Blu-ray / HD DVD cold war turns hot

The BD / HD DVD ‘war’ has been something of a cold war for a while, with both sides probing the other and not much actual shooting going on. Mainly just trading marketing jabs and quotes in the press. Last week things started to heat up a bit with Disney kicking off their “Magical Blu-ray Tour”, then announcing titles out into late 2008, and starting promotions for Cars. And Sony announcing $100 million HD marketing effort. A little sniping across the DMZ.

Well, today all hell broke loose. Paramount opened up with the big guns. Back during the ‘game of chicken’ before launch, Paramount was in the HD DVD camp. When it became clear a format war was inevitable, Paramount went neutral – promising to release titles on both formats. Recently they’d even been considered to be favoring BD, using BD’s higher capacity to include content or features not on the HD DVD. And, as with the market in general, their BD versions outsold HD DVD roughly 2:1. So there was some talk of them going BD exclusive, but no one really expected them to make a move.

Today they surprised everyone – not just by going exclusive, but by going exclusive with HD DVD! That’s right, going forward all Paramount HD releases will be exclusive to HD DVD. And, on top of that, all DreamWorks Pictures, DreamWorks Animation, Paramount Vantage, Nickelodeon Movies, and MTV Films releases will also be exclusive to HD DVD – as Paramount handles their home video distribution. That means films such as Transformers, Blades of Glory, and Shrek the Third will be exclusively on HD DVD – even though they’d been up for pre-order on BD until now.

There is one major exception – movies directed by Steven Spielberg will NOT be exclusive to HD DVD. To date the only Spielberg film slated for high-def is Close Encounters of the Third Kind, from Sony on BD. (And that looks like it will be one hell of a release!) Indications are that he favors Blu-ray and that, if Paramount releases any of his films on high-def, they’ll either be BD or at least dual-format. I’ll include the full press release below.

So, why did they do this? Well, this is what they had to say in their press release:

The companies each said that the decision to distribute exclusively in the HD DVD format resulted from an extensive evaluation of current market offerings, which confirmed the clear benefits of HD DVD, particularly its market-ready technology and lower manufacturing costs.

Seems odd considering their own releases were selling on BD 2:1 over HD DVD. But wait, that doesn’t seem to be the full story. There is a report that Paramount and DreamWorks were effectively paid-off to make this move – $50 million to Paramount and $100 million to DreamWorks to go exclusive on HD DVD. Of course, paying a studio directly to exclusively support a format could lead to legal troubles, so these funds are for ‘promotional considerations’. It looks like the HD DVD camp knew that they were on the ropes and decided to go all out for this holiday season. Universal alone wasn’t going to carry the format, but this shift gives HD DVD a boost. It isn’t enough to save HD DVD by itself, but it gives HD DVD some more life, and more time to carve out a niche in the market while they look for a more permanent solution. It still comes down to the holiday shopping trends, only now it isn’t quite the sure thing it was for BD to knock out HD DVD. HD DVD could come through battered but still standing, leading to another round – and a longer war.

The BDA made a very circumspect comment on the move:

“The decision seems oddly timed given Blu-ray’s tremendous momentum both with consumers and with retail. Blu-ray title sales continue to outpace HD-DVD sales by nearly a 2 to 1 margin, and major retailers have expressed a strong preference for Blu-ray. Moreover, the price delta between HD DVD and Blu-ray players has been greatly reduced in the past few months, a trend that is on its way to eliminating any perceived cost advantage the HD DVD format has claimed to have. Under these circumstances, we can only imagine what could have enticed them to walk away from a format that is clearly selling significantly more software than the ailing HD-DVD format.” – Andy Parsons, Chairman, Blu-ray Disc Association US Promotions Committee

