Might the tide be turning in HD-DVD's favor?

According to DVD Town, it looks like Microsoft is now willing to talk about the supposed money that changed hands between it and Paramount to support HD-DVD.

The result?

According to Microsoft this never happened.

Here's what "Kevin Collins, head of Microsoft's HD-DVD unit" now says in an official statement:

"Microsoft did not provide any financial incentives to Paramount/Dreamworks' recent decision to support HD-DVD."

Responding to other articles he read on the Home Theater Forum, he states, "This type of 'reporting' amazes me and I challenge anyone to provide proof around these statements. They are unfounded and inaccurate."

There is still no final word on what Toshiba's role is in this if any at all. However, Paramount does acknowledge that variables "like manufacturing cost, low prices on players and technology advantages" helped in their decision making process.

Also, in a story from Tech Newsworld, their opinion writer Rob Enderle sees the cost of manufacturing Blu-ray discs to be the format's eventual downfall.

However, he doesn't necessarily think that HD-DVD is going to win the format war either.

In his story he writes, "I was one of the folks who thought that Blu-ray was going to eliminate HD-DVD and by this time HD-DVD would be toast. In fact, I was one of the analysts who helped convince Time Warner to hedge its bets and go with both formats. However, this was all before I knew the cost of the Blu-ray technology, and it was based on the assumption that Sony would never be stupid enough to price itself out of the game console market, effectively giving it to Nintendo and Microsoft."

He then goes on to say, "Not only was Blu-ray too expensive, the technology wasn't as far along as Sony led us to believe. The delays not only make the PS3 too expensive; they made it late. That was effectively a one-two punch, knocking Sony out of the lead so far in the game console business. Now, Sony is dead last by a significant margin."

"So instead of the PS3 ensuring Blu-ray's success, right now it appears that Blu-ray may have effectively killed the PS3, at least in terms of market leadership. We'll have to wait until the PS4 before Sony has a chance to come back."

On the subject of neither format winning he writes that there won't be one uniform standard "until both one standard is clear and the related players drop below $200. They need both to happen or the market won't move. Currently, Blu-ray is running at more than twice the target price on players and HD-DVD is about 15 percent over target. In the case of the Xbox 360 accessory, it's actually about 15 percent under target."

"This means that if the studios have any chance this year of getting a large ramp -- and I would include Wal-Mart , Amazon and anyone else that sells HD movies -- it has to be HD-DVD. Blu-ray simply can't get there."

Lastly he goes on to write, "I think all realize, or should, time isn't unlimited either. We are already talking about what comes after HD-DVD and Blu-ray, and scalers are getting so good that increasingly many are arguing that you don't need either now. In other words, while Blu-ray can't win, in my view, there is still an excellent chance the market will simply bypass both if one doesn't ramp to high volume this year. In that instance, everyone loses."

"I think Paramount and DreamWorks saw this outcome and are trying to avoid it. While they did get an estimated $250 million incentive to move, that doesn't change the result. The studio execs likely realize if revenues don't improve, many of them may not be around by this time next year... So, as of right now, I think it is reasonably obvious Blu-ray lost. The only question is whether HD-DVD will be allowed to win; and the decision may be up to Time Warner or Disney and not Sony or Toshiba."

One might think that with consumers voting with their wallets that Blu-ray was going to easily win this format war. What is interesting, if what is written above is indeed the case, is that manufacturing costs seem to be dictating what the market will bear even though it doesn't seem that HD-DVD is 100% the format that the market wants.

Evan Jacobs at Movieweb
Evan Jacobs