Clause in Contract means Paramount can go Back to Blu-ray

Paramount is poised to drop its support of HD DVD after Warner Brothers’ recent backing of Sony’s Blu-ray technology, in a move that will sound the death knell of HD DVD and bring the home entertainment format war to a definitive end. Paramount and DreamWorks Animation, which makes the Shrek films, came out in support of HD DVD last summer, joining General Electric’s Universal Studios as the main backers of the Toshiba format. However, Paramount, which is owned by Viacom, is understood to have a clause in its contract with the HD DVD camp that would allow it to switch sides in the event of Warner Bros backing Blu-ray, according to people familiar with the situation. Paramount is set to have a bumper 2008 with several likely blockbusters, including the latest instalment in the Indiana Jones franchise.

Paramount joining the Blu-ray camp would leave HD DVD likely to suffer the same fate as Sony’s now obsolete Betamax video technology, which lost out to VHS in a similar format war in the 1980s. Warners decision last week to throw its weight behind Blu-ray saw it join Walt Disney, 20th Century Fox and Metro-Goldwyn-Mayer as backers of the Sony format. The Warners move gives Blu-ray about 70 per cent of Hollywood’s output, although the format’s grip on film content will increase further when Paramount comes aboard. It is unclear whether DreamWorks Animation has the same get-out clause in its contract with the HD DVD camp. However, Paramount and DreamWorks have a close relationship, with Paramount distributing DreamWorks Animation films. The two companies also signed their HD DVD contracts at the same time. Meanwhile, Universal has declined to comment on its next-generation DVD plans since the Warners move.

View: Full Story @ Financial Times
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