Sony DVD move deals blow to Microsoft

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The high definition video strategies of Toshiba and Microsoft have been thrown into disarray on the eve of the consumer electronics industry’s biggest trade event of the year, following a landmark movie deal secured by rival Sony.

A decision late last week by Warner Bros to release high-definition DVDs only in Sony’s Blu-ray format would turn out to be the tipping point in the “format war” that has divided the consumer electronics industry, according to analysts.

Leaders of the rival HD DVD camp – led by Toshiba and Microsoft – over the weekend called off a number of promotional events that had been planned as the Consumer Electronics Show gets under way in Las Vegas. They also cancelled private meetings with analysts and retailers, leaving widespread uncertainty about the long-term prospects for the HD technology.

“Retailers haven’t got any clear signal” of what support will remain for HD players if most new movies are released only in the Blu-ray format, said Richard Doherty, an analyst at Envisioneering Group. “This sounds like they’re folding their tent.” One person close to the HD camp denied that the loss of Warner would lead to a capitulation, while conceding that it had caused short-term disarray.

“It was obviously a big shock to everybody, but that doesn’t mean everyone’s picked up the football and gone home,” this person said. “It’s premature to say it’s over. Things change so fast with the studios.”

Warner’s decision means that some 70 per cent of movies will be released exclusively on Blu-ray, leaving Paramount, Universal and DreamWorks as the only major studios to have signed on exclusively with HD, at least until the end of this year.

Part of the disarray in the HD camp was caused by an expectation in some quarters that Warner would instead back its technology instead of Sony’s. “We had been working with Warner for a long time and had long-term relations, going back to the original DVD technology,” Toshiba said. It added that it had received “commitments” in the past from Warner over the use of the technology, but would not comment on whether it believed the studio had broken any contractual obligations.

The loss of Warner is also a blow to Microsoft, whose software is used in the HD format and which has been one of its main backers.

But while closely allied to the HD side, Microsoft has said that the technology is only part of a medium-term strategy, and that it expects consumers to shift to downloading high-definition video within seven years – a stance that has led critics to complain that it does not want either DVD format to succeed.

Director Michael Bay, whose movies include Transfomers, wrote on his blog: “Blu-ray is just better. HD will die a slow death.”

By Richard Waters, Paul Taylor and Mariko Sanchanta in Las Vegas
Published: January 6 2008 19:15 | Last updated: January 6 2008 19:15
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Through out my years, Sony has been a passion of mine.

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