It didn’t take long for the BD camp to respond – Fox and MGM re-affirmed their exclusive support for Blu-ray, and backed that up by announcing 29 titles and also stating that they will be using BD-Java and BD-Live for features on some of the titles. 19 catalog titles and 10 new releases ‘day and date’ with the DVD. Since the news was rushed out in response to Paramount’s announcement, not all of the details are out yet – but the rest of the dates and more details on the content of each release should be out soon. Fox and MGM were early supporters of BD, but neither have released any BD titles in months. They stopped around the time AACS was cracked, and it was widely believed that they were waiting for BD+, as an added layer of anti-piracy, was available. As BD+ recently became available, and Fox licensed it immediately, this announcement is not unexpected – but it is still impressive for the number of titles coming just this year. And it sounds like there will be more titles as of yet unannounced. The releases are:

October 2nd
The Day After Tomorrow
Master and Commander

October 9th
28 Days Later
Amittyville Horror
Edward Scissorhands
The Fly
From Hell
Robocop

November 6th
A Bridge Too Far
Battle of Britain

November 13th
I, Robot

November
Die Hard
Die Hard 2: Die Harder
Die Hard With a Vengeance
Red Dawn

December 4th
Cast Away
Independence Day
Mr. and Mrs. Smith
Ronin

New ‘day and date’ releases:
Fantastic Four: Rise of the Silver Surfer
Live Free or Die Hard
Prison Break

+ 7 more not yet named

I’ll also put their full press release below.

For me this doesn’t change much. I will not be buying HD DVD this year, and I plan to wait well into next year before deciding if I’ll buy it at all. If HD DVD survives this holiday season and shows signs of being healthy and sustainable next year, I’ll consider it. Until then I won’t waste any money on it. I still expect HD DVD to die in 2008. It isn’t a slam dunk as it was before this mornings move, but even with Paramount and DreamWorks in their camp, HD DVD has a lot of challenges to beat to remain viable. Studio support is still slanted in favor of BD, as is consumer electronics and computer industry support. And BD is simply a better format, technologically. If HD DVD needs to buy friends, it isn’t viable. I still recommend that people do not buy HD DVD at all. Either buy Blu-ray or nothing. I’d prefer people buy Blu-ray, as every purchase helps tip the balance toward BD and thereby helps end this format war faster. Buy Paramount’s existing BD releases, but don’t touch their HD DVD releases. Let them have weak sales this holiday season, and realize their mistake.

I expect this kind of aggressive move to really stir the hornets nest. The Fox and MGM response is likely just the first salvo. There are literally billions of dollars in future revenue at stake. Sony alone is spending $100 million to market HD, including Blu-ray, through this holiday season. Expect the rest of the BD camp to spend similarly large amounts. I would not be surprised to see Sony make some aggressive moves with pricing on their standalone BD players, and perhaps the PS3, to eliminate Toshiba’s price advantage on players. Sony already dropped the BDP-S300 from $599 to $499 between announcing the unit and the retail launch, primarily in response to Toshiba’s pricing. You’ll probably see some very low prices on BD players, along with free movie offers, rebates, etc, this holiday season. It should be great for consumers looking to pick up a player.

Aug 20, 2007 12:40 ET

Paramount and DreamWorks Animation Each Declare Exclusive Support for HD DVD

Movies Distributed by Paramount Home Entertainment Including Paramount Pictures, DreamWorks Animation SKG, DreamWorks Pictures, Paramount Vantage, Nickelodeon Movies and MTV Films to be Released Exclusively in HD DVD

Exclusive Program To Begin with Release of “Blades of Glory,” Followed by “Transformers” and “Shrek the Third,” Films Representing More Than $1.5 Billion in Combined Worldwide Box Office

LOS ANGELES, Aug. 20 /PRNewswire-FirstCall/ — Paramount Pictures, a unit of Viacom Inc. (NYSE:VIA) (NYSE:and) (NYSE:VIA.B) and DreamWorks Animation SKG (NYSE:DWA) , each announced today that they will exclusively support the next-generation HD DVD format on a worldwide basis. The exclusive HD DVD commitment will include all movies distributed by Paramount Pictures, DreamWorks Pictures, Paramount Vantage, Nickelodeon Movies and MTV Films, as well as movies from DreamWorks Animation, which are distributed exclusively by Paramount Home Entertainment.

