Is HD-DVD Dead?

Jan. 7, 2008 — -- When Warner Bros. Entertainment announced Friday it will release high-definition DVDs exclusively in the new Blu-ray format, the studio may have struck a deadly blow against its struggling high-definition rival, HD-DVD, analysts resoundingly told ABCNEWS.com.

The rivalry between the two platforms of high-definition DVDs — Blu-ray is supported by Sony, while HD-DVD is supported by both Toshiba and Microsoft — has been raging since the discs' development. While other Hollywood studios have gradually chosen one format over the other, Warner Bros. had been the lone exception, publishing movies in both formats.

"Warner Bros.' move to exclusively release in the Blu-ray disc format is a strategic decision focused on the long term and the most direct way to give consumers what they want," chairman and CEO of Warner Bros. Barry Meyer said in a statement on Friday. "The window of opportunity for high-definition DVD could be missed if format confusion continues to linger."

Only two major U.S. studios now support HD-DVD, while five will support Sony's Blu-ray disc exclusively.

After the studio's announcement, a long-planned press event to promote HD-DVD at the Consumer Electronics Show in Las Vegas was abruptly canceled.

"This is definitely a bad blow to the HD-DVD folks at a time when both sides were trying to gain momentum," Michael Gartenberg, vice president and research director of Jupiter Research, told ABCNEWS.com. "And clearly you can see the effects of this. They canceled their press conference at CES. That doesn't happen every day."

At the Consumer Electronics Show, Sunday, representatives from Sony were practically giddy over the development.

"All of us at Sony are feeling a bit blue today, but that's a good feeling," CEO Sir Howard Stringer said at a news conference, chuckling. "Along with Warner Bros.' decision to support Blu-ray I want to thank Bob Iger at Disney and Rupert Murdoch at Fox for being 'true blue' from the start."

Disney, the parent company of ABC News, was one of the first to commit to the Blu-ray format.

Rick Clancy, Sony's senior vice president of electronics, echoed those sentiments.

"We're very pleased with the news obviously," Clancy said Sunday in Las Vegas. "Clearly the momentum is in Blu-ray's favor in terms of consumer interest in the format."

Despite the boost and the potential downfall of HD-DVD, analysts say that Blu-ray still faces a few formidable competitors.

The most difficult challenge will be regular DVDs, said Rob Enderle, a Silicon Valley technology analyst for the Enderle Group.

New DVD players allow consumers to "upgrade" their regular DVDs to look almost as good as they would in high definition.

"The big obstacle is to overcome is actually regular DVDs because it's already good enough" for most consumers, Enderle said. "It's inexpensive and good enough and they already have it. They're likely to stay with what they've got."

Online video on demand that allows consumers to download movies directly to their PCs may also ultimately make the format war an obsolete argument. As technology advances, more consumers will be able to connect content on their desktops to their televisions, including high-definition content.

"This year at CES you're going to see a whole lot about downloads and downloads are probably the next big thing," Enderle said.

Still, not everyone is ready to count HD-DVD out. CNET editor at large Brian Cooley doesn't believe HD-DVD Microsoft will go down without a fight.

"This is the thing. [They] are both movie formats and they're also computer disc formats just like a CD. … Microsoft wants to use HD-DVD as the computer format," Cooley said. "Microsoft's a very powerful force. Vista supports HD-DVD. The Xbox uses HD-DVD."

"I think this is probably the beginning of the end … [but] I'll tell you they've surprised us before," Cooley said.

Cooley advised eager shoppers ready to snap up Blu-rays to wait.

"Between now and next holiday season it's a big window but that's the time you can decide," Cooley said. "I think that you're getting pretty confident as a consumer that Blu-rays the way to go, I'd still give it a few months to see what's going on. … You want to see HD-DVD officially give up."

ABCNews' Andrea Smith and Eric Strauss contributed to this report.