The format war over nextgeneration DVDs just got a lot murkier.

Paramount Pictures and DreamWorks Animation SKG Inc. said yesterday they will offer movies exclusively in the HD DVD format rather than its better-selling rival Blu-ray — a surprise move that complicates the technology battle that Blu-ray had been winning.

"I am very late to this party because I was skeptical about high-definition," said Jeffrey Katzenberg, chief executive of DreamWorks Animation, "but what is happening in the marketplace is a game-changer."

Not included are director Steven Spielberg's films, which the companies said are "not exclusive to either format." Spielberg, Katzenberg and mogul David Geffen sold their DreamWorks SKG live-action operation to Paramount.

Both HD DVD and Blu-ray players produce much sharper pictures than conventional DVD players. Because most people still have standard machines, high-definition discs are just a fraction of the overall DVD market. From Jan. 1 through Aug. 12, consumers bought 2.1 million Blu-ray discs and 1.1 million HD DVD discs, compared with nearly half a billion standard DVDs, said Judith McCourt, research director of Home Media Research.

But HD DVD players now retail in some cases for $299 and could be headed as low as $199 by the holiday season, Katzenberg said, making them affordable to families just as a diverse group of hi-def movies is going on sale. He further predicted that this summer's Hollywood blockbusters — including installments of the "Shrek," "Pirates of the Caribbean" and "Harry Potter" franchises — would make the fourth quarter the biggest ever in home entertainment.

Blu-ray players have come down from about $1,000 a year ago to $499 today. Even so, Blu-ray discs have outsold HD DVDs by 2-to-1 this year, and retailers including Blockbuster Inc. and Target Corp. are lining up on the Blu-ray side, according to the Blu-ray Disc Association trade group.

"Blu-ray is going to win," said Andy Parsons, spokesman for the group. "It's just a question of how much longer it's going to take now."

He said the decision "seems oddly timed given Blu-ray's tremendous momentum both with consumers and with retail."

Target will start selling a Blu-ray device this fall for the holiday shopping season, although it will offer discs in both formats. Blockbuster now stocks Blu-ray discs exclusively at most of its outlets.