The companies each said that the decision to distribute exclusively in the HD DVD format resulted from an extensive evaluation of current market offerings, which confirmed the clear benefits of HD DVD, particularly its market-ready technology and lower manufacturing costs. Paramount Home Entertainment will launch its exclusive HD DVD program with the release of the blockbuster comedy hit “Blades of Glory” on August 28th and follow with two of the biggest grossing movies of the year “Transformers” and “Shrek the Third”. These three titles alone represent more than $1.5 billion in box office ticket sales worldwide.

“The combination of Paramount and DreamWorks Animation brings a critical mass of current box office hits to consumers with a line-up of live action and animated films that are perfect for HD DVD,” stated Brad Grey, Chairman and CEO of Paramount Pictures, which is currently the leading studio in domestic box office. “Part of our vision is to aggressively extend our movies beyond the theater, and deliver the quality and features that appeal to our audience. I believe HD DVD is not only the affordable high quality choice for consumers, but also the smart choice for Paramount.”

“We decided to release “Shrek the Third” and other DreamWorks Animation titles exclusively on HD DVD because we believe it is the best format to bring high quality home entertainment to a key segment of our audience — families,” stated DreamWorks Animation CEO, Jeffrey Katzenberg. “We believe the combination of this year’s low-priced HD DVD players and the commitment to release a significant number of hit titles in the fall makes HD DVD the best way to view movies at home.”

With the rapid increase of HD TV screens in households, and audiences wanting to enjoy the total entertainment experience, HD DVD has emerged as the most affordable way for consumers to watch their movies in high definition. In addition to pristine quality, HD DVD also offers consumers the chance to personalize the movie-watching experience, to interact with their movies and even to connect with a community of other fans.

Paramount Home Entertainment will issue new releases day and date as well as catalog titles exclusively on HD DVD. Today’s announcement does not include films directed by Steven Spielberg as his films are not exclusive to either format.

About Paramount Pictures Corporation

Paramount Pictures Corporation (PPC), a global producer and distributor of filmed entertainment, is a unit of Viacom (NYSE:VIA) (NYSE:VIA.B) , a leading content company with prominent and respected film, television and digital entertainment brands. The company’s labels include Paramount Pictures, Paramount Vantage, Paramount Classics, MTV Films, Nickelodeon Movies and DreamWorks Studios. PPC operations also include Paramount Digital Entertainment, Paramount Home Entertainment, Paramount Pictures International, Paramount Licensing Inc., Paramount Studios and Worldwide Television Distribution.

About DreamWorks Animation SKG

DreamWorks Animation is principally devoted to developing and producing computer generated, or CG, animated feature films. With world-class creative talent, a strong and experienced management team and advanced CG filmmaking technology and techniques, DreamWorks Animation makes high quality CG animated films meant for a broad movie-going audience. The Company has theatrically released a total of fourteen animated feature films, including Antz, Shrek, Shrek 2, Shark Tale, Madagascar, Wallace & Gromit: The Curse of the Were-Rabbit, Over the Hedge, Flushed Away, and Shrek the Third. DreamWorks Animation’s newest release, Bee Movie, opens in theaters November 2, 2007.

