Viacom Inc's Paramount Pictures and DreamWorks Animation SKG Inc both announced this week that they will release their next-generation DVD titles exclusively on HD-DVD, claiming that the format offers better quality, lower-priced players and lower manufacturing costs than the rival Blu-ray format.

This news is clearly a major blow to Sony’s plans for the relatively inexpensive Blu-ray player that also plays a few videogames, otherwise known as the PlayStation 3. However, the fact that lowest-priced, stand-alone HD-DVD players currently sell for $299 (£150) is clearly a major factor in Paramount and DreamWork’s decision to back the HD-DVD horse.

Following yesterday's news on Microsoft's new Xbox 360 Elite - launching in the UK this coming Friday and aggressively priced at £299 - it seems that the Xbox strategy is shifting further and further towards affordable movie-rental downloads at the expense of disc-based HD-DVD movies.

"This has been the biggest summer on record for movies, it will be the biggest fourth quarter for popular movies for consumers. At the same time, we have HD-DVD players that are truly affordable,” said Kelley Avery, president of Paramount Home Entertainment.

Paramount's first releases under the exclusive HD-DVD program include Blades of Glory later this month, with Transformers and Shrek the Third due for release later this autumn.

DreamWorks Animation Chief Executive Officer Jeffrey Katzenberg said of the HD-DVD format, "They have a high-quality consumer experience that is now being offered at a price point that we believe is going to connect with the consumer… This seems to us to be the right product at the right price at the right time.”
The exclusive agreement does not include movies directed by Steven Spielberg for DreamWorks SKG but it does include all other movies distributed by Paramount, DreamWorks, Paramount Vantage, Nickelodeon Movies and MTV Films.

To date an estimated 3.7 million high-definition discs have been sold, overall, including 2.2 million in Blu-Ray and 1.5 million in HD DVD through July, according to Home Media Research.

^{source: Reuters}