Retailers: DVD Format War 'Stupid,' Harmful

LAS VEGAS – Consumers, confused over the brewing battle between next-generation DVD technologies, are not alone: Top U.S. electronics retailers at the Consumer Electronics Show in Las Vegas called the war "nightmarishly unfriendly" and "stupid."

Stores like Best Buy (BBY), Circuit City (CC) and closely held CompUSA may sell millions of devices, either HD DVD or its rival, Blu-ray, and some day one version could be obsolete, drawing the ire of their customers. What's more, many will chose not to buy any device, instead waiting for one format to win.

Blu-ray is backed by Sony Corp. (SNE) and HD DVD is championed by Toshiba Corp. The two technology camps failed to reach a unified technological front, setting the stage this year for a format war like the costly VCR vs. Betamax battle of the 1980s.

"We are frustrated," said Best Buy CEO Brad Anderson on Friday on the sidelines of a panel discussion at CES, the industry's biggest U.S. trade show. "We are going to wind up with some number of consumers probably buying a format that dies, and we are probably going to wind up having to sell it to them. They are not going to be happy with us."

Both Blu-ray and HD DVD backers hope to spark the sagging home video market with new high-definition DVD players and discs, offering greater capacity and interactive features.

"The problem is that what you want is huge penetration into homes as quickly as possible," said CompUSA Chief Executive Larry Mondry. "The Beta-VHS wars lasted 10 years. We are doing it again and we are just stupid as an industry.

"I don't care which way it goes, I just want it to go one [particular] way," he added.

Starting this year, it is likely that electronics retailers are going to have to make space in their stores for sundry devices related to both formats, including DVD players, movies and other programming that play on them, and accessories.

Those boxes will crowd against standard DVD players, as well as digital video recorders, like those made by TiVo Inc.(TIVO), creating many — perhaps too many — choices for shoppers who want to enjoy advanced TV viewing features.

Decisions on what to stock will have to be made by the retailers sooner rather than later. At the Consumer Electronics Show in Las Vegas, Toshiba and Thomson (TMS) each announced plans to sell in the next few months high-definition DVD player in the United States priced at around $500.

Blu-ray backers such as Philips Electronics (PHG), Matsushita (MC) and Samsung Corp. aim to sell devices this year, as will Sony, whose next version of the popular PlayStation game machine will play Blu-ray disks.

Both camps have lined up Hollywood movie studios to release movies on the new formats, some exclusively on either HD DVD or Blu-ray disks.

"Customers clearly have an appetite for high-quality content. The shame is it is going to take longer than we need it to," to get it to them, said Circuit City Chief Executive Alan McCollough, during a panel discussion at CES.