Viacom Inc's Paramount Pictures and DreamWorks Animation SKG Inc said on Monday they will release their next-generation DVD titles exclusively on HD DVD ahead of what they say could be the biggest holiday season ever for DVDs.

Paramount had sold titles in both the new high-definition formats -- HD DVD and Blu-Ray -- but settled exclusively on HD DVD after deciding that it offered better quality, lower-priced players and lower manufacturing costs, Kelley Avery, president of Paramount Home Entertainment, told Reuters.

This has been the biggest summer on record for movies, it will be the biggest fourth quarter for popular movies for consumers, Avery said. At the same time, we have HD DVD players that are truly affordable.

HD DVD and Blu-Ray are waging a battle to dominate the next generation of DVD players that promise better pictures, sound and in some cases more content in the multibillion-dollar home-entertainment arena.

So far, most of the major Hollywood studios are selling Blu-Ray titles, and HD DVD sales have lagged. But some HD DVD supporters hope to broaden their appeal to consumers based on cost. The lowest-priced, stand-alone HD DVD player sells for $299, compared with $499 for the lowest-cost Blu-Ray option.

Paramount's first releases under the exclusive HD DVD program include Blades of Glory on August 28, and the summer blockbusters Transformers and Shrek the Third, due for release later this fall.

SHREK PREFERS HD DVD

DreamWorks Animation, maker of the blockbuster Shrek animated movie franchise, had not committed exclusively to either high-definition format but was swayed to HD DVD by the lower-cost player, DreamWorks Animation Chief Executive Officer Jeffrey Katzenberg said.

They have a high-quality consumer experience that is now being offered at a price point that we believe is going to connect with the consumer, Katzenberg told Reuters.

Katzenberg said timing also played a part, with the holiday season sure to be the biggest quarter in the history of the home-video market and consumers facing the 2009 switch to a high-definition broadcast signal.

This seems to us to be the right product at the right price at the right time, Katzenberg said. He added that sales for high-definition discs were much too small to declare either format dominant.

DreamWorks Animation titles are distributed on home video and DVD by Paramount.

The exclusive agreement does not include movies directed by Steven Spielberg for DreamWorks SKG, a Paramount unit. It does include all other movies distributed by Paramount, DreamWorks, Paramount Vantage, Nickelodeon Movies and MTV Films.

HD DVD was developed by Toshiba Corp and backed by Microsoft Corp and is supported by Warner Bros, Universal Studios, New Line Cinema, HBO and the Weinstein Co.

Blu-Ray discs use Sony Corp-backed technology and are supported by most of the major U.S. movie studios.

Both formats came on the market last year. Blu-Ray outsold HD DVD 2-to-1 in the United States in the first half of 2007. An estimated 3.7 million high-definition discs have been sold, overall, including 2.2 million in Blu-Ray and 1.5 million in HD DVD through July, according to Home Media Research.

Electronics Viacom