AFI BLOG: Media and Technology

Next-Gen DVDs: Advantage, Sony - BusinessWeek

Sony-led backers of Blu-ray seem to have pulled ahead of rivals in the race for a single high-def DVD standard

It’s a fight with more plot twists and intrigue than a Hollywood thriller. For two years now, rival camps have been battling over which new DVD format will prevail: Blu-ray, which is backed by Sony (SNE) and a consortium of 170 other companies, or HD DVD, which is being championed by Toshiba (TOSBF), Microsoft (MSFT), and others. Both technologies promise crisper video that looks better on the new generation of flat-panel, high-definition TVs. And the winner stands to control a lucrative new market worth billions. Each side has been competing to win the backing of the major movie studios. Only Warner Bros. (TWX), which currently uses both formats, is still playing hard to get.

Now, with the Jan. 7 International Consumer Electronics Show fast approaching, Sony and Toshiba are keen to announce they have won over Hollywood’s last holdout. In the meantime, they are falling over themselves to woo Warner. While either side could prevail, the Sony group has suddenly emerged as the front-runner.

Why? Because despite a setback this summer when the HD DVD companies signed up Paramount Pictures (VIA) and DreamWorks Animation (DWA), the Blu-ray forces have still lined up more studios than the HD DVD side. Plus this year, the Sony team has sold more than twice as many discs. “The rumor is that Warner is coming aboard soon,” says Michael Burns, vice-chairman of studio Lionsgate (LGF), which makes its movies available on the Sony-backed format. “That will make it awfully tough for HD DVD to stay in this game.” (Sony declined to comment, and Toshiba only would say it is “in regular contact with the studios.”)

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