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High-Definition DVD Formats Slow to Catch On With Consumers

First, there was the war between eight-track tapes and cassettes. Then there was Betamax versus VHS.

Now a new battle for the future of home entertainment is once again forcing consumers to choose.

High-definition DVDs are supposed to provide sharp, wide-screen images to fill the more than 30 million HD television sets that have been sold. They are also meant to replace standard definition DVDs, providing studios with a new source of profits.

• Click here to read a review of Toshiba's HD-A1 HD DVD player.

But after much anticipation, the two competing formats have debuted to a big yawn.

Retailers report slow sales of the expensive machines required to play the new discs as gun-shy consumers wait for one of the formats to prevail. And studios have held back issuing high-def versions of their most desired titles — because so few players exist.

"I'm not jumping on this bandwagon yet," said John Scally, a 39-year-old in Elizabeth, N.J., who has already spent thousands of dollars on a high-def TV set and subscribes to HD channels through his satellite TV provider.

"They probably would tempt me if it wasn't for the two formats," Scally said. "I'm a semi-early adopter, but I'll wait at least a year, maybe two, for this to play out."

• Click here to read how Samsung is fixing an image glitch on its BD-P1000 Blu-ray disc player.

Complicating the choice is the increasing availability of movies and TV shows for download online, bypassing the need for a physical disc format.

Apple Computer Inc. (AAPL) just launched its long-awaited movie download store, and also showed off as a slim device, provisionally called iTV, which is designed to wirelessly stream movies from a computer or other storage device to a TV set.

Web-based services, however, do not yet offer high-definition versions of films, because the size of the files would be enormous, requiring hours for a download.

Consumers unwilling to wait for high-definition movies at home must choose between discs and players in the Blu-ray format, backed primarily by Sony Corp. (SNE), and HD DVD, championed by Toshiba Corp.

Both formats deliver high-definition pictures and sound, but are incompatible — just as Betamax and VHS were when video cassettes were introduced in the mid-1970s.

High-def DVDs can't be played on current DVD players, and new players range from $500 to $1,000. If one format ends up winning the war, consumers could be saddled with useless equipment, although the new players do play current, standard-definition DVDs.

"Both the record and movie industry have trained us every time there is a format change to go out and replace our current content," said Kurt Scherf, vice president and principal analyst at Parks Associates, a technology research firm. "Consumers are sick of upgrading."

Studios need at least one high-definition DVD format to succeed.

Entertainment companies already earn more from DVD sales than from box office receipts. But home-video sales have leveled off and studios need to replace that income.

The new discs can hold far more data than current DVDs, allowing studios to pack them full of interactive features, including games and menus that can be perused without stopping the film.

But there appears to be less pent-up demand than consumer-electronics companies anticipated for high-def content that can play on new digital wide-screen TV sets.

Retailers report disappointing sales since Toshiba released its $499 HD DVD player in March and Samsung began selling its $1,000 Blu-ray player in June.

Brian Solis of Redwood City, Calif., scared off by both the cost of the new machines and the possibility of betting on the wrong format, bought an inexpensive DVD player that can play his existing DVDs at something close to high-definition quality.

"I am going to upgrade everything, but not until the prices come down," Solis said.

One reason for the slack sales is that studios are not releasing their most desirable titles until more players are sold. Most of the films that have been released lack the special interactive features that backers touted.

Other retailers report glitches in some of the new players and dissatisfaction with the picture quality delivered by some high-def discs.

Most observers believe the new format will take off once one of the two formats prevails. So far, HD DVD players have outsold Blu-ray, but that trend could reverse once the Sony Playstation 3 video-game console, which will include a Blu-ray DVD drive, goes on sale in November.

The Consumer Electronics Association estimates that about 1 million standalone high-def DVD players will be sold in 2007. And studios have said they will release more titles later this year.

"This is going to be something great, it's just probably not going to be something great this year," said Gary Yacoubian, president of MyerEmco, which operates 10 specialty electronics stores in the Washington, D.C., area.

But the Playstation 3 launch may make less of a dent that Blu-ray backers had hoped.

Sony recently said only 400,000 game machines would be available in the U.S. at launch because of a problem producing a key component.

Sony also said it would delay the launch of the console in Europe, but still hopes to ship 6 million machines in Japan and the U.S. by March 2007.

Microsoft (MSFT) is expected to offer an external HD DVD drive for its Xbox 360 game machine sometime next year.

The biggest challenge to high-def DVDs may ultimately come from the delivery of films over the Internet.

While the online market for films has been slow to take off — studios have only just begun to allow consumers to buy permanent copies of films — that may soon change.

Online movie stores have been launched recently by Amazon.com Inc. (AMZN) and Apple Computer Inc. Wal-Mart (WMT) also is developing a movie download service.

Still, some analysts believe that market will have its limits.

"Consumer habits just don't change that quickly," said analyst Tom Adams of Adams Media Research. "People like to own physical things."

Curt Marvis, chief executive of the online film marketplace CinemaNow, suggests the digital download business won't eclipse traditional home video for at least a decade, giving the new high-def format a reasonable lifespan.

The two even could complement each other, he says. While retail shelves offer the latest films and TV shows on high-def discs, the thousands of older titles studios don't want to spend millions of dollars to upgrade to high definition could fine a new home online.