In August the New York Times reported that Paramount and Dreamworks Animation would receive $150 million for making an exclusive commitment to supply titles in the HD DVD format and not Blu-ray. My good friend Benjamin Weeks (President of the Digital Video Professionals Association) then wrote a blog entry quoting stats that show that the format war was actually causing people to “stick with DVD” rather than upgrade to the better technology. He also had this inspired quote:

“We’re asked on a weekly basis by members which format they should invest their time and resources. A month ago I thought I knew the answer. After the announcement of this disturbing trend toward “buying the support of others”, I’m not as convinced. A few truths I do know, however, is that Adobe has chosen to support Blu-Ray exclusively, more companies are producing Blu-Ray technology than HD DVD and more movie studios are supporting Blu-Ray than the competition.”

He then goes on to say, “As of today (before another $150 million buy-out announcement is made), we’d put our money, long-term, behind Blu-ray.”

And then this week happened. First, Warner Brothers announced that it was dropping the HD DVD format entirely in favor of Blu-ray. This announcement made pundits predict that 70% of all HD movies would soon be shipping exclusively in the Blu-ray format. This was a big blow to Toshiba (the primary maker and backer of the technology) and Microsoft which has heavily endorsed the format in both it’s operating system and XBOX 360 units. The quote from Warner Brothers chief exec Barry Meyer was:

“Warner Bros. has produced in both high-definition formats in an effort to provide consumer choice, foster mainstream adoption and drive down hardware prices… [this] is a strategic decision focused on the long term and the most direct way to give consumers what they want. The window of opportunity for high-definition DVD could be missed if format confusion continues to linger.”

Then, at CES 2008, the entire HD DVD Promotional Group canceled their CES keynote on short notice. Not Good. Then Toshiba puts out a press release hinting that Warner Brothers is in Breach of Contract and that “We will assess the potential impact of this announcement with the other HD DVD partner companies and evaluate potential next steps.”

Meanwhile, at the Blu-ray press conference, the couldn’t be more giddy.

And now we go back to Paramount, who if you remember, recently got paid off financial incentives to go exclusively with the HD DVD format. Well now the Financial Times is reporting that Paramount has a clause in its contract that allows it to get out of the deal if Warner Brothers goes exclusively to the competing Blu-ray format! It’s the “I don’t want to be the last off of the sinking ship” clause. Specifically, the Financial Times says:

“Paramount, which is owned by Viacom, is understood to have a clause in its contract with the HD DVD camp that would allow it to switch sides in the event of Warner Bros backing Blu-ray, according to people familiar with the situation.”

If this is true and it actually takes place, then it would leave only Universal and Dreamworks in the HD DVD camp… for like a day. They’d switch as fast as PR could write the release. This is one battle where no one wants to be last man standing.

The Fat Lady may not be singing yet… but you can definitely hear her warming up in the wings.

Seriously, someone give Toshiba a HUG. It’s been a rough week.

UPDATE: “Daily Variety has confirmed that Universal’s commitment to backing HD DVD exclusively has ended. And Paramount has an escape clause in its HD DVD contract allowing it to release pics on Blu-ray after Warner Bros.’ decision to back that format exclusively.”

UPDATE: About 7:40 PM tonight Engadget reported…

Universal Studios issued a terse statement today, denying rumors that the HD DVD stalwart is looking to take advantage of that lapsed exclusivity contract and jump ship for cross-town high-def adversary, Blu-ray. Ken Graffeo - veep of HD strategic marketing at Universal and also co-president of the HD DVD Promotional Group - said simply “Universal’s current plan is to continue to support the HD DVD format.”

Let me translate that statement into non-PR speak, “We’re staying with HD DVD for the next few weeks until our lawyers have a chance to study all the contracts and figure out how to get us out of this mess without getting sued!“