DreamWorks and Paramount: Only HD DVD

DreamWorks Animation and Viacom's Paramount Pictures announced Monday they will now use the HD DVD format exclusively for worldwide distribution and will not co-distribute on Sony's Blu-Ray format. The move is a significant win for Toshiba, which developed HD DVD. In a release, the companies said they made the move because of HD DVD's "market-ready technology and lower manufacturing costs." "Today Toshiba is making HD-DVD players available at $299, which is a first time that it's really been at an affordable price," said DreamsWorks Animation CEO Jeffrey Katzenberg. "It's a game-changer...and it's why we decided to throw in with them." The least expensive stand-alone Blu-Ray player retails for $499. Despite the price differential in players, Blu-Ray discs outsold HD DVD discs by a 2-to-1 margin in H1. Blockbuster recently announced it will stock only Blu-Ray high-definition titles, and Target said it will sell only Blu-Ray DVD players in Q4. Sony Pictures, Twentieth Century Fox, Walt Disney and MGM release movies only on Blu-Ray, while Universal releases only on HD DVD. Warner Brothers is now the only major studio releasing movies on both formats. "It had seemed like Blu-Ray was winning the format war,'' said Miller Tabak analyst David C. Joyce. "It's surprising Viacom would try to be a David in a fight with the rest of the industry goliaths."

Sources: Thomson Financial, MarketWatch I, II, Bloomberg, Reuters, Dow Jones
Commentary: Hollywood Sweats the Peak of the DVD Format • DreamWorks Animation Should Ride Shrek 3 To Growth • Can DreamWorks Animation Rise Above the Market Turbulence?
Stocks/ETFs to watch: TOSBF.PK, SNE, DWA, VIA. Competitors: HIT, Pixar Animation Studios Inc. (private), Walt Disney Feature Animation (private). ETFs: PBS, PEJ
Earnings call transcripts: DreamWorks Animation Q2 2007, Viacom Q2 2007, Sony F1Q07

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