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Paul Sweeting

Paul Sweeting is the editor of ContentAgenda.com and a columnist for Video Business. He has covered the home entertainment industries since 1985 for Billboard, Variety, Publishers Weekly and other leading business publications. He is based in Washington, DC.


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Paul Sweeting

Paul Sweeting, Editor
ContentAgenda

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Missing the point on Paramount and HD DVD - August 20, 2007

Much is being made in the blogosphere of anonymously sourced reports suggesting that the decision by Paramount and DreamWorks Animation to drop their dual-format posture in the high-def wars and support HD DVD exclusively may have been greased by "promotional considerations" forthcoming from HD DVD's hardware makers.

Figures as high as $100 million are being thrown around, supposedly the amount paid to Paramount by Toshiba in a desperate move to save a "dying format."

It certainly wouldn't surprise me if such "promotional considerations" were involved. They usually are in this business. But as an explanation for why the studios would make the switch it doesn't make a lot of sense.

Both the Blu-ray and HD DVD hardware camps have been throwing money and considerations at studios and retailers since the formats were launched. Paramount has been in both formats for over a year. Any deal that might have been put on the table now it could have had a year ago, or at any time since. The relevant question is not how much but, why now?

At the time Paramount switched its allegiance from HD DVD-only to supporting both formats (under a different regime at its home entertainment division) the studio was working off a weak release slate. The weight of its titles wasn't going to tip the format war one way or the other. So when Blu-ray offered to cap the costs of replication at a level no greater than HD DVD, effectively removing any risk to the studio in supporting the format, it probably wasn't that tough a call for Paramount.

Today, Paramount boasts the strongest release slate of any title going into the fourth quarter, including Blades of Glory, Transformers and DWA's Shrek the Third. Having the ability to actually influence the course of events in the format war was one reason, I think, that Paramount abandoned its format-neutral stance.

The impact of its decision, in fact, was almost immediately apparent. Mere hours after the Paramount/DreamWorks move was announced, Fox and MGM broke their long silence on their future slate of Blu-ray releases, announcing 29 titles between them through the rest of the year. While those plans were doubtless in the works long before the Paramount announcement, the timing of the announcement was just as surely not a coincidence.

But why wouldn't Paramount and DreamWorks not go exclusively Blu-ray?

I think emphasis the two studios placed on the cost delta between the formats in the press release was probably on the level. And it reflects the growing anxiety, at least at some studios, over flattening DVD sales and the need to turn high-def into a volume business quickly. The combination of lower-priced players and lower costs to the studio make HD DVD the logical choice if you're looking to push volume.

"Our real focus is on, how do we jump start this thing?" Paramount Home Entertainment president Kelly Avery said Monday. "This is still a very small market and we need to start moving some movies and some players."

The combination of a strong slate of movies and sub-$300 players represents the best chance to do that in the near term, in Avery's view. Splitting the studios' hard costs over two formats also made the dual-format strategy less efficient, she added.

"Ultimately, we don't want this to become a niche business," she said. "We need to get consumers to step up to high-def DVD players and we think this fourth quarter presents an opportunity to do that."

Will it work? It's probably not going to settle matter this year. But it's likely that it will make it difficult for either side to credibly claim victory early next year. That's when the really hard questions will start.

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Talkstr8t
August 20, 2007
Response to:
Missing the point on Paramount and HD DVD

Paramount just took a $150M short-term payoff at the expense of the high-def future for the rest of the studios and the consumer. Nice job, Paramount.




dopper
August 21, 2007
Response to:
Missing the point on Paramount and HD DVD

It's all about the money baby! Follow the money trail! So! What's Blockbuster and Target going to do now?




unda
August 21, 2007
Response to:
Missing the point on Paramount and HD DVD

Paul, please proof and spellcheck your articles.




Delanewf
August 21, 2007
Response to:
Missing the point on Paramount and HD DVD

The reasons Kelly Avery gave for supporting HD-DVD exclusively are going to have the opposite effect. You jumpstart the sale of movies by getting to one format. The only way a larger volume of consumers will adopt a high definition format is if there is only one. Paramount's move just made that even more difficult for the consumer and will prolong this war unneccessarily. Her answer is complete BS. They jumped ship for the money plain and simple. $150 million for 18 months of so called exclusivity(Speilberg isn't exclusive)probably sounded great to Paramount. Blu-ray will dominate HD-DVD this holiday season like it has for all of 2007 but it probably won't ring the deathknell like it should have thanks to Paramount. Too bad.




