Blu-ray outsells HD-DVD in U.S. for first 9 months

By Sue Zeidler

LOS ANGELES (Reuters) - Blu-ray DVD titles outsold rival HD-DVD titles by almost 2-to-1 in the first nine months of the year, but analysts expect additional HD-DVD support and new hit releases to "transform" the high-definition DVD battle score in the fourth quarter.

Home Media Research, a division of Home Media Magazine, said on Tuesday total U.S. sales of Blu-ray discs, using a Sony Corp (6758.T)-backed technology, totaled 2.6 million units from January 1 through Sept 30, versus 1.4 million HD-DVD discs sold.

HD-DVD was developed by Toshiba Corp (6502.T). It is backed by Microsoft Corp (MSFT.O) as well as film studios like Time Warner Inc's TWX.N Warner Bros.

The division in Hollywood grew deeper in August when Paramount Pictures (VIAb.N) and DreamWorks Animation SKG Inc DWA.N signed exclusivity deals to distribute their next-generation discs on HD-DVD format for the next 18 months.

Gerry Kaufhold, analyst with In-Stat research firm, believes newly released HD-DVD titles with new advanced Web-enabled features, such as Paramount's "Transformers", will help the HD-DVD camp in the fourth quarter.

Paramount Home Video said that "Transformers" had the biggest debut of any high-definition titles, selling over 100,000 HD-DVDs on Oct 16, its first day of release.

Tom Adams, president of Adams Media Research, also said the 18-month period of exclusivity for HD-DVDs by Paramount and DreamWorks should strengthen HD-DVD's hand this quarter.

"This definitely smooths out the edge that Blu-ray had in exclusive titles and it very much strengthens HD-DVD's hand in the fourth quarter," he said, but still expects Blu-ray will

lead for the year overall.

Adams predicts that for 2007 overall, consumers will spend $186 million purchasing Blu-ray discs, versus $91 million for

HD-DVD.

Walt Disney Co (DIS.N), Sony, News Corp's NWSa.N 20th Century Fox, and Lions Gate Entertainment (LGF.N) are exclusively in the Blu-ray camp.

Hollywood and electronics manufacturers had hoped new high-definition DVDs, with better picture quality and more capacity would revive the slowing $24 billion home DVD market.

But like the Betamax-VHS battle in the 1980s, the DVD standards war has slowed adoption and created customer confusion. It has also raised the likelihood it will be years before next-generation players become standard equipment.

Since both formats launched in the spring of 2006, an estimated 4.98 million high-definition discs have been sold, including 3.01 million in Blu-ray and 1.97 million in HD-DVD through the end of September, according to Home Media.