Blockbuster Stores Told to Choose Blu-ray?

Blockbuster Video stores are expanding their high definition offerings to 1700 stores by mid-July, however these offerings won't include HD DVD titles. Online rentals will still be available for both Blu-ray and HD DVD and the initial 250 stores that currently rent both formats will continue to do so.

"We intend to meet the demands of our customers and based on the trends we're seeing, we're expanding our Blu-ray inventory to ensure our stores reflect the right level of products," said Matthew Smith, SVP Merchandising for Blockbuster. "While it is still too early to say which high-definition format will become the industry standard, we will continue to closely monitor customer rental patterns both at our stores and online, so we can adjust our inventory mix accordingly and ensure that Blockbuster is offering customers the most convenient access to the movies they want, in the format they want."

With the expansion in July, the 1,700 stores will be carrying more than 170 titles in Blu-ray and will continue to add titles in the format as they are released from the studios.

Says Smith: "We are excited to be able to make more high-definition titles available to our customers in those stores where our research indicates there will be the most demand... Obviously, when customers are ready we can expand the Blu-ray offering into more stores and add HD DVD to more locations if that's what customers tell us they want. We'll continue to work with the movie studios to ensure we have the right assortment of products."

Here's where it gets interesting. Blockbuster's parent company used to be Viacom. Viacom happens to be the parent company to Paramount Pictures and DreamWorks SKG. Paramount was the notorious company that "switched" from endorsing HD DVD to endorsing Blu-ray (but while still releasing titles in both formats to hedge it's bets. While this doesn't exactly scream conspiracy theory, it appears that Blockbuster is taking the same approach with the stores hedging their bets by saying that consumer influence will dictate corporate policy on a per-store basis (and it possibly may, though it will take a significant study of market penetration per area to determine the effectiveness of these per-store policy changes.)

SO is the format war finally over? Well, not if Wal-mart pushes through with its plans to release a Chinese-branded HD DVD player this year for less than $200. A lot of discussion ensued when Chinese manufacturer leaked that they were going to produce HD DVD players for Wal-mart in quantity to the tune of $199 retail:

"We are sorry to correct the statement that we have two million HD DVD players order from Wal-Mart and manufactured by China Great Wall Group," Fuh Yuan said. "The actuality is that we had not received yet. We are asked to provide the schedule to Wal-Mart and cost to determine the quantity even more than two million, if the cost is good enough and timing is correct. So the capacity is under consideration. Any qualified manufactured base group will be welcome."

Though they retracted the statement, the facts seemed to show that the only mis-statement was that Fuh Yuan had exclusively won the bid. With a pretty clear indication that this is out for bid to Chinese manufacturers to the tune of more than 2 million players it is likely that Wal-mart, who possesses more than 40% of the DVD market, may swing the format war again towards HD DVD. Blu-ray Disc players have not, to our current understanding, been licensed for manufacture by third parties as of yet.

The bottom line will be determined by one thing: Can a retailer or any external entity force the collective hands of the studios? If so, then a successful push by Wal-mart may force studios who are exclusively Blu-ray to begin manufacturing HD DVD titles simply to compete. If not, then the lack of particular titles in the HD DVD format will cause the format war to be extended further with no end in sight.