SpongeBad
August 21, 2007
Response to:
Missing the point on Paramount and HD DVD

I have a hard time understanding how moving AGAINST the momentum of the format war will help to shorten it. It's counter-intuitive. Realistically, the studio making the most money on HD at this point is Warner Bros and they're a dual format supporting studio - the same as Paramount and Dreamworks were until yesterday. It's obvious why Sony pictures (the owners if the highest grossing film of the year-to-date, Spider-Man 3) will never support HD DVD, but the only logic that allows Paramount to support HD DVD exclusively (and Universal, for that matter) at this point is a pay off.




JDK
August 21, 2007
Response to:
Missing the point on Paramount and HD DVD

IAs someone who been watching this from the sidelines all this did is convince me not to get involved at all. We now seem to have a SACD vs DVD-A situation with HD video media. I was hoping to purchase something once the new gen players were out but now believe that the winning format is going to be DVD. I don't think either format has a chance to go mainstream while this nonsense is going on.




Feghoot
August 21, 2007
Response to:
Missing the point on Paramount and HD DVD

As a supporter of both formats, I am happy to see action which increases the likelihood of survival for either. No matter how you cut it, HD-DVD disks continue to be less expensive than BD disks, so I think the general public needs the lower-cost alternative. Finally, I strongly believe the only solution to this mess is for ALL players to be dual-format. My next player will only be dual-format. Too, bad Toshiba and Sony - I think you're both going to have to go dual or lose sales.




Brandon
August 21, 2007
Response to:
Missing the point on Paramount and HD DVD

Nice of you to show how short-sighted and/or naive you are, Mr Sweeting.




Dan
August 21, 2007
Response to:
Missing the point on Paramount and HD DVD

Paul, I know Paramount lost my DVD sales. I no longer support a Studio that goes from a neutral stance to be exclusive. I was planning on buying the Blu-Ray releases.




Chuckamuck
August 22, 2007
Response to:
Missing the point on Paramount and HD DVD

Paul, how can you find any logic in a company that goes against a market where consumers are voting for Blu-ray by a 2:1 margin, and effectively slams the door on loyal customers who believed that the studio had committed to a neutral stance? Paramount & Dreamworks might as well hang a "FOR SALE" sign on their doors -- the message they've sent is "Screw the market and our consumers -- we can be bought and sold."




tyler
August 28, 2007
Response to:
Missing the point on Paramount and HD DVD

U bly ray fans here are hilarious. You bag paramount for going exclusive. What about blu ray exclusive companies? Same thing, except now it's happening to your precious blu ray. You think Sony has no monetary deals in place securing exlcusivity? Your dreaming. HD DVD all the way!




Chuckamuck
August 28, 2007
Response to:
Missing the point on Paramount and HD DVD

No one's disputing that both HD DVD and Blu-ray camps have exclusive deals in place. The point is that those exclusive deals were in place before both products came to market. Paramount announced they were neutral before they ever released a single disc. Now that they've back-tracked (and they're the only company to have reversed their decision), they've left a lot of their own consumers in the lurch. You can take a mocking tone all you want, Tyler, but in the end Paramount's decision only creates more confusion for consumers and prolongs mass adoption of hi-def video in either format -- already one of the worst product launches in home video history.




Jason
August 29, 2007
Response to:
Missing the point on Paramount and HD DVD

All this does is prolong the inevitable, which is HD-DVD going the way of the Beta Max. There are more Blu Ray players on the market now, and Blu-Ray movies sale 2-1 over HD-DVD. I think the key player in this is Disney, who is exclusive to Blu Ray. Someone who has kids isn't going to buy a HD-DVD player if they can't get the big Disney movies for them. I've read a lot about people talking about how 'Shrek the 3rd' is exclusive to HD-DVD, yet all three Spider-Man movies are exclusive to Blu Ray. If Toshiba and Sony really want to see sales go up, they should convince Wal-Mart to take BRD's and HD-DVD's out of the video game case and put them on the shelf where you can just pick them up. Regular DVD's weren't any more expensive when they first came out (I paid $25 for Varsity Blues) than the new discs are and they were out on the shelf.




HiDefGuy
September 5, 2007
Response to:
Missing the point on Paramount and HD DVD

Paramount made the right choice. A local fanboi flipped all of the HD DVDs face down on the shelves at my local Wal Mart - shows what a bunch of crybabies the BR crowd is. I also like how you always see the parethesized Speilberg statement when discussing Paramount: just because he can release on both formats is no guarantee he will. Watch tissue sales skyrocket as every BR fanboi mops up her tears if such a thing happens to occur - I'll laugh wildly! To this day BR is still a developing technology released prematurely out of Sony's fear that they would not have a proprietary format to charge people up the wazoo for - and you fools still want them to have a monopoly over you. How dumb is that?