Paramount and its subsidiary DreamWorks announced this week that they were dropping production of Blu-ray high definition discs for future movie releases, and will go ahead exclusively with HD DVD. Up until this announcement, the studios released titles in both formats. According to an interview by (a former colleague) Melissa Perenson in PC World with Paramount CTO Alan Bell, the main reasons for the decision were that it is easier to develop interactive features and that the players cost less.
Other sources cite additional reasons: the production costs are lower, and the HD DVD titles have been more reliable. Another rumor that is widely circulated is that the DVD Forum — creators of the HD DVD format — paid for an exclusive with Paramount, that will run for the next 18 months. The PC World article reports that a Paramount spokesperson said they “never discuss business terms” of co-marketing agreements, but did not deny that there was a deal with the DVD Forum.
This news comes at a good time for HD DVD, as the Blu-ray publicity juggernaut is banging away at the fact that Blu-ray discs are currently outselling HD DVD titles. One good reason for that fact is that many PlayStation 3 owners are probably buying one or two movies just to check out how they look on their new console. Still, HD DVD players cost about half as much as Blu-Ray players, and that is likely to have an impact as the fall buying season proceeds. With manufacturers giving away five movies with most players, a unit sales advantage on the HD DVD side could rapidly alter the balance of number of discs “sold”. I still believe that Paramount is backing the ultimate winner here.
While we’re on the subject of Blu-ray versus HD DVD, let me correct a detail that seems to be widely misunderstood. Many sources, including Associated Press, cite Blockbuster’s decision to “only stock Blu-ray”. The fact is that Blockbuster tested both HD DVD and Blu-Ray in a sample of 250 stores beginning in November 2006. In June this year, the company decided to roll out the high definition support to the remaining 1,700 stores, and those stores would only be getting Blu-ray titles. The original 250 stores will still carry both formats, as will the online/mail rental service that competes head to head with Netflix. So while the decision clearly favors Blu-ray, it is not slamming the door on HD DVD. (And I guarantee you that come November, if hordes of customers with new HD DVD players come into those 1,700 stores asking for HD DVD titles, the company will change its mind quickly.)