Leo Lewis on Asian markets

The sprawling consortium of technology and media companies assembled to promote the HD DVD format of next-generation, high-definition discs could be close to collapse after a spate of defections to the rival Blu-ray Disc consortium.

As many as 20 companies that are members of the HD DVD Promotion Group could be preparing to remove their names from the alliance’s 130-strong membership list, The Times has learnt.

The defections could, one Tokyo-based analyst said, represent the final nails in the coffin of Toshiba’s HD DVD standard after a bitterly fought “format war”.

Eiichi Katayama, of Nomura Securities, said that the battle between the formats, which display films and video games more sharply in an era of ever-larger television screens, was now “entering its final phase”.

The threatened exodus from the HD DVD format comes after the decision by Warner Bros last week to back the rival Blu-ray Disc format, whose main technology backers include Sony, Apple and Dell. Apparently encouraged by the strong momentum behind Blu-ray, Paramount emerged yesterday as the latest Hollywood studio poised to switch allegiances.

Pony Canyon, a Japanese music, animation and film studio and part of the Fuji Television media empire, said that although it was a member of the HD DVD Promotion Group, the decisions taken by American studios meant that it would “choose Blu-ray in the end”. Several other Japanese companies, including content producers and electronics component makers, said that their support of HD DVD was “under review”.

Backers of HD DVD point to the relative ease of producing the discs and the lower cost of building machines capable of reading them. Unlike previous format wars, particularly the Betamax v VHS skirmish in the 1980s, the Blu-ray v HD DVD war effectively has been decided in board-rooms, rather than in electronics showrooms. The decisions of the big studios have come well before those of customers, who generally have held back from picking one format for fear of backing a loser. Paramount has turned out to be a pivotal figure. Its decision in August to give exclusive backing to HD DVD was seen as a potentially devastating blow to the prospects of Blu-ray and to the strategy of Sir Howard Stringer, Sony’s president. Sir Howard argued, however, that the PlayStation3 games console, which includes a Blu-ray disc player, would put the format in people’s living rooms more quickly than HD DVD players would be adopted by consumers.

Paramount, like other members of the HD DVD group such as Fujitsu, Lenovo and Kenwood, has hedged its bets. It offered exclusivity on the basis that it could reverse the decision should Warner Bros switch to Blu-ray.

Facing a future with only Universal Pictures as its big Hollywood supporter, analysts at the Consumer Electronics Show in Las Vegas said that Toshiba and HD DVD could quickly be isolated.

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