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Warner Opens Blu-ray Door – Will Paramount Step Through?

The latest salvo in the war between the Blu-ray and HD DVD camps over which high definition format will replace the ubiquitous DVD may be little more than pop and flash — but effective nonetheless. Sony’s Blu-ray and Toshiba’s HD DVD formats have various technology industry supporters behind them, but the biggest backers come in the form of the Hollywood studios.

HD DVD is supported by DreamWorks, Paramount and Universal. Blu-ray is bolstered by Columbia, Disney, Fox, Lions Gate, Miramax, New Line and Sony. Until last week, Warner Bros. released movies for both Blu-ray and HD DVD, but that studio’s public move to Blu-ray was a big win for the Sony-backed format. It may have also opened the door for Paramount to ditch HD DVD.

According to a report in the Financial Times, Paramount is planning to drop support for HD DVD because of a contract clause that would let it switch sides after Warner Bros. moved solely to Blu-ray — giving the Blu-ray camp an industry lead in Hollywood output.

HD DVD Not Out Yet

Paramount did not immediately return inquiries from TechNewsWorld, but studio representatives have reportedly denied the assertion in the Financial Times that it would ditch HD DVD, noting that the studio’s current plan is to continue supporting Toshiba’s format.

It’s still possible, though, that Hollywood power players are working all angles.

“You can’t call it [the HD DVD/Blu-ray war] definitively right now, because this is not about technology, and this is not about which one is the better technology. This is about money — about negotiations going on,” Van Baker, vice president of media industry research for Gartner, told TechNewsWorld.

Back Room Dealing

“If people still smoked, it would be smoked-filled back rooms — this is the big boys negotiating over licensing terms and royalty fees, and the studies are ultimately the deciders in this,” Baker explained. “None of the other stuff matters. Gaming doesn’t matter, the PC market doesn’t matter — it’s all about the movie distribution.”

For the Blu-ray consortium that developed and created the technology — those that own some sort of financial stake in it, at least — winning the war with HD DVD will mean that Blu-ray’s market size will grow, which means that it’ll generate more revenue in the form of licensing fees and royalties for Blu-ray drives in PCs, for any Blu-ray disc, and for Blu-ray players. The stakes are high. If Blu-ray or HD DVD doesn’t get an upper hand soon, both formats may fall prey to HD online downloads before either format has a chance to find its way into living rooms around the world.

For now, if Paramount really does stick with HD DVD, who’s in the lead?

“I was talking to a buddy of mine who was walking the floor at CES (the Consumer Electronics Show), and he said, ‘The HD DVD booth, which is huge, is like a ghost town, and right across the aisle the Blu-ray booth is jammed,'” Baker noted. “I mean, clearly the indications are that Blu-ray has all the momentum.”

The Kingmaker

Still, even if Paramount should move to the Blu-ray camp wholeheartedly, it might not change anything at all.

“Who it boils down to, for all intents and purposes, is NBC Universal,” Baker said.

“Universal has been in the HD DVD camp since day one, they haven’t moved once, they haven’t wavered. They are the kingmaker, and if they flip, it’s over,” he explained. “The only remaining obstacle for Blu-ray is to get Universal to flip. And if I was a bettin’ man, I’d say that was probably going to happen sometime this year.”

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