HD DVD at a loss in Vegas

Cancels CES event after WB defects

The North American HD DVD Promotional Group abruptly canceled a planned two-hour extravaganza Sunday night in Las Vegas on the eve of the Consumer Electronics Show. The group had planned on using the event to preview upcoming HD DVD releases and show off the latest advances in special features.

The cancellation came in the wake of Warner Home Video's announcement Friday that it was dropping support for HD DVD and after May will release high-definition titles exclusively in the Blu-ray Disc format. The Warner move dealt a strong blow to the HD DVD camp, leaving it with just two of the six major studios.

Ken Graffeo, the Universal Studios Home Entertainment executive vp who serves as co-president of the HD DVD promotional group, late Friday confirmed rumors that the event would be canceled.

According to an official statement from the group, "Based on the timing of the Warner Home Video announcement today, we have decided to postpone our CES 2008 press conference. … We are currently discussing the potential impact of this announcement with the other HD DVD partner companies and evaluating next steps. We believe the consumer continues to benefit from HD DVD's commitment to quality and affordability — a bar that is critical for the mainstream success of any format. We'll continue to keep you updated on new developments around HD DVD."

Warner — with a market share of more than 20%, the biggest Hollywood player in the home entertainment industry — had been the last remaining major studio to release titles in both Blu-ray and HD DVD.

The decision to ditch HD DVD gives Blu-ray a decided advantage since the format now enjoys the exclusive support of four of the six major studios — Warners, Disney, Sony and Fox — as well as the smaller MGM and Lionsgate.

The move also mitigates any momentum HD DVD might have gained in the fall when Paramount, along with DreamWorks and DreamWorks Animation, abandoned its dual-format strategy and began releasing titles only in HD DVD, as Universal already had been doing.

Warner execs said Friday that the decision to go with Blu-ray was based on two considerations: more demand for Blu-ray compared with HD DVD and a desire to help usher an end to the format war.

"The window of opportunity for high-definition DVD could be missed if format confusion continues to linger," Warners chairman and CEO Barry Meyer said.

Warner said it will pull the plug on HD DVD gradually, issuing titles on HD DVD "after a short window following their standard DVD and Blu-ray releases," then discontinue HD DVD entirely come May.

While Warner in the past has said its dual-format strategy allows it to maximize sales in the nascent HD media market, consumer confusion ultimately became the bigger issue.

"We want mass adoption," said Kevin Tsujihara, president of the Warner Bros. Home Entertainment Group. "At this point, we believe the highest probability of success is with one format."

Tsujihara said that on titles Warner was selling in both formats, Blu-ray was outselling its rival 6-to-4.

When Paramount and DreamWorks abruptly ended their support for Blu-ray last year, it was leaked that a $150 million incentive payment was a deciding factor. Tsujihara, while vague, said that Warner's decision wasn't based on such a consideration.

"This wasn't a bidding war," Tsujihara said. "It was really about us being very clear about what the best strategic choice was for us — and the industry, quite frankly."

Some were predicting that Warner's decision would put an end to HD DVD as early as this year.

"A Warner Blu-ray shift will kill off HD DVD within six to nine months," Pali Research analyst Richard Greenfield said Friday.
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