Source: Paramount Pictures; DreamWorks Animation

CONTACT: Mary Kincaid of Paramount Home Entertainment, +1-323-956-3653,
Mary_Kincaid@Paramount.com; or Rich Sullivan of DreamWorks Animation Investor
Relations, +1-818-695-3900, ir@dreamworksanimation.com; or Dane Estes of Weber
Shandwick, +1-425-452-5486, Dane.estes@webershandwick.com, for the HD DVD
Promotional Group

—-

For Immediate Release

FOX AND MGM UNVEIL BLU-RAY EXCLUSIVE WORLDWIDE RELEASES FOR 2007

29 Titles To Debut Packed With Soon-to-Be-Announced BD Industry ‘Firsts’

PLUS Fox’s First TV Title ‘PRISON BREAK’ FANTASTIC FOUR: RISE OF THE SILVER SURFER
And LIVE FREE OR DIE HARD and Other Titles To Debut Day-and-Date on BD/DVD

– Blu-ray Out-Performing HD DVD 2-to-1 At Retail in 2007 –

August 20, 2007 — LOS ANGELES–(BUSINESS WIRE)– Twentieth Century Fox Home Entertainment (TCFHE) today unveiled an aggressive global Blu-ray Disc release strategy including 29 new release and “must-have” catalog titles that runs through the end of the 2007 calendar year. Among the many highlights of the impressive worldwide slate are six day & date BD/DVD new theatrical releases from Fox including the $241 million box-office family favorite FANTASTIC FOUR: RISE OF THE SILVER SURFER and the $335 million box-office action powerhouse LIVE FREE OR DIE HARD, four day & date BD/DVD (U.S. only) new theatrical releases from MGM, 19 ‘must-have on BD’ films from the two studios’ libraries, Fox’s first-ever TV release on BD – PRISON BREAK — and Fox’s intention to release at least one state-of-the-art title per month featuring numerous BD ‘firsts.’

The only high-definition packaged media universally supported by the film, music, gaming and computer industries, BD is the #1 selling high-definition packaged media. In fact, on a worldwide basis, BD is averaging nearly 70% market-share per week of all high definition titles sold this year and, in the U.S., it is out-performing HD DVD by a margin of 115%.

“Given that Blu-ray has consistently outsold HD DVD all year, and this is the case for any titles released by any studio in both formats, we believe that the time is right for us to accelerate our activities and help convert the nearly 60 million high definition households worldwide into Blu-ray households,” noted Mike Dunn, President Worldwide, Twentieth Century Fox Home Entertainment.

“By the end of this calendar year there will be expansive availability of technically vibrant releases featuring never-before-seen, advanced BD-J interactivity as well as a broad offering of playback devices at attractive prices that will prove to any doubting consumers once and for all that Blu-ray is the only way.”

“And as Blu-ray continues to grows stronger, it has become survival of the fittest which is most apparent in the retail landscape where our eager and growing global Blu-ray consumer base has caused a shift that is forcing the allocation of more space to the format that is selling the best. And, in many recent instances of note, top retailers in North America are choosing to promote the Blu-ray format exclusively in their stores,” continued Dunn.

Among the BD industry ‘firsts’ from the Studios’ upcoming global release slate are picture in picture capability, enhanced viewing and surround sound modes with the ability to mix and match picture and sound, direct access to in-movie features through one of the four colored buttons on the BD remote and the most technically vibrant BD-Java interactive multi-player challenge and trivia games to date. The Studios’ slate also takes full advantage of BD-Live functionality this fourth quarter. Internet-connected consumers will enjoy unique, title specific “web-enabled” interactive features and games and “web-exclusive” downloadable content with the ability to connect and interact with other broadband BD users worldwide.

Cementing its leadership position within the industry – previous BD releases NIGHT AT THE MUSEUM and X-MEN THE LAST STAND rank in the Top 20 best-sellers – the vast majority of the Studios’ upcoming global slate will be presented on 50 GB dual-layer discs with advanced BD-J interactivity and feature numerous Blu-ray exclusive high-definition bonus materials that further realizes BD’s incredible potential. Consumers will enjoy the superior video and audio elements of AVC encoding and Lossless HD audio on many of the coming titles as well as enhanced and integrated menus, personal scene selections, search indexing, trivia and other title specific games and high-definition bonus materials.

