Report predicts studios will hedge high-def bets

Screen Digest: By 2011, U.S. will be evenly split between Blu-ray, HD DVD

By Ned Randolph -- Video Business, 9/17/2007

SEPT. 17 | The high-definition war between Blu-ray Disc and HD DVD will last for several years, forcing studios to support both formats or risk losing out on hundreds of millions of dollars in consumer spending, predicts international media research firm Screen Digest in a new report issued Monday.

The holiday season this year will be critical to high-definition sales but not in deciding the format war, said Richard Cooper, Screen Digest video analyst. “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,” the report says. “We believe that eventually most will decide to offer their titles on both HD DVD and Blu-ray in order to maximize their returns.”

Recent decisions by Paramount and DreamWorks to support HD DVD exclusively gave more life to the format, which serves to extend the format war, Screen Digest maintains.

Screen Digest predicts that both formats have enough individual studio support to co-exist for the foreseeable future, which will extend the format war and cost those studios who pick sides to miss out on as much as $270 million in consumer spending in western Europe and the U.S. in 2008 alone.

“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,” the firm said in Monday’s release. Blu-ray’s stronger sales, however, mean that HD DVD-only supporters—led by Universal, Paramount and DreamWorks Animation—are at risk of the largest individual losses.

“With so much at stake, Screen Digest expects several single-format studios to reassess their positions during 2008,” the report says.

Blu-ray is currently outselling its HD DVD rival, but Screen Digest expects the gap to shrink as cheaper standalone players and more titles for each format come online.

Screen Digest numbers show Blu-ray accounting for 60%-65% of U.S. high-def software sales in 2007 and 2008, shrinking back to about 50% by 2011.

Cooper concludes that both formats will be adopted but at a slower rate than some in the industry was expecting.