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Tuesday, August 21, 2007

HD DVD's Last Ditch Effort?

Today's news that Paramount and DreamWorks Animation will release movies in HD DVD only feels like a last-ditch effort to give HD DVD a leg up over Blu-ray...especially because financial incentives are involved, and especially because the exclusive agreement could be for as short as a year.

From Brooks Barnes' NY Times coverage:

    ...Paramount and DreamWorks Animation together will receive about $150 million in financial incentives for their commitment to HD DVD, according to two Viacom executives with knowledge of the deal but who asked not to be identified.

    The incentives will come in a combination of cash and promotional guarantees. Toshiba, for instance, will use the release of “Shrek the Third” as part of an HD DVD marketing campaign.

In the Wall Street Journal, Sarah McBride writes:

    The exclusive could be for as little as a year, according to two people familiar with the situation.

    The studios won undisclosed financial incentives for exclusive commitments to release high-definition movies onto HD DVD only. A person familiar with the situation said the incentives included both cash payments and soft incentives such as marketing promotions.

    ...Prices for hardware to play each of the dueling formats are dropping. Toshiba HD DVD players are now available for less than $300, compared with about $449 for the least-expensive Blu-ray player. The combination of the less expensive players and the hot titles that will be available on HD DVD could help steer many consumers in that direction over the key holiday sales period.

Variety notes that as recently as March, DreamWorks Animation CEO Jeffrey Katzenberg had been non-plussed by high-def discs in general. Daniel Frankel and Ben Fritz write:

    "Blu-Ray and HD DVD are a niche business," [Katzenberg] said in March on a conference call with Wall Street analysts. "They're not going to become the next platform. I think for the general consumer, there is not a big enough delta between the standard DVD in terms of where it is today and the next generation."

    That's a far cry from the statement he put out on Monday: "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."

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