Warner Bros. to Sell High-Definition DVDs in Blu-Ray (Update3)
By Gillian Wee
Jan. 4 (Bloomberg) -- Time Warner Inc.'s Warner Bros. Entertainment will stop selling DVDs made with Toshiba Corp.'s high-definition technology, bolstering Sony Corp.'s Blu-ray in the battle to become the next home entertainment standard.
Warner Bros. had been releasing movies in both formats. It will drop Toshiba's HD DVD format at the end of May, the studio said today in an e-mailed statement.
The decision benefits Tokyo-based Sony, which built Blu-ray into its PlayStation 3 video-game console to stoke demand from consumers who don't want to buy a separate HD DVD player. A coalescing of major studios around one format would help them to fight a flattening in DVD sales at a time when movie production has been hampered by a two-month old writers strike.
``We expect HD DVD to `die' a quick death,'' Rich Greenfield, an analyst at Pali Capital in New York, wrote on his blog today. ``While we still expect overall consumer spending on DVDs to decline at least 3 percent in 2008, the risk of an even worse 2008 DVD environment has most likely been avoided by Warner's early 2008 decision.''
Greenfield has a ``neutral'' rating on New York-based Time Warner and doesn't own any of the shares, which fell 42 cents, or 2.6 percent, to $15.91 at 4:01 p.m. in New York Stock Exchange composite trading and have lost 29 percent in the past year.
Toshiba is ``surprised'' by the decision to abandon HD DVD, given Warner Bros.' level of participation in developing the standard, the Tokyo-based company said in a statement. ``We will assess the potential impact of this announcement with the other HD DVD partner companies and evaluate potential next steps.''
Blow to HD DVD
The battle between the two technologies has left studios scrambling to predict which format might prevail. Warner Bros., the second-largest studio in 2007 U.S. box-office receipts, joins Walt Disney Co. and News Corp.'s Fox in backing Blu-ray exclusively. The top studio, Viacom Inc.'s Paramount Pictures, uses HD DVD, along with DreamWorks Animation SKG Inc. and General Electric Co.'s Universal Pictures.
Movie discs using Blu-ray's high-definition format outsold HD DVD by 2-to-1 in the first half of last year, according to Home Media Research.
Warner's move ``will further the potential for mass-market success and ultimately benefit retailers, producers, and most importantly, consumers,'' Chief Executive Officer Barry Meyer said in the statement.
Viacom, based in New York, and DreamWorks in Glendale, California, announced in August they would back the HD DVD format. At the time, Greenfield wrote on his blog that Viacom will receive $50 million and DreamWorks Animation will get $100 million from a group including Toshiba. He didn't name his sources.
