Christmas Hi-Def Price War

Manufacturers of high-definition DVD players are slashing prices in an urgent pre-Christmas attempt to break the deadlock between two rival formats.

The cost of key manufacturing components for the Sony-supported Blu-ray players and Toshiba's rival HD-DVD hardware will fall below $150 early in 2008, analysts at Understanding & Solutions, an entertainment consultancy, forecast yesterday.

The price falls could accelerate an end to the damaging format war.

Some studio executives reckon January's Consumer Electronics Show in Las Vegas could be where the battle lines could shift, with Blu-ray best placed in the struggle for disc sales on both sides of the Atlantic.

Price cuts in the weeks before Christmas have seen the cost of Blu-ray players fall below $300 for the first time in the US, while HD-DVD players are now available for under $200.

Wal-Mart sold more than 90,000 HD-DVD players in a day when it cut the price of a Toshiba model to $99.

However, the costlier Blu-ray continues to sell more discs. In the busy shopping period since Thanksgiving, Blu-ray has been responsible for more than 72 per cent of all high-definition discs sold in the US, compared with 27.4 per cent for HD-DVD.

Walt Disney, 20th Century Fox and MetroGoldwyn Mayer have lined up behind Blu-ray while Universal is in the HD-DVD camp, which is reported to have offered about $150m to sign up Paramount and DreamWorks Animation.

Warner Bros is supporting both sides and could decide the war if it threw its weight behind either Blu-ray or HD-DVD, analysts say.

Studios are desperate for a new format to ignite the market at a time when traditional DVD sales, their biggest profit source, have begun to slide after years of double-digit growth.

However, they are concerned consumer confusion could see both overtaken by digital downloads or video-on-demand. "There is a very reasonable chance this market may not take off at all," said JP Gownder, principal analyst at Forrester Research.

The stakes extend beyond disc sales and could determine whether Microsoft, Apple or Sony ultimately take control of video distribution into the digital living rooms of the future.

Story source: ft.com