Upcoming BD-J features exclusive to priority catalogue titles from Fox and MGM include an “Alien Scavenger Hunt” (INDEPENDENCE DAY) that challenges players to earn points by identifying the correct number of aliens in select scenes to unlock additional bonus features; a “Global Warming Trivia Track” (THE DAY AFTER TOMORROW) where users must correctly answer questions about global warming to keep the Earth’s temperature from rising and being destroyed; and a historical and geographical pop-up map (MASTER & COMMANDER) that tracks the location of Captain “Lucky” Jack Aubrey and his enemies.

Listed below are the upcoming Blu-ray Disc releases from Fox and MGM excluding new theatrical day & date BD/DVD releases.

EXACT TITLE CONFIGURATIONS TO FOLLOW IN THE COMING WEEKS.
TITLE N.A. RELEASE INTERNATIONAL RELEASE
MASTER & COMMANDER OCT. 2 OCT.
THE DAY AFTER TOMORROW OCT. 2 NOV.
FROM HELL OCT. 9 OCT.
THE FLY (1986) OCT. 9 Q1 08
EDWARD SCISSORHANDS OCT. 9 NOV.
28 DAYS LATER OCT. 9 North America Only
ROBOCOP (MGM) OCT. 9 DEC.
AMITYVILLE HORROR (1979) (MGM) OCT. 9 North America Only
BATTLE OF BRITAIN (MGM) NOV. 6 Q1 08
A BRIDGE TOO FAR (MGM) NOV. 6 Q1 08
I, ROBOT NOV. 13 Q1 08
DIE HARD NOV. NOV.
DIE HARD 2: DIE HARDER NOV NOV.
DIE HARD WITH A VENGEANCE NOV. NOV.
RED DAWN (MGM) NOV. Q1 08
MR. AND MRS. SMITH DEC. 4 DEC.
INDEPENDENCE DAY DEC. 4 DEC.
CAST AWAY DEC. 4 North America Only
RONIN (MGM) DEC. 4 DEC.

Blu-ray Disc is a next generation optical disc format developed for high-definition video and high-capacity software applications. A single-layer Blu-ray Disc holds up to 25 gigabytes of data and a dual-layer Blu-ray Disc holds up to 50 gigabytes of data. This greater storage capacity enables the Blu-ray Disc to store over six times the amount of content than is possible with current DVDs, and is particularly well-suited for high definition feature films with extended levels of additional bonus and interactive material. Blu-ray also features the most advanced copy protection, player backward compatibility with the current DVD format, connectivity and advanced interactivity. Fox takes advantage of the next generation format’s high definition technology and advanced functionality to present its titles with the highest quality audiovisual elements. Showcasing picture quality with six times the resolution of DVD and theater quality “uncompressed” audio for the purest digital sound, the cutting-edge discs also feature enhanced and integrated menus, games, high-definition bonus materials and Java-encoding for more dynamic and sophisticated interactivity.

The Studio’s commitment to emerging technologies is dedicated to enhancing the consumer experience of its products and providing for backward compatibility with their existing home entertainment libraries while also aggressively protecting its intellectual property from piracy. The Blu-ray companies fully embrace the Studio’s steadfast commitment to the fight against piracy and the preservation of the integrity of its properties. Twentieth Century Fox is a member of the Board of Directors of the Blu- ray Disc Association.

A recognized global industry leader, Twentieth Century Fox Home Entertainment LLC (TCFHE) is the worldwide marketing, sales and distribution company for all Fox film and television programming on VHS, DVD and Blu-ray Disc (BD) as well as acquisitions and original productions. The company also releases all products around the globe for MGM Home Entertainment. Each year TCFHE introduces hundreds of new and newly enhanced products, which it services to retail outlets — from mass merchants and warehouse clubs to specialty stores and e-commerce – throughout the world. Twentieth Century Fox Home Entertainment LLC is a subsidiary of Twentieth Century Fox Film Corporation, a News Corporation company.