Just when many observers are beginning to believe that Blu-ray has the next-gen HD format wars all wrapped up, Paramount throws us a major curveball. The studio has announced that it is abandoning Blu-ray in favor of HD DVD. Is a shake-up in the works?

Both Paramount and DreamWorks Animation SKG today announced their backing of HD DVD, which will entail exclusive use of the HD DVD format. The decision will see movies from Paramount Pictures, DreamWorks Pictures, Paramount Vantage, Nickelodeon Movies and MTV Films available in standard definition DVD and HD DVD, exclusively.

What makes this decision so remarkable is the fact that Paramount was a fence straddler: the company has issued movies in both HD DVD and Blu-ray over the past several months, choosing to evaluate the market. Paramount says that its evaluation uncovered two benefits to HD DVD. First, the format is less expensive to produce, as we have touched on before. Second, Paramount described HD DVD as being superior owing to "market-ready technology."

In a statement, Brad Grey, Chairman and CEO of Paramount Pictures said, "Part of our vision is to aggressively extend our movies beyond the theater, and deliver the quality and features that appeal to our audience.  I believe HD DVD is not only the affordable high quality choice for consumers, but also the smart choice for Paramount."

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