Wal-Mart picks Blu-ray in HD DVD disaster

NEW YORK (Reuters) - Wal-Mart Stores Inc on Friday abandoned the flailing HD DVD format, potentially ending a war over next-generation DVDs as it joined Best Buy and Netflix in supporting rival Blu-ray technology.

Television images are reflected on a sign for Blu-ray Discs at the 2007 International Consumer Electronics Show (CES) in Las Vegas, Nevada January 9, 2007. REUTERS/Rick Wilking

The format war between Toshiba Corp-backed HD DVD and Sony Corp’s Blu-ray, often compared to the Betamax-VHS battle in the 1980s, has slowed the development of what is expected to be a multibillion dollar high-definition DVD industry.

It also has been a thorn in the side of retailers, which have had to commit shelf space to devices from both camps even as they field complaints from customers frustrated that some films come out in HD DVD while others are released in Blu-ray.

Wal-Mart, the world’s largest retailer, announced the move as a phase-out at 4,000 U.S. Wal-Mart and Sam’s Club stores by June, saying it was responding to consumer preference.

Wal-mart’s on-staff movie and gaming blogger put the future of HD DVD in stark terms.

“So ... if you bought the HD player like me, I’d retire it to the bedroom, kid’s playroom, or give it to your parents to play their John Wayne standard def movies, and make space for a BD (Blu-ray disc) player for your awesome Hi Def experience,” Wal-Mart blogger Susan Chronister wrote in a posting.

Consumer electronics chain Best Buy Co Inc and online video rental company Netflix Inc defected to the Blu-ray camp earlier in the week.

Next-generation DVDs and players, boasting better picture quality and more capacity, were expected to help revive the $24 billion global home DVD market. But Hollywood studios had initially split their alliances between the two camps, meaning only certain films would play on a consumer’s DVD machine.

The balance of power, however, tipped toward the Sony camp in January after Time Warner Inc’s Warner Bros studio said it would only release high-definition DVDs in Blu-ray format. With that, studios behind some three-quarters of DVDs are backing Blu-ray, although some release in both formats.

Toshiba responded by slashing prices of HD DVD players, but Wal-Mart’s move cast doubt on the success of that strategy.

“Where are you going to sell the cheaper high-def format if not at Wal-Mart?” said Stephanie Prange, editor in chief at Home Media Magazine, who in January had cautioned against declaring Blu-ray the winner.

“The dominoes are falling pretty quickly .... I think it’s over,” she said, tallying up previous wins for Blu-ray at Target Corp and Blockbuster Inc as well.

Blu-ray also has support from News Corp’s 20th Century Fox, Walt Disney Co and Lions Gate Entertainment Corp. Sony’s PlayStation 3 game console can also play Blu-ray films.

To be sure, Toshiba has secured agreements with studios including NBC Universal’s Universal Pictures, Viacom Inc’s Paramount Pictures and DreamWorks Animation SKG Inc.

Microsoft Corp’s Xbox 360 also currently works only with HD DVD. However, Microsoft said in January it could consider supporting Blu-ray technology at consumers’ behest.

Blu-ray said the Wal-Mart move showed its format had emerged the winner.

Toshiba could not be reached to comment on Wal-Mart’s move, while earlier on Friday, the Hollywood Reporter quoted unidentified industry sources as saying Toshiba was widely expected to pull the plug on HD DVD in the coming weeks.

Toshiba spokeswoman Junko Furuta said none of what was reported in the magazine had been decided. “We cannot comment on speculation,” she said.

Additional reporting by Kiyoshi Takenaka in Tokyo and Peter Henderson in Los Angeles; editing by Phil Berlowitz, Gerald E. McCormick, Richard Chang