Home movie DVD battle won, hard sell begins

By Jennifer Tan - Analysis

SINGAPORE (Reuters) - Consumers will be the winners, through better quality home movies and lower prices, when Toshiba Corp finally calls time on its DVD technology, ending a long-running battle to set the format for next-generation discs.

Viewers seeking sharper movies on high-definition DVDs will no longer have to choose between rival incompatible formats. A single format should help accelerate the shift to the new technology in the $24 billion home DVD market.

But, while they will get better audio quality and higher resolution pictures -- and they will likely wait for DVD player prices to halve -- consumers will probably have to upgrade their television sets to make the most of them.

Sony Corp's Blu-ray technology is close to winning the format war for home movie DVDs after a source at Toshiba said it was planning to exit its HD DVD business after Hollywood studios and big retailers such as Wal-Mart Stores Inc backed Blu-ray.

"This has been a long overdue end to the format war that has frustrated and confused consumers, and will allow vendors to focus resources on the Blu-ray technology," said Claudio Checchia, an analyst with research firm IDC.

"I would expect a more aggressive push towards Blu-ray in the second half, resulting in more movie content, more stand-alone DVD players, and prices for these players falling to attractive levels by Christmas."

Checchia said the cheapest Blu-ray player on the market was Sony's PlayStation 3 video game console, costing about $400.

"Prices for players need to fall to $200 and below before they get consideration from the mass market, and I would expect companies would push prices down aggressively now that the uncertainty over the format war is over."

Apart from a mushrooming of stand-alone DVD players, analysts expect more Blu-ray players to be embedded in laptop and desktop personal computers from next year.

Companies in the Blu-ray camp, which include Apple Inc, Dell Inc, Philips and Matsushita Electric Industrial Co, could start investing more aggressively in the technology and get a head-start in terms of launching products, analysts said.

Because of Blu-ray's more advanced technology versus HD DVDs, companies needed to invest in new manufacturing technologies to produce the Blu-ray discs, but many held back as the outcome of the DVD format battle was uncertain.

SWEET VICTORY

Investors in companies involved in the Blu-ray format also welcomed the likely end of the format war.

Shares in Sony rose on Monday, while Taiwan disc makers climbed on relief the industry can finally start producing in earnest.

"Everyone had been waiting to see who will win, so if Toshiba exits, then it could really take off for Sony," said Sammy Lo, spokeswoman for CMC Magnetics, which supplies one third of the world's DVD discs and counts Sony as a major client.