Report: High-def battle will cost studios

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LONDON -- Backing a single format in the high-definition video format war could lead to U.S. studios missing out on millions of dollars from the global market over the next few years.

A report published here Monday by entertainment research firm Screen Digest says that Hollywood studios that opt to support only one format could miss out on as much as $270 million in the U.S. and Western Europe in 2008 alone.

Screen Digest says that, while Blu-ray Disc is selling more units than rival HD DVD at the moment, "in the longer term, both formats will establish a viable installed base, allowing them to co-exist for the foreseeable future."

It means customers will be looking for titles to watch in either format instead of having to buy a different player. The research predicts that, given the potential loss of earnings, everything points to "several single-format studios" reassessing that position during the next year.

Blu-ray-exclusive studios Sony, Fox and Disney could miss out on $175 million in consumer spending by not publishing their films on HD DVD, though Blu-ray's stronger sales mean that HD DVD-only supporters are at risk of making the largest individual losses, the report says.

The research seems to fly in the face of the recent decision by both Paramount and DreamWorks to support HD DVD exclusively.

Screen Digest analysts believe that the decision by Paramount to "get off the fence" over hi-def actually makes it more likely that other studios will now move to a format-agnostic position.

The decision has effectively secured HD DVD's immediate future and cleared the way for the other studios that currently support just one platform to move to an agnostic position without being the studio solely responsible for prolonging a format war, or for killing off one of the formats.

Screen Digest video analyst Richard Cooper believes the upcoming holiday season will be "critical for the hi-def video business."

Said Cooper: "Both formats will be seeking to secure consumer buy-in to their proposition during the critical holiday season but with so much at stake on both sides, we think it is highly unlikely that one format will emerge as the winner. We believe that eventually most will decide to offer their titles on both HD DVD and BD in order to maximize their returns."

The research also points to the importance of hardware sales as helping decide the outcome. Blu-ray currently enjoys "a significant advantage" over HD DVD because it also can be played on Sony's PlayStation 3 games console.

To date, PS3 sales have exceeded total standalone player sales (irrespective of format) by a 6-1 ratio.

While Blu-ray is currently outselling HD DVD on both sides of the Atlantic, Screen Digest expects the situation to even out as hi-def hardware becomes more affordable and more titles become available on both formats.

Both formats will be adopted, but slower than some in the industry were expecting," Cooper said. "There will be no outright winner in the short term."
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