Warner Expects Huge High-Def DVD Sales This Year

Warner Home Video on Thursday said it expects motion picture industry sales of next-generation DVDs to reach as much as $750 million in the last quarter of this year, which will include their first holiday sales season.

"From October to December, we expect at least $250 million to possibly as much as $750 million in sales industrywide," said Steve Nickerson, senior vice president of market management for Warner Home Video, which plans to release its first three titles on April 18 in HD DVD format, championed by Toshiba Corp.

Warner Home Video is a unit of Time Warner Inc (TWX).

HD DVD is one of two competing formats hoping to breath new life into the slowing home video market. The rival format is Blu-ray, created by a group led by Sony Corp (SNE).

Both Blu-ray and HD DVD offer more capacity than current DVDs, but the groups' failure to reach a unified front has paved the way for a costly battle in the $24 billion home video market, like the VHS/Betamax war of 25 years ago that caused widespread customer confusion.

Nickerson said Warner Home Video was forecasting industry-wide sales of next-generation DVDs of $35 million to $40 million in April to September, as electronics makers and studios begin to release the next-generation DVD players and movies.

In disclosing Warner's forecast for the fourth quarter, Nickerson attributed the wide range to uncertainty regarding home penetration of Sony's PlayStation 3, which is expected to launch in November with a Blu-ray drive, and Microsoft Corp's (MSFT) Xbox 360 game console, which he said is expected eventually to have an HD DVD add-on drive.

"This is a new format and we're using a lot of new technologies. We wanted to make sure that with all of these new things that the product is right," he said.

Earlier this week, Sony said it would delay the release of its new PlayStation 3 console until early November because development of some of the technology was behind schedule.

The PS3 launch date had been the subject of heavy speculation as expectations are high for the machine, which is also expected to give a huge boost to the install base of the Blu-ray technology.

Despite the PS3 delay, industry insiders believe the first stand-alone Blu-ray players will still come to market around May, with Hollywood rolling out titles accordingly.

Nickerson said Warner was targeting late June and early July for its first Blu-ray titles and saw no delays in other Blu-ray products as a result of the Sony PS3 delay.

"There's nothing we've calculated from a business model that has been changed because of the Sony announcement," said Nickerson.

The first three Warner titles on HD DVD will be released on April 18, including "Million Dollar Baby," The Last Samurai," and "The Phantom of the Opera," he said.

Korea's LG Electronics Inc. this week also announced plans to launch a next-generation DVD player that will bridge the yawning gap between the two competing formats by playing both HD DVD and Blu-ray.