Dvd Format Battle

Apr 15, 2005
Submitted by: Clayton Seaberry

Industry Tries Again to Reach Agreement on New DVD Format

Hoping to avoid a costly war over the next generation of DVDs, Hollywood executives and electronics manufacturers are discussing whether to merge two competing formats that are on a collision course and are threatening to delay the arrival of high-definition movies and games in consumers' homes, Friday's Wall Street Journal reported.

Sony Corp. (SNE), with its Blu-ray format, is in a knockout battle with Toshiba Corp. and its HD DVD format. Both formats promise better picture quality, more-interactive features and stricter copy protection than do today's DVDs. Each one has the support of several big electronics makers and studios.

Studios are hoping the next generation of DVDs will help stave off piracy while boosting sales and rentals of packaged movies, already a $21 billion-a- year business. Electronics companies, meanwhile, are counting on the new discs to drive sales of a whole new line of players and recorders, as well as garner revenue from patents on technology.

The two sides have resisted years of pressure from studios and consumer- electronics retailers to reach a compromise. Given the two camps' dug-in positions, the idea of a merged format hasn't gotten much traction, and even now, the chances of an agreement may be slim.

Still, talks recently have gained momentum, people familiar with them say, in part because of Howard Stringer's recent appointment as chief executive of Sony Corp. Mr. Stringer, who has led the U.S. entertainment business at Sony for several years, is known as a skilled diplomat, with close ties to Hollywood. He is said to be less concerned with pushing Sony's proprietary technology than are the electronics-focused executives who have run Sony until now. Sony said Mr. Stringer declined to comment.

An agreement on a single new DVD format would help the industry avoid a standoff, in which rival formats sit side by side on store shelves. Such an outcome would probably deter a lot of consumers from upgrading their DVD players and libraries.

Wall Street Journal Staff Reporters Sarah McBride, Phred Dvorak and Kate Kelly contributed to this report.

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