Blockbuster (BBI) has decided to only offer Blu-ray DVDs in most of its stores. Blu-ray is one of two rival formats for delivering high-definition movies.Its biggest proponent is Sony (SNE) which builds players for the technology. According to The Wall Street Journal "will rent high-definition DVDs only in the Blu-ray format in 1,450 stores when it expands its high-def offerings next month".
Sony could use the help. It had hoped that it could use the PS3 which can be set up to play Blu-ray disks as a way to champion the format. But, PS3 sales have lagged the Microsoft (MSFT) Xbox 360 and Nintendo Wii.
Sony’s major rival in the high-def wars is Toshiba which sells hardware for the HD-DVD format.
The prices for high-def players is already falling. The makes volume the critical element in whether Sony and Toshiba make money. The war is not unlike the one which took place in the 1970s between Betamax and VHS tape players. Sony lost out in that one when Betamax turned out to be the platform which consumers rejected.
Another "Betamax" for Sony would be a headache the company can hardly afford. With its video game platform doing poorly, it has to rely on its consumer electronics and studio operations to do well. Absent strong performance at one of those and Sony could be in real trouble.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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