HD format war seen dragging on
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) Warner Bros studio said it would exclusively release high-definition DVDs in Blu-ray format instead of Toshiba Corp's (6502.T) 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) 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) U.S. stores.
"I don't know if that's going to happen or not."
THE BATTLE CONTINUES
HD DVD was developed by Toshiba while Sony Corp (6758.T) developed the Blu-ray standard.
The new high-definition DVDs, with better picture quality and more capacity, were expected to help revive the slowing $24 billion global home DVD market.
But Hollywood studios split their alliances between the two standards. After the switch by Warner, studios behind some three-quarters of DVDs are backing Blu-ray. Some release in both formats, with a minority focused on HD DVD.
Similar to the Betamax-VHS battle in the 1980s, having two competing DVD standards has created customer confusion, dampened sales of both formats and put retailers in a conundrum of having to either choose sides or sell products that have a chance of becoming obsolete very quickly.
This holiday season, shelves at many consumer electronics retailers were stuffed with Blu-ray DVDs, HD DVDs, and players the supported one or both formats.
Amid the plethora of products, some retailers chose to make a decision and support a single format. Continued...
