Blockbuster to favor Blu-ray HD disc

The prototype model of the next generation DVD recorder with Blu-ray format from Japanese electronics giant Sony at its unveiling in Tokyo, September 2006. Sony has cut the price of its new Blu-ray high-definition DVD player for the North American market, stepping up the fight against rival electronics giants.

By GARY GENTILE, AP Business WriterMon Jun 18, 6:39 AM ET

Blockbuster Inc. will rent high-definition DVDs only in the Blu-ray format in 1,450 stores when it expands its high-def offerings next month, dealing a major blow to the rival HD DVD format.

The move, being announced Monday, could be the first step in resolving a format war that has kept confused consumers from rushing to buy new DVD players until they can determine which format will dominate the market.

Blockbuster has been renting both Blu-ray and HD DVD titles in 250 stores since late last year and found that consumers were choosing Blu-ray titles more than 70 percent of the time.

"The consumers are sending us a message. I can't ignore what I'm seeing," Matthew Smith, senior vice president of merchandising at Blockbuster, told The Associated Press.

Blockbuster will continue to rent HD DVD titles in the original 250 locations and online, the Dallas-based company said.

The decision was helped in large part by the lopsided availability of titles in Blu-ray, Smith said. All major studios except one are releasing films in Blu-ray, with several, including The Walt Disney Co., releasing exclusively in Blu-ray. Only Universal Studios, which is owned by General Electric Co., exclusively supports HD DVD.

Warner Bros., a unit of Time Warner Inc., and Paramount Pictures, which is owned by Viacom Inc., release films in both formats.

"When you walk into a store and see all this product available in Blu-ray and there is less available on HD DVD, I think the consumer gets that," Smith said.

The rollout of Sony Corp (NYSE:SNE - news).'s PlayStation 3 game console, which comes standard with a Blu-ray drive, also helped give the format momentum, Smith said.

Blockbuster's decision, while significant on it's own, could boost Blu-ray even more if other retailers follow suit.

"It will help shift the balance toward Blu-ray, clearly," said Richard Doherty, president of The Envisioneering Group, a research company.

The North American HD DVD Promotional Group said Blockbuster's decision was shortsighted and skewed by the success of films released by Blu-ray studios in the first three months of the year. The group said HD DVD has since gained momentum, selling more players and popular titles such as "The 40-Year Old Virgin" and "The Matrix" trilogy.

"I think trying to make a format decision using such a short time period is really not measuring what the consumer is saying," said Ken Graffeo, co-president of the group.

The two formats have been battling it out since they both hit the market last year. Studios hope the high-definition discs, with their sharper picture and more room for interactive special features and games, will replace standard definition DVDs.

The formats are incompatible and neither will play on standard DVD players, although standard DVDs can be viewed with either a Blu-ray or HD DVD player.

The Blu-ray camp has been helped by the release of such huge hits as "Casino Royale," "Pirates of the Caribbean" and "Spider-Man" coming out exclusively in its format.

As the battle has unfolded, the price of the high-definition players needed to show the movies has plummeted. Toshiba Corp., the major supporter of HD DVD, is selling its player for $299 with a rebate, down from $499 when it first went on sale.

Sony, which is pushing Blu-ray, recently slashed the price of its player by more than half to $499. The player retailed for $1,000 when it first was introduced.

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On the Net:

Blockbuster Inc.: http://www.blockbuster.com

North American HD DVD Promotional Group: http://www.thelookandsoundofperfect.com

Blu-ray Disc Association: http://www.blu-raydisc.com