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A draw in the next-generation DVD war?

Neither Blu-Ray nor HD DVD likely to be a 'knock-out'

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The ongoing battle for next-generation DVD supremacy could ultimately result in an uneasy stalemate, according to a new report from media analysts.

A report from Screen Digest predicts that the struggle between the latest generation of rival and mutually incompatible DVD formats - Blu-ray and HD DVD - will not mirror the legacy of the bygone war between the VHS and Betamax video formats which resulted in VHS becoming the market dominator.

Instead, analysts at Screen Digest predict neither of the two new formats will achieve a "knock-out" position of market dominance and instead expect both to coexist. Furthermore, according to the analysts, eventually a cost-effective combination format will emerge and live happily ever after.

Report author Graham Sharpless believes that the success of the DVD was due to it being a single format that offered better quality and greater convenience than the VHS format it replaced. However, in this new battle of the movie medium both formats support similar features.

"Blu-ray discs offer capacities of up to 50GB compared with HD DVD's 30GB, but Blu-ray is a revolutionary format that is more difficult and expensive to produce than HD DVD discs, which can be produced using modified DVD equipment," he added.

Even so, Screen Digest is unwilling to pin its colours to the mast yet, and has also highlighted some other - perhaps less likely - outcomes of the DVD format war.

Most obviously, either HD DVD or Blu-ray reaches market dominance, and supporters of the loosing format jump ship to the other.

Alternatively, both formats "lose" in the sense that neither is successful enough to achieve mass consumer adoption, resulting in a situation comparable to that of the battle between "next generation" audio formats SACD and DVD Audio, according to Screen Digest.

Screen Digest chief analyst Ben Keen said the perception of a "war" didn't help either format. "Given the vested interests on either side, we believe that the most likely outcome at present that...the two formats will co-exist until they give way to affordable dual-format solutions but none of the other three scenarios can be completely ruled out. Overall though, the net result of the format war and the publicity it has generated will be to dampen consumer appetite for the whole high definition disc category," he said.

By 2010, Screen Digest believes that just under one third of total spending on buying video discs in the three key regions of the US, Japan and Europe will be generated by sales of high definition formats; that's $11bn out of a total spend of $39bn.

Screen Digest also predicts that few households will opt to replace their existing DVD libraries. Instead, market value growth will come primarily from the premium prices charged for the new formats. This could mean that by 2010 total revenues from packaged media will be 15 per cent to 20 per cent higher than would have been the case without hi-def discs.

So far, Blu-ray is supported by Philips, Sony, Dell, and several major Hollywood studios. In return, HD DVD is championed by Toshiba, NEC, plus Warner, Paramount and Universal movie studios. Intel and Microsoft are also supporting HD DVD, while HP is backing both horses.

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