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Thursday, 13 December 2007 09:54

Is Warner leaning toward a HD format exclusive?

Written by David Stellmack

Image

Business Week article sets off a firestorm


By now, most people have either seen or read the article in Business Week where Michael Burns from Lionsgate Studios suggests that “Warner will be coming on board soon”. This has set off a firestorm of comments from both sides over the past couple of days.

Let’s just make sure that everyone knows that Warner still claims that it is “format neutral” and will continue to release movies in both the Blu-ray and HD DVD format. This news is good news for fans on both sides.

If Warner were to sign up to go HD DVD exclusive, we believe this would finally split the market in half and would be quite a blow to the Blu-ray camp. Toshiba and Sony would have to divide up the spoils, as the hi-def war would be a draw for the time being with each side having about an equal studio presence for titles.

If Warner were to choose to support Blu-ray exclusively and drop its support for HD DVD, this could spell a deathblow to the HD DVD format in about 18 months or less, as the Paramount and Dreamworks Animation HD DVD exclusive support is only for 18 months. If Warner supports Blu-ray it could most likely end the format war.

Toshiba is the low-price leader and continues to gain some ground in its adoption rate, but until all of the figures come in for the holiday season it will be hard to tell where things stand. We can tell you that both sides are pulling out all the stops for the holiday season, with Blu-ray dropping its price on players (with rumors reaching us today that we can expect the first $299 Sony player to most likely arrive soon). Manufacturers are bundling players with televisions, and both sides are throwing in a lot of free movies to attract attention and create buzz.

Toshiba is not going to go away quietly, and the studios are right to consider the slashing of both player and disc prices. This is something that will help spur the adoption rate. Still, manufacturing costs for HD DVD are still lower than that of Blu-ray, which does provide the studios a bit more profit on the HD DVD titles.

Warner could really play the spoiler role if it were to lean one way or the other as an exclusive; and, in order not to piss consumers off, it might just be better if it remained neutral. However, if a change were going to come, we don’t expect that it will be loud. Perhaps a gradual phased-in approach might be the ticket as not to attract too much attention.  Both sides continue to send reps to Warner in hopes of cutting a deal, but is there really a deal to cut?

We just don’t see it at the moment. The situation is still too fluid and Sony continues to depend on the PS3 as the key to tip the scales in Blu-ray’s favor, much as it did with the PlayStation 2 did for the adoption rate of the DVD format. We believe that in just a few short weeks at the Consumer Electronics Show in Las Vegas we will have a better idea of what is going to happen next. We do expect one side or the other to declare a holiday victory; but don’t expect Warner to declare its intent and go exclusive just yet.

Last modified on Thursday, 13 December 2007 10:20

David Stellmack

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