Paramount got bung to dump Blu-ray for HD-DVD

Paramount and the publicly held Dreamworks Animation announced that they would exclusively back the HD DVD format for the release of high-definition movies including "Transformers" and "Shrek the Third."

According to the Times, Viacom, which owns Paramount and Dreamworks Animation will receive about $150 million for the deal.

Apparently the cash will not come in the form of used banknotes stuffed into a Swiss bank account. It seems that hardware makers will provide cash and promotional guarantees. Toshiba plans to use the release of “Shrek the Third” as part of an HD DVD marketing campaign.

Microsoft is one of the bigger supporters of HD-DVD, but it confirms that it "wrote no cheques" to get Paramount and Dreamworks to change its mind.

The deal is limited to 18 months which means that Paramount is off the hook if it all goes pear-shaped. If Blu-ray becomes the accepted standard in the meantime then Paramount has had its profits all nicely guaranteed during the tricky period where no-one knows who will win. It is a bit like betting on a horse and having your winnings guaranteed even if you lose.

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