Blockbuster gives Blu-ray format a lift

Video chain provides Sony a victory in disc-format competition with Toshiba

June 19, 2007|By Tricia Bishop | Tricia Bishop,Sun reporter

In the world of home entertainment, Sony took a big loss early on when its Betamax videotapes lost out to JVC's VHS versions, making yesterday's announcement by Blockbuster Inc. seem like slight vindication.

The movie rental giant announced plans to stock 1,700 stores - including 21 in Maryland - with disks using Sony's newest technology, called Blu-ray. That's 1,450 more Blockbusters than will carry movies made in Toshiba's competing format, known as HD DVD.

In vintage Beta-versus-VHS style, the two businesses have been duking it out over the title of next-generation home movie maker, with each racking up a list of big-name backers.

Among those on the Toshiba side are Microsoft, Intel and Universal Studios. On the Sony side are Walt Disney, Dell and, now, Blockbuster.

Some saw the video company's announcement as a coup for Sony, signaling a marketplace shift toward its technology, while others said it was simply another move in a war that's wasting resources and confounding consumers.

"Pretty much every week one of the sides is declaring victory and customers get confused by that," said Brian Lucas, a spokesman for Best Buy, which - like Circuit City - carries both formats.

"We would love for something to happen and for the format war to end. I think that eventually consumers will vote with their wallets."

So far, few have adopted either of the new technologies, which won't play on standard DVD players. Just a tiny fraction of American households - about 0.3 percent - have Blu-ray Disc or HD DVD players.

Many people are waiting to see which format emerges the winner, or they're holding out for the emergence of reasonably priced players that can handle both formats. Blu-ray players are priced from about $600, and HD players from $500.

"The most probable outcome to this situation is a stalemate ... because you're going to see by the end of the year a lot more dual format equipment out there," said Chris Crotty, an analyst with market researcher iSuppli. And none of it really matters, in his estimation, because the real enemy is online and downloadable content.

"They've been so busy fighting each other that they're missing the common enemy," Crotty said.

Both Sony and Toshiba claim they have superior technology, though many technology followers say the differences are mostly technical and would not be detected by the average viewer.

Blockbuster has been carrying both formats in about 250 stores - including eight in Maryland - but said customers were leaning toward the Blu-ray version, which helped tip the scales in its favor.

"We're looking at what the customers are telling us they want," said spokesman Randy Hargrove. Blockbuster will continue to offer the HD DVDs in the 250 stores where they're already available and through its online movie rental program.

"It certainly isn't meant to be a formal endorsement," he said of the Sony announcement. "We're going to continue to follow the demands of our customers in the future."

And Toshiba is far from conceding defeat. Calls to the company were returned by an organization called the HD DVD Promotion Group, which calls itself an educational organization charged with teaching consumers about the new medium.

The war is "getting a lot of industry attention because of the companies that are involved with it," said spokesman Ken Graffeo. But, he added, it's far to early to call a winner.

Sony said its expert on the Blu-ray technology was traveling yesterday and unavailable to comment.

At the University of Maryland, Baltimore County's New Media Studio, where the school's promotional videos are cut, most of the work is done on HD DVDs simply because they fit with the school's current technology, said producer Bill Shrewbridge. It could have just as easily been Blu-ray, he said.

"It's an arbitrary choice," Shrewbridge said. "We hadn't really committed one way or the other. We sort of threw our hands up in the air, and said, `Make up your mind already so we can get on with our lives.' It's sort of been a sticking point."

Most analysts said the two technologies are not likely to coexist for long, and, given its Beta history, Sony may have extra incentive to win. It's already taken a big gamble by folding Blu-ray technology into its PlayStation 3 consoles, significantly boosting the game players' price.

"There probably was a lot of corporate pressure on Sony to get this one right, to sort of win this battle," said Joe Laszlo, an analyst with Jupiter Research in New York. "There may well have been something in the corporate subconscious that said, `We don't want another Betamax on our hands.' "

tricia.bishop@baltsun.com

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