Warner Bros. Goes Blu-ray Exclusive – Take That HD DVD!

Oh, that’s gotta hurt! In breaking news, EngadgetHD is reporting on a new press release from Warner Bros. Entertainment. Following their abandonment of TotalHD and rumors of a move to Blu, Warner has made it official. Warner will continue to release some titles on HD DVD until the end of May 2008, which will allow them to flush out previously announced HD DVD releases. Which is certainly a nicer way to handle it than Paramount and Dreamworks did when they just canceled forthcoming Blu-ray releases, even those already pressed. After May 2008, Warner will release high-definition content exclusively on Blu-ray Disc.

Warner is the last studio to be format neutral, after Paramount and DreamWorks Animation dropped Blu-ray for an 18-month exclusivity deal with HD DVD, for which they reportedly received $150-$180 million. But they’re small-fry compared to Warner. The two camps have been in a tug of war. Sony, Disney, Fox, and MGM, the major players in the Blu-ray camp, jointly account for roughly 50% of the home video market. Universal, Paramount, and DreamWorks Animation, the major players in the HD DVD camp, jointly account for roughly 30% of the home video market. Warner alone accounts for roughly 20%. By going Blu-ray exclusive, they shift the balance 70/30 in favor of Blu-ray, which is a substantial advantage. And, remember, the Paramount & DreamWorks exclusivity is reportedly for 18 months, which means it would expire in early 2009. With the market that skewed, and with past experience releasing Blu-ray, I’d expect them to go back to being neutral, if not switching camps entirely. And that’s if they don’t have an escape clause in the exclusivity contract – like “If Warner goes BD exclusive, the deal is off.”

In any case, this could be what it takes to tip the scales and end the format war. Even before this, Blu-ray has been outselling HD DVD 2:1 in the US – and by wider margins elsewhere. But nearly 35% of HD DVD titles are from Warner, and some of them are best sellers, such as 300 and the Harry Potter films. Losing Warner is going to hurt HD DVD disproportionately, while 35% of the titles may be Warner, I’d bet more than 35% of sales are from Warner. This alone could push the ratio in the US to 3:1, or better, for BD titles. And this is on top of far stronger industry support for BD and a growing number of players, combined with falling prices. And there is currently a rumor than Apple will be announcing Blu-ray drives as options in their systems at MacWorld.

EDIT: Both Toshiba and the HD DVD Promotional Group have issued replies.

Warner’s press release was posted by Deadline Hollywood Daily:

WARNER BROS. ENTERTAINMENT TO RELEASE ITS HIGH-DEFINITION DVD TITLES EXCLUSIVELY IN THE BLU-RAY DISC FORMAT BEGINNING LATER THIS YEAR Decision Made in Response to Strong Consumer Preference for Format

(January 4, 2008 – Burbank, CA) – In response to consumer demand, Warner Bros. Entertainment will release its high-definition DVD titles exclusively in the Blu-ray disc format beginning later this year, it was announced today by Barry Meyer, Chairman & CEO, Warner Bros. and Kevin Tsujihara, President, Warner Bros. Home Entertainment Group.

“Warner Bros.’ move to exclusively release in the Blu-ray disc format is a strategic decision focused on the long term and the most direct way to give consumers what they want,” said Meyer. “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 Home Video will continue to release its titles in standard DVD format and Blu-ray. After a short window following their standard DVD and Blu-ray releases, all new titles will continue to be released in HD DVD until the end of May 2008.

“Warner Bros. has produced in both high-definition formats in an effort to provide consumer choice, foster mainstream adoption and drive down hardware prices,” said Jeff Bewkes, President and Chief Executive Officer, Time Warner Inc., the parent company of Warner Bros. Entertainment. “Today’s decision by Warner Bros. to distribute in a single format comes at the right time and is the best decision both for consumers and Time Warner.”

“A two-format landscape has led to consumer confusion and indifference toward high definition, which has kept the technology from reaching mass adoption and becoming the important revenue stream that it can be for the industry,” said Tsujihara. “Consumers have clearly chosen Blu-ray, and we believe that recognizing this preference is the right step in making this great home entertainment experience accessible to the widest possible audience. Warner Bros. has worked very closely with the Toshiba Corporation in promoting high definition media and we have enormous respect for their efforts. We look forward to working with them on other projects in the future.”