HD format war seen dragging on

By Nicole Maestri

LAS VEGAS (Reuters) - The high-definition DVD format war has not been won, at least not in the minds of the retailers. Last week, Time Warner Inc's (TWX.N: Quote, Profile, Research, Stock Buzz) Warner Bros studio said it would exclusively release high-definition DVDs in Blu-ray format instead of Toshiba Corp's (6502.T: Quote, Profile, Research, Stock Buzz) competing HD DVD technology.

While the announcement was seen as tipping the balance of power in favor of the Blu-ray format, retailers at the Consumer Electronics Show in Las Vegas this week did not see the announcement as a definitive sign of a clear winner.

"I don't think we're in a position to go out and declare a winner," said Steve Eastman, Target Corp's (TGT.N: Quote, Profile, Research, Stock Buzz) vice president of consumer electronics, in an interview.

As long as there are two standards competing in public, consumers will stay away, he added.

"Until it settles completely I think we're going to continue to see consumers sitting on the sidelines," Eastman said.

That is bad news for the development of a much-needed multibillion dollar industry. U.S. sales of DVDs, which are crucial to Hollywood studio profits, fell 4.8 percent to $15.7 billion in 2007, the first significant drop since the format was introduced, according to preliminary Adams Media calculations.

"It would be our hope that by this Christmas there would be a clearer choice for the customer, instead of battling back and forth" between the formats, said Gary Severson, senior vice president in charge of electronics for Wal-Mart Stores Inc's (WMT.N: Quote, Profile, Research, Stock Buzz) U.S. stores.

"I don't know if that's going to happen or not."