Two Studios to Support HD DVD Over Rival

LOS ANGELES, Aug. 20 — Hollywood’s squabble over which of two technologies will replace standard DVDs reignited Monday with two studios throwing their weight behind one format and several rivals ramping up support for the other.

Paramount, part of Viacom, and the publicly held DreamWorks Animation said they would exclusively back the HD DVD format for the release of high-definition movies on disc. Among the movies the studios plan to release in the format are “Transformers” and “Shrek the Third.”

Until now, Paramount has released titles in both HD DVD and a competing format, Blu-ray. DreamWorks Animation has not released a movie in either.

The battle over the competing high-definition DVD technologies has sputtered in recent months as Blu-ray discs have emerged as the front-runner. Blu-ray titles are sharply outselling HD offerings, major retailers like Target are stocking only Blu-ray players, and Blockbuster recently said it would carry Blu-ray exclusively.

Last week, the Walt Disney Company said it would release one of its best-known animated movies, “Sleeping Beauty,” on Blu-ray. “There is no longer any doubt that Blu-ray is the clear successor to standard DVDs,” said Bob Chapek, president of Disney’s home entertainment unit.

But money talks: Paramount and DreamWorks Animation together will receive about $150 million in financial incentives for their commitment to HD DVD, according to two Viacom executives with knowledge of the deal but who asked not to be identified.

The incentives will come in a combination of cash and promotional guarantees. Toshiba, for instance, will use the release of “Shrek the Third” as part of an HD DVD marketing campaign.

Paramount and DreamWorks Animation declined to comment. Microsoft, the most prominent technology company supporting HD DVDs, said it could not rule out payment but said it wrote no checks. “We provided no financial incentives to Paramount or DreamWorks whatsoever,” said Amir Majidimehr, the head of Microsoft’s consumer media technology group.

The surprise move by Paramount and DreamWorks Animation prompted an immediate response from the electronics companies betting on Blu-ray.

“This seems like a move of desperation,” said Andy Parsons, a member of the Blu-ray Disc Association, which represents companies like Panasonic, Samsung and Sony.

Studios that have lined up behind Blu-ray, including Disney and 20th Century Fox, said the move would heighten consumer confusion at a point when Blu-ray appeared to be emerging as the best choice. “This is not in the best interest of consumers,” said Mr. Chapek of Disney.

A Disney spokesman said the company might expand a new campaign to sell consumers on Blu-ray, and Fox announced plans to flood the market with 29 new Blu-ray releases.

Paramount and DreamWorks Animation described their decision to back HD DVD as part of an “extensive evaluation of current market offerings.” The key factor was HD’s lower cost to consumers, said Rob Moore, Paramount’s president of worldwide marketing and distribution.

“What is most important to consumers is how much they are paying, and HD DVD is simply less expensive,” he said. “Focusing on one format will also allow us to provide better content because we’re not splitting our attention.”

The two studios may have left themselves wiggle room, however. Paramount’s agreement to use only HD DVD is limited to only 18 months. And Paramount noted that no films directed by Steven Spielberg were included in the deal “as his films are not exclusive to either format.” Mr. Spielberg is a co-founder of DreamWorks SKG, a unit of Paramount.

The rivalry between Blu-ray and HD DVD harks back to that 30 years ago between the VHS and Betamax formats for home video recording. Which high-definition technology is better has been the subject of intense debate in Hollywood for years. HD DVD players are about $200 cheaper than Blu-ray machines, but Blu-ray discs have more storage space and more advanced protections against piracy. Both versions deliver sharp resolution.

Sales of DVDs over all are expected to be especially strong this holiday season, and both sides are hoping that the battle of the high-definition formats will not cause consumers to tune out entirely, perhaps deciding that standard DVDs are good enough.

To help clear up confusion, the studios are starting marketing campaigns in partnership with the various electronics companies. The most prominent is Disney, which last week introduced something it calls the Magical Blu-ray Tour. The 40-foot exhibit, built to look like the Sleeping Beauty Castle at Disneyland, will be set up in malls in 18 cities. It features Panasonic high-definition televisions showing various Disney movies.