North American HD DVD Promotional Group said that as of Friday, more than 175,000 HD DVD players had 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, said it will ship this spring 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 51GB 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 said, 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 in the market, with an additional 300 planned for this year. Based on a yearly attach rate of 28 movies per player and an installed based of 2.5 million players by year's end, 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 and 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. While the format is supported by three of the six major studios, of those three, Paramount Home Entertainment and Warner Home Video also are releasing titles in the Blu-ray format. Universal is the lone studio to release titles exclusively in HD DVD.
The Blu-ray camp took full advantage of these shortcomings at its news event Monday, distributing a 28-page mock newspaper with a front-page headline that declared, "Blu-ray Victory Inevitable." The newspaper included a study from British research firm Understanding & Solutions that projects Blu-ray's market share will 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. Although 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 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, 20th Century Fox Home Entertainment worldwide president. He said by the end of the first quarter of this year, "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 more Blu-ray movies (PS3 players came bundled with Sony Pictures' "Talladega Nights: The Ballad of Ricky Bobby"), 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 U.S. expected to soar, Understanding & Solutions sees 4.5 million households with PS3s this year and 14.6 million in 2008.
"I really believe the format war is in its final phase," Dunn said.
Blu-ray studios predict combined Blu-ray software sales of 40 million-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 electronics companies shipping Blu-ray players, Understanding & Solutions sees the high-def player market in the U.S. reaching 8.5 million units this year and 24 million units by 2008.
Both camps announced significant software titles in the pipeline. Among the high-profile titles headed for HD DVD this year is 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 50GB discs, including "Chicken Little" (March 20), both "Pirates of the Caribbean" films (May) and "Cars" (in the summer).
Fox said that 40 Blu-ray titles -- from Fox and MGM -- will be released in the first half of the year, including "Castaway," "The Silence of the Lambs," "Dances With Wolves," "Master and Commander: The Far Side of the World," "I, Robot," "Independence Day" and current boxoffice champ "A Night at the Museum," the latter headed for same-day release as the DVD.
Sony fielded the largest slate of titles, with worldwide home entertainment president David Bishop saying 90-100 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.
WHV 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 Academy Awards.
PHE president Kelley Avery called the PS3 "a major driver" in pushing Blu-ray acceptance. Among the titles Paramount will release this year on Blu-ray are "Babel," "Flags of Our Fathers" and such catalog titles as "Payback" and "Face/Off."
Lionsgate, which like Buena Vista, Fox and Sony is releasing movies only on Blu-ray, has 40-50 titles in the pipeline for next year, including "Saw III," "Basic Instinct" and Season 1 of Showtime's "Weeds."
"This will be the year when Blu-ray establishes itself as the format of the future," Lionsgate president Steve Beeks said.
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 can 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's Bishop.
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