Aug. 20 (Bloomberg) -- Viacom Inc.'s Paramount Pictures and DreamWorks Animation SKG Inc. will exclusively release movies using the HD DVD format, giving Toshiba Corp.'s high-definition standard traction against rival Blu-ray from Sony Corp.

Viacom will receive $50 million and DreamWorks Animation will get $100 million from a group including Toshiba, Rich Greenfield, an analyst with Pali Research in New York, wrote on his Web log, without naming his sources.

``The reason for shifting exclusively to HD DVD would appear to be substantial upfront dollars,'' wrote Greenfield, who has a ``buy'' rating on Viacom and DreamWorks shares and doesn't own either. The payments will have ``meaningful positive impact'' on Viacom's second-half and full-year film profitability, he said.

Paramount, Hollywood's biggest studio this year by domestic ticket sales, joins General Electric Co.'s Universal Pictures as the only studios to back the HD DVD format exclusively. Movie discs using Blu-ray's high-definition format outsold HD DVD by 2- to-1 in the first half, according to Home Media Research. They are battling to become the next home entertainment standard.

The decision will affect all films distributed by Paramount, DreamWorks Pictures, Paramount Vantage, Nickelodeon Movies and MTV Films, the companies said today in a statement. Previously, they had released titles in both HD DVD and Blu-ray.

Rob Moore, Paramount's president of worldwide marketing and distribution, wouldn't discuss terms of the arrangement with HD DVD. ``We believe this relationship is in the best interest of Viacom and its shareholders,'' he said in an interview.

DreamWorks Animation spokesman Rich Sullivan declined to comment on the terms.

`Format War'

Sony, Walt Disney Co. and News Corp.'s Fox film studio are releasing titles only in Blu-ray. Time Warner Inc.'s Warner Bros. studio has movies in both formats.

Blu-ray players were included in Sony's PlayStation3 video game console, giving the format a sales boost over HD DVD's lower-priced players. More than two-thirds of high-definition players purchased this year have been Blu-ray, according to Home Media Research.

``It had seemed like Blu-ray was winning the format war,'' David C. Joyce, an analyst at Miller Tabak & Co. in New York, said in an interview. He has a ``buy'' rating on Viacom and doesn't own the stock. `` It's surprising Viacom would try to be a David in a fight with the rest of the industry goliaths.''

Player Prices

DreamWorks Animation Chief Executive Officer Jeffrey Katzenberg and Paramount's Moore cited HD DVD players' lower price as a motivating factor for choosing the format. Titles to be released in the holiday season exclusively on HD DVD include ``Shrek the Third'' from DreamWorks Animation, ``Bourne Ultimatum'' from Universal and ``Transformers'' from Paramount's DreamWorks live-action studio.

A Toshiba HD DVD player costs $299, while a Sony Blu-ray machine is priced at $487.99 on the Web site of electronics retailer Best Buy Co.

The pricing ``makes this very appealing to the family market, which is our primary audience,'' Katzenberg said in an interview.

Warner Bros. and New Line Cinema, studios owned by Time Warner, may also decide to release titles solely in Blu-ray or HD DVD, Greenfield said in an interview.

``Viacom's decision throws a wrench into the format war,'' Greenfield at Pali said in an interview. ``The next key will be which way Warner Bros. and New Line decide to go.''

Viacom shares rose 16 cents to $37.56 at 4 p.m. in New York Stock Exchange composite trading. The New York-based company's stock has dropped 8.5 percent this year. DreamWorks shares rose 63 cents to $29.30 and are little changed this year. The animation studio is based in Glendale, California.

To contact the reporter on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net

Last Updated: August 20, 2007 16:29 EDT