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Universal's American Gangster to be next big HD DVD exclusive
HD DVD still believes that there is still much territory to be claimed

Even with the tide apparently shifting in Blu-ray Disc’s favor, the HD DVD camp isn’t about to relent in the on-going high-definition format war. HD DVD still commands a significant portion of exclusive content and the most affordable hardware, giving the format a fighting chance – and nobody believes in HD DVD more than Universal Studios executive vice president Ken Graffeo, who also serves as the co-president of the HD DVD Promotional Group.

The HD DVD Group was rather mum on Warner’s surprise announcement right before CES to go Blu-ray Disc exclusive and cancelled its Sunday press conference. Graffeo, speaking to BetaNews, explains, “We heard about the whole move when everyone else did – when a lot of us were on planes flying to CES in Las Vegas ... If we had our press event on Monday, it would have been different, but because it was right there on Sunday and we heard Friday afternoon we couldn't even get to everybody ... The entire flow of the presentation would have had to been changed. When we found out at the last minute, we had to regroup and say ‘Toshiba, what are you doing?’ and we didn't have any answers.”

With HD DVD losing movie releases from Warner Bros. starting June, the HD DVD landscape could change drastically – something that the Promotional Group doesn’t yet have an answer for. “To be very honest with you, we have not addressed that yet,” Graffeo admitted. “Warner is still releasing HD DVD titles up until May. Warner has always been in two formats, and prior to Paramount's switch, they had been in two formats, so now that Warner is exclusive... we just haven't addressed it yet.”

One of the first rumors from Daily Variety to hit following Warner’s move was that Universal and Paramount were both poised to make the switch to Blu-ray Disc, but Graffeo refutes such reports. “I want to say that none of those rumors were substantiated. Nobody ever talked to us. I know nobody talked to Paramount ... This is business as usual for us and there are no plans to make any changes.”

One part of HD DVD’s new strategy is on lower prices and selling the hardware’s ability to upscale regular DVD movies. Graffeo explained the logic behind the new push, “Consumers right now are buying upconverting players – they are outselling the next-gen players combined by 10 to 1 every month. They are affordable because they are under $200 – the average price is $85 – and consumers want to see their movies better. So pricing is very important.”

As part of Toshiba’s new promotional plan, HD DVD hardware across the board dropped in price. Introduced on January 13, the price of the entry-model HD-A3 is $149.99, the HD-A30, with 1080p output, $199.99, and the high-end HD-A35, $299.99. Graffeo, along with the entire HD DVD Group, hopes that the entry-level HD-A3 will entice a whole new group of consumers.

“We saw that on DVD: as soon as price point went under $200 and as soon as it started getting close to $100 players really started taking off because you're hitting very consumer-friendly prices,” he said. “If you want to hit the mass market, you have to be consumer-friendly in price. If you want to be a niche electronic, you're going to be high priced.”

It is the HD DVD Promotional Group’s belief and hope that sales of its players and software will grow exponentially as the mainstream consumer experiences high-definition movies. “1 million units starts word of mouth – people get exposed, people see it. When you're dealing with 200,000, you're at the early adopters and that's not really going to spread.”

Even with the latest sales numbers leaning in Blu-ray Disc’s favor, the overall high-definition market is still insignificant compared to standard DVD sales. According to Graffeo, 35 percent of households have HDTVs, but only 12 percent receive HD programming, and an even smaller percentage have a high-definition movie player. For this reason, Graffeo feels that HD DVD still has a lot of potential.

The Group most recently announced that it has sold over 750,000 HD DVD players total just after Thanksgiving shopping week. With holiday sales added, current day numbers could be near 1 million, giving Graffeo a reason to expect a spike in HD DVD uptake.

“That's why HDTVs finally started taking off, because consumers walked into their neighbors' houses and said ‘Look at that flat thing on the wall,’ that's great. You saw in November and December, everyone was aggressive with pricing. You could see how consumers are willing to buy HD movies when you get to an affordable price,” he said. “Most people are very happy with their DVD, but when they see a 1080p movie, it blows them away.”





"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer



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