January 5, 2008 / 12:09 AM / 10 years ago

UPDATE 2-Warner Bros to back Blu-ray DVD format exclusively

3 Min Read

(Adds comment from Toshiba, analysts, background)

NEW YORK/LOS ANGELES, Jan 4 (Reuters) - Time Warner Inc's (TWX.N) Warner Bros studio on Friday said it would exclusively release high-definition DVDs in Sony Corp's (6758.T) Blu-ray format, dealing a big blow to Toshiba Corp's (6502.T) rival HD DVD technology.

Some saw the move as an end to the war that has confused consumers and delayed the development of a multibillion-dollar market. Warner Bros, Hollywood's biggest seller of DVDs, represents about 18 to 20 percent of sales in the United States and was one of the few studios that backed both formats.

"We expect HD DVD to 'die' a quick death, versus a prolonged format war," Pali Capital analyst Rich Greenfield told investors in a note.

But Toshiba said it was "quite surprised" by the move and vowed to fight on.

Blu-ray discs outsold HD DVD by nearly two-to-one in the United States last year, but HD DVD won major allies in August when Paramount Pictures and DreamWorks Animation SKG Inc said they would go exclusively with the Toshiba technology.

"I have not seen anyone give up in this fight. Every time one shoe drops and you think 'Oh, it's over,' the other side comes up with something else," said Stephanie Prange, Home Media Magazine editor in chief.

The battle has confused consumers, she confirmed, but many people don't see the need for high-definition anyway, she added.

The stakes are particularly high because sales of traditional DVDs last year posted their first significant drop since the disc format debuted in 1997, according to Adams Media Research. Total DVD unit sales fell 4.5 percent in 2007 and sales fell 4.8 percent to $15.7 billion.

"The window of opportunity for high-definition DVD could be missed if format confusion continues to linger. We believe that exclusively distributing in Blu-ray will further the potential for mass market success and ultimately benefit retailers, producers, and most importantly, consumers," Warner Bros Chairman and Chief Executive Barry Meyer said in a statement.

News Corp's NWSa.N 20th Century Fox, Walt Disney Co (DIS.N), and Lionsgate LGF.N are among studios backing the Blu-ray format. Viacom Inc's VIAb.N Paramount studios and General Electric's (GE.N) NBC Universal release movies in HD DVD format. In addition, Sony's PlayStation 3 video game system can play Blu-ray movies while Microsoft Corp's (MSFT.O) Xbox 360 works with HD DVD.

Warner said it would continue releasing in the HD DVD format until the end of May, although those releases would follow the standard DVD and Blu-ray releases. (Reporting by Kenneth Li in New York and Bob Tourtellotte and Peter Henderson in Los Angeles; Editing by Brian Moss, Leslie Gevirtz)

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