Netflix to back Blu-ray exclusively

Company to phase out HD DVD by end of year

By Danny King -- Video Business, 2/11/2008

FEB. 11 | Netflix will phase out Toshiba’s HD DVD by the end of the year in favor of Sony’s competing Blu-ray format, the company said Monday.

Netflix, the largest U.S. movie-rental service via mail, cited Warner Bros.’s decision last month to exclusively release in Blu-ray starting in June as a reason to move toward a single format. Of the six major studios, only Paramount and Universal will publish in HD DVD.

“We’re now at the point where the industry can pursue the migration to a single format,” said Ted Sarandos, chief content officer at Netflix, in a statement today. “We expect that all of the studios will publish in the Blu-ray format and that the price points of high-def DVD players will come down significantly.”

Also on Monday, Best Buy said it would market and merchandise Blu-ray as the preferred high-def format, though it will continue to stock HD DVD.

Jodi Sally, vice president of marketing at Toshiba’s DAV Group, in a statement: "Toshiba will continue to study the market impact and value proposition for consumers, particularly in light of our recent price reductions on all HD DVD players."

Netflix has about 400 Blu-ray titles among its inventory of about 90,000 DVD titles. Netflix chief financial officer Barry McCarthy said at a conference last week that the company hasn’t ruled out raising prices on high-definition rentals if a resolution to the format war between Sony’s Blu-ray and the Toshiba-led HD DVD drives costs up, McCarthy said.

“If a winner emerges and we experience some margin compression if a large number of subscribers rent in high-def, we’ll weigh the options of increasing prices,” McCarthy said last week.

Netflix recently sent its subscribers an e-mail notifitying them of the upcoming HD DVD change. It read: 

You’re receiving this email because you have asked to receive high-definition movies in the HD DVD format. As you may have heard, most of the major movie studios have recently decided to release their high-definition movies exclusively in the Blu-ray format. In order to provide the best selection of high-definition titles for our members, we have decided to go exclusively with Blu-ray as well. 

While we will continue to make our current selection of HD DVD titles available to you for the next several months, we will not be adding additional HD DVD titles or reordering replacements.

Toward the end of February, HD DVDs in your Saved Queue will automatically be changed to standard definition DVDs. Then toward the end of this year, all HD DVDs in your Queue will be changed to standard definition DVDs. Don’t worry, we will contact you before this happens.

We’re sorry for any inconvenience. If you have any questions or need further assistance, please call us at 1 (888) 638-3549.

- The Netflix Team

Netflix spokesman Steve Swasey, responding  to a question about whether the decision to back Blu-ray exclusively was to customer complaints that high-def titles were taking a long time to ship, said  "We’ll be able to use the resources for both formats and put them into Blu-ray."