Wal-Mart Dumps HD DVDs to Back Blu-ray

NEW YORK (Reuters) – Wal-Mart Stores Inc has decided to exclusivelysell high-definition DVDs in the Blu-Ray format, dealing what could bea crippling blow to the rival HD DVD technology backed by Toshiba Corp.

The move by the world’s largest retailer, announced on Friday, capsa disappointing week for HD DVD supporters, who also saw consumerelectronics chain Best Buy Co Inc and online video rental companyNetflix Inc defect to the Blu-ray camp.

In a statement on its Web site, Wal-Mart said that over the next fewmonths it will phase out sales of HD DVD systems and discs. By June, itwill sell only products in the Blu-ray format which was developed bySony Corp.

"We’ve listened to our customers, who are showing a clear preferencetoward Blu-ray products and movies with their purchases," said GarySeverson, a Wal-Mart senior vice president.

The move affects 4,000 Wal-Mart and Sam’s Club stores in the UnitedStates, as well as related online sites. The stores will continue tosell traditional DVD players and movies.

The so-called format war between HD DVD and Blu-ray has been a thornin the side of retailers, which have had to commit shelf space todevices from both camps even as they field complaints from frustratedand confused customers.

Next-generation DVDs and players, boasting better picture qualityand more capacity, were expected to help revive the $24 billion globalhome DVD market. But Hollywood studios had initially split theiralliances between the two camps, meaning only certain films would playon a consumer’s DVD machine.

Like the Betamax-VHS battle in the 1980s, having two DVD standardshas dampened sales of both and put retailers in a conundrum of havingto either choose sides or sell products that have a chance of becomingobsolete very quickly.

The balance of power, however, tipped toward the Sony camp inJanuary after Time Warner Inc’s Warner Bros studio said it would onlyrelease high-definition DVDs in Blu-ray format. With that, studiosbehind some three-quarters of DVDs are backing Blu-ray, although somerelease in both formats.

Blu-ray also has support from News Corp’s 20th Century Fox, WaltDisney Co and Lions Gate Entertainment Corp. Sony’s PlayStation 3 gameconsole can also play Blu-ray films.

"So if you bought the HD player like me, I’d retire it to thebedroom, kid’s playroom, or give it to your parents to play their JohnWayne standard def movies, and make space for a BD player for yourawesome Hi Def experience," Wal-Mart’s movie and gaming blogger, SusanChronister, wrote in a posting.

To be sure, Toshiba has secured agreements with studios includingNBC Universal’s Universal Pictures, Viacom Inc’s Paramount Pictures andDreamWorks Animation SKG Inc.

Microsoft Corp’s Xbox 360 also currently works only with HD DVD.However, Microsoft said in January it could consider supporting Blu-raytechnology at consumers’ behest.

Toshiba could not be reached to comment on Wal-Mart’s move.

Earlier on Friday, the Hollywood Reporter quoted unidentifiedindustry sources as saying Toshiba was widely expected to pull the plugon HD DVD in the coming weeks.

Toshiba spokeswoman Junko Furuta said none of what was reported inthe magazine had been decided. She declined to comment further, saying:"We cannot comment on speculation."

(Reporting by Franklin Paul; additional reporting by KiyoshiTakenaka in Tokyo; editing by Phil Berlowitz and Gerald E. McCormick)

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