Update: Paramount denies plans to drop HD DVD

Paramount has officially denied rumors that it will break its exclusivity with HD DVD and switch to Blu-ray. The studio said in a statement that its current plan is to continue supporting the format.

The Financial Times claimed that Paramount will use a "get-out clause" in its exclusivity agreement with HD DVD to follow Warner in jumping ship to Blu-ray. The paper cited "people familiar with the situation," and offered little evidence.

Paramount signed an exclusive deal last summer to distribute its films on HD DVD alongside DreamWorks Animation. The move was a blow to Sony's Blu-ray format, but the win was short-lived: just a day before CES, Warner Bros. announced it would go Blu-ray-only starting in June.

If Paramount were to have a clause to exit the agreement and end up joining Blu-ray, HD DVD's fate would be all but sealed. Currently, HD DVD counts only Paramount and Universal as major supporters, while Blu-ray is backed by Fox, Disney, Lionsgate, Sony, MGM and now Warner Bros.

It is unlikely that Universal would remain the sole HD DVD backer, leading to a complete dismantling of the format by Hollywood.

The Financial Times said it was not clear whether DreamWorks had the same clause, but noted that Paramount distributes the studio's films.

Blu-ray has been publicly asserting victory in the long-running next-generation format war, although HD DVD still offers more advanced technology with interactive features and Internet connectivity at a lower price. Blu-ray has acknowledged its sluggishness in adopting advanced features, and promised big changes in 2008 -- which will require early adopters to purchase new Blu-ray players.