Report: Studios Opting for Single HD DVD Format Could Lose Out

LONDON, September 18: A
new Screen Digest study
examining the evolution of the high-definition video market predicts that both
Sony’s Blu-ray Disc and HD DVD formats will be able to establish a viable
installed customer base in the future, and that Hollywood studios opting to
support a single format could lose out on more than $270 million of consumer
spending in 2008 alone.

According to Screen
Digest, while Blu-ray Disc is
currently outselling rival HD DVD in both the U.S. and in Europe,
Blu-ray-exclusive studios Sony, Fox and Disney could miss out on $175 million
in consumer spending by not publishing their films on HD DVD. However,
Blu-ray’s stronger sales also mean that HD DVD-only supporters are at risk of
making the largest individual losses. With so much at stake, Screen Digest expects several single-format studios to reassess
their positions during 2008, and that most studios will eventually become
format agnostic.

Screen Digest believes that the decision by Paramount to
exclusively support the HD DVD format actually makes it more likely that other
studios will now move to a format-agnostic position. The decision has
effectively secured HD DVD’s immediate future, clearing the way for the other
studios that currently support one platform only to move to an agnostic
position without being the studio solely responsible for prolonging a format
war, or for killing off one of the formats.

The report also notes that
a crucial factor in how the high-definition market will evolve is the level of
hardware support available to each format. Both formats benefit from a growing
range of standalone video disc players, at ever lower prices. However, Blu-ray
currently enjoys a significant advantage over HD DVD because it can also be
played on Sony’s PlayStation 3 games console. To date, PS3 sales have exceeded
total standalone player sales (irrespective of format) by a ratio of six to
one. Although Screen Digest’s
research shows that each PS3 household buys far fewer movie discs than each
standalone household, their sheer numbers still provide significant buying
power. Screen Digest expects
sales of Blu-ray and HD DVD to even out as hi-def hardware becomes more
affordable and more titles become available on both formats.

Richard Cooper, a Screen
Digest Video analyst, commented:
“Christmas 2007 is going to be critical for the hi-def video business. Both
formats will be seeking to secure consumer buy-in to their proposition during
the critical holiday season but with so much at stake on both sides we think it
is highly unlikely that one format will emerge as the ‘winner.’ Once it becomes
clear that both formats are gaining customer acceptance, studios that have
chosen to support one format over the other will realize that they are missing
out on potential sales and will have to decide how long they can afford to
place principle over profit. We believe that eventually most will decide to
offer their titles on both HD DVD and Blu-ray in order to maximize their returns.”