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HD-DVD Rollout, Set for Holidays, Gets Scaled Back

By SARAH MCBRIDE Staff Reporter of THE WALL STREET JOURNAL August 10, 2005

The much-touted holiday rollout of HD-DVD, one of two planned formats for next-generation DVDs, seems to be losing steam. HD-DVD, backed by Toshiba Corp. and others, is battling Blu-ray, backed by Sony Corp., to become the dominant format in the next generation of DVDs, which promises high-definition pictures and other features. Supporters of the brand-name HD-DVD earlier this year pledged a strong fourth-quarter launch as a way of getting a leg up in the heated competition, even as talks proceeded to unite the rival technologies in an effort to prevent a format war. Blu-ray has said that its product will be available sometime in 2006.

But it appears that both hardware and software deliveries of HD-DVD products will be lighter than expected, blunting HD-DVD's first-mover advantage. Viacom Inc.'s Paramount Pictures, which had committed to releasing more than 20 titles on the HD-DVD brand starting in the fourth quarter, now won't release any in the quarter, according to a person familiar with the matter. General Electric Co.'s NBC Universal plans to release about a dozen HD-DVD titles in the fourth quarter, scaling back from the 16 titles it had announced in January.

Time Warner Inc.'s Warner Home Video, the biggest backer of the format, says its exact plans are up in the air, as it waits to see whether a compromise is reached between the rival formats. "If there is a unification of formats, we would want to work toward that," said Jim Cardwell, president of Warner Home Video, who didn't rule out a holiday-season launch for Warner movies on HD-DVD.

Warren Lieberfarb, a consultant to HD-DVD backers, characterized rollout efforts as "no big deal" and added that "there was never a rock-solid date about the fourth quarter."

But many HD-DVD backers, including hardware makers such as Toshiba, had counted on a big fourth-quarter rollout to get a jump on the competition. In fact, Toshiba will likely be the only company to introduce an HD-DVD player in the U.S. in time for the holidays, although some computers with HD-DVD-ready drives may be available.

Just three months before players and movies should be on store shelves to catch the wave of holiday shoppers, it is unclear how much promotion is planned. A Toshiba America spokeswoman said the company was currently talking to retail partners about the size of the launch for its HD-DVD players, and what kind of marketing campaign to run.

Circuit City Stores Inc., the electronics retailer, says it plans to carry the Toshiba player if it is ready, but doesn't expect strong sales while consumers are still unfamiliar with the product and its cost, expected to be around $1,000, remains high. "We don't have a lot of information yet," says Randy Wick, general-merchandising manager for home audio and video at Circuit City.

It is more likely the product will do well among specialty retailers that cater to so-called early adopters of technology. "It's going to be one of the highest-demand products in our store," said Casey Crane, president of Ken Crane's Home Entertainment, a Southern California retail chain. "We're the movie-industry capital -- the people here are definitely leading edge."

Late last month News Corp.'s Twentieth Century Fox, the last studio that hadn't yet committed to bringing out titles in one of the two formats, said it would release titles in the Blu-ray format, joining Sony Pictures and Walt Disney Co.

Fox's move leaves the studios roughly evenly split when it comes to next-generation DVD, with about half of DVD releases in the Blu-ray camp and half in HD-DVD, according to Tom Adams of Adams Media Research.

To get Fox's support, Blu-ray agreed to add some features, including extra copy protections, according to people familiar with the matter. The extra copy protections had been rejected by some Blu-ray members. A Fox spokesman said it wouldn't be appropriate to discuss the negotiations.
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