Studios were paid $150 million for HD-DVD exclusivity

Following the revelation that Paramount and Dreamworks will work exclusively with HD-DVD disks, news has emerged that "incentives" were offered, alleged to amount to the tune of $150 million.

Until now, Paramount has released titles in both HD DVD and competing format, Blu-ray while DreamWorks Animation has not released a movie on either.

Microsoft, the most prominent technology company supporting HD-DVDs, said it couldn’t rule out payment but said it has "provided no financial incentives to Paramount or DreamWorks whatsoever," said Amir Majidimehr, the head of Microsoft’s consumer media technology group.

On the deal, Andy Parsons, a member of the Blu-ray Disc Association, which represents companies like Panasonic, Samsung and Sony, said: "This seems like a move of desperation."

The New York Times has revealed that two company executives, who do not wish to be named, have confirmed that a sweetener was included in the deal. However, it seems the Blu-ray camp are not prepared to be spectators in what has become an intense format war.

A Disney spokesperson said the company may expand a new campaign to convince consumers on Blu-ray, and Fox announced plans to flood the market with 29 new Blu-ray releases.

Blu-ray is still leaps and bounds ahead of the HD-DVD format and things are set to get more tense on the HD-DVD camps with Blockbuster and major retailer Target announcing they plan to only stock Blu-ray titles.

Stirring the debate to boiling point Bob Chapek, president of Disney’s home entertainment unit, said: "There is no longer any doubt that Blu-ray is the clear successor to standard DVDs."