Dallas (TX) - Playing the new high-def video market much more safely than its competitor Netflix - which proclaimed last January it would fully and unabashedly support both HD DVD and Blu-ray high-definition disc formats - Blockbuster confirmed to TG Daily today that it will make HD DVD rentals available next Tuesday to its online subscribers only, with Blu-ray titles following in May. This decision comes in the wake of a full evaluation of Blockbuster's place in the video delivery market, one result of which may be a pullback from migrating toward the video-on-demand market.

But the announcement came parenthetically - not trumpeted like Netflix - in a news brief about a customer survey about their willingness to adopt new high-def formats. The results of that survey are in alignment with those from research firms over the past year: Of the Blockbuster Online subscribers surveyed (the total number of which is not available), 55% currently own high-definition viewing equipment, and 47% would be interested in viewing a high-def movie. But only about a third were interested in purchasing an HD DVD or Blu-ray player, the key cause of their reluctance being price.

As a result, next Tuesday, Blockbuster Online will enable its users to browse and rent HD DVD titles, with Blu-ray titles to be added on 23 May. Just how much "browsing" users will be able to do will be limited to the number of titles studios will make available - which, a Blockbuster spokesperson confirmed to TG Daily today, will be limited to a grand total of four: The Last Samurai, Million Dollar Baby, Phantom of the Opera, and Serenity. Availability of these four titles online will not be guaranteed, we were told, although they should each count as single rentals just like any other DVD rental, for members with rental plans.

The purpose of this program, Blockbuster's Randy Hargrove told us, is to gauge consumer acceptance levels of high-definition formats, to determine whether it's time to make these titles available through Blockbuster's retail outlets. As a result, making high-def titles available in-store will wait until the success levels of the online sampling program indicate it would be viable for Blockbuster to do so. In the meantime, Hargrove said, the company will watch consumer penetration levels for HD DVD and Blu-ray players and recorders, which the online survey highlighted as a potential roadblock for wide customer adoption.

Hargrove cites some company history: The company initiated its rollout of the DVD format in stages in December 1999, prior to the launch of its online rental service. A small number of stores were chosen for the initial stages of the rollout, so the company could gauge consumer reaction. As DVD player prices started to fall - more accurately, to plunge - consumers appeared clearly ready to adopt DVD, and the phase-out of VHS rentals began. Today, Blockbuster could have adopted a similar test program for high-def, but studios aren't making enough titles available in these early stages. So instead, the company is relying on online sampling, although Hargrove admits, there are no set levels determined yet which would serve as clear signals of customer adoption - no percentages, and no timeframes.

The impediment to Blockbuster's being able to make these determinations is related, according to Hargrove, to the same problem its own customers are reporting: the high price of Blu-ray and HD DVD players. How soon manufacturers would be willing to start ramping those prices down isn't clear. So while Blockbuster believes high-def formats represent a new opportunity for consumers, Hargrove stated, it remains uncertain how soon those consumers will be able to realize that opportunity.

This morning's statement quotes the company's senior vice president and general manager, Shane Evangelist, as saying, "It's the old beta versus VHS dilemma. There's no way to know how long it's going to take for the general market to decide which formats will ultimately prevail. So while this shakes out, we're just going to listen to our customers and make sure we give them the movies they want in the format they prefer - whatever the technology."

To that, Hargrove adds, "I think one [high-def] format would have made it easier on consumers and retailers, but we will look at what the formats are, and consumer demand, and work within the framework of what is released."