Paramount Pictures and DreamWorks Animation SKG Inc. will offer next-generation DVDs in the HD DVD format and drop support for Blu-ray, further complicating the race between the competing technologies.

Monday's announcement affects the upcoming DVD releases of the blockbusters ''Shrek the Third'' and ''Transformers,'' along with movies distributed by Paramount Pictures, DreamWorks Pictures, Paramount Vantage, Nickelodeon Movies and MTV Films.

Movies directed by Steven Spielberg, however, will continue to be released in both formats.

Paramount, which owns DreamWorks Pictures and handles home sales for the separate company DreamWorks Animation, previously released movies in both Blu-ray and HD DVD.

''Part of our vision is to aggressively extend our movies beyond the theater, and deliver the quality and features that appeal to our audience,'' said Brad Grey, chairman and CEO of Paramount Pictures, a unit of Viacom Inc.

''I believe HD DVD is not only the affordable high-quality choice for consumers, but also the smart choice for Paramount,'' he said.

The competition between Blu-ray and HD DVD has kept confused consumers from rushing to buy new DVD players until they can determine which format will dominate the market.

Until recently, many consumers were able to defer the choice because players have been so expensive. But prices have been slashed by about half - Sony Corp.'s Blu-ray player now sells for $499, and Toshiba Corp.'s cheapest HD DVD player sells for $299, with both likely to include as many as five free movies as an incentive.

Jeffrey Katzenberg, CEO of DreamWorks Animation, said consumers seeking to switch to high-definition DVDs will be enticed by the movies available for HD-DVD players. He added the lower price for the Toshiba devices will appeal to the family market.

''It's a game-changer, what they're doing, and it's why we decided to throw in with them,'' Katzenberