HD DVD ready to bow out of war with Blu-ray

Attention consumers: It is now safe to enter the high-definition DVD aisle.

A series of stunning moves over the last week by DVD retailers suggests the war over the next generation of at-home movie players has ended.

Yesterday, Toshiba Corp., which had strenuously promoted its favored HD DVD format against fierce competition from Sony Corp.'s preferred Blu-ray format, was said to be reevaluating its strategy.

Toshiba's apparent retreat followed announcements last week by Netflix Inc., Best Buy Co. Inc. and Wal-Mart Stores Inc. that they were dropping HD DVD from their product lines in favor of Blu-ray - the only other competitor in the fledgling high-definition DVD market.

Since their introduction 20 months ago, the dueling formats had been locked in a stalemate that thwarted many consumers from buying either, for fear of investing in the one that would lose the free-market war.

But with HD DVD now effectively marginalized, analysts say the path is clear for tech-crazed consumers to replace their conventional DVD players without fear of buying a high-tech loser.

"If I were making purchases for myself, I would consider right now Blu-ray being the best bet," Ed Moran, who monitors consumer electronics as director of product innovation for Deloitte Services L.P., of New York, said. "I think we're going to see tremendous sales."

The apparent victory for Blu-ray is akin to when VHS VCRs defeated Betamax in a battle over videocassette formats, which dominated the market before DVDs were introduced in 1997.

But there is a difference this time that analysts say they believe will fuel sales of the Blu-ray format.

At a staggering pace, consumers are replacing old-fashioned analog televisions with high-definition TV sets - a trend that takes on even greater urgency as broadcasters move to abandon analog TV signals a year from now.

"Thanks to the discounting this holiday season where you could get HDTVs for $400," there are more household with HDTVs than ever, said Richard F. Doherty, research director of the Envisioneering Group, of Seaford, N.Y.

"Sixty percent of the consumers we've interviewed in the last year and a half have said I don't want either HD DVD or Blu-ray until there's just one format," said Doherty, whose firm does market research.

With Blu-ray emerging as the winner, demand is expected to uncork in the months to come.

Several major movie studios, including Warner Bros. Entertainment Inc., have said in recent months that they would only produce DVDs in Blu-ray format. It is unclear what the other studio faction, which includes Universal Pictures and Paramount Pictures Corp., will do given they had backed Toshiba's HD DVD format.

But with retailers such as movie-rental giant Netflix defecting from HD DVD, "Blu-ray definitely has the content advantage," Moran said.

Conventional DVD players remain immensely popular. They are in 96 percent of the roughly 107 million households in the United States, compared with 3 million Blu-ray players and 1 million Toshiba-favored HD DVD players in the United States and Canada combined, Doherty said. The Blu-ray tally includes Sony PlayStation game systems.

Consumers with conventional DVD players cannot view high-definition DVDs. But owners of high-definition players may continue to view conventional DVDs on their consoles, he said.

This will not be a problem for consumers as long as movie-rental outfits, movie producers, and retailers continue to stock, produce and sell the older format DVDs.

Another consideration for consumers, however, is whether DVD players have a long-term future. Internet technology may soon advance to the point where people download and view movies online.

"The elephant in the room is how much longer until the download model becomes the prevalent model," Moran said. "I say we're talking probably about three years before . . . the average American is in a position with any satisfaction to download a movie and watch it on a large screen."

Comcast Corp. says its research shows consumers are still using DVDs and related formats. But the company is making more and more of its content available for download. "It's very easy to get a movie from your remote control," a Comcast spokeswoman said.

Analysts do not expect high-definition DVD prices to drop much this year, though promotional offers pairing free DVD players with high-definition TVs have surfaced.

Regardless of whether the Internet trumps the format entirely in several years, it will cost less in a few years to buy a high-definition DVD player.

Said Doherty: "It will probably be the size of a paperback book and may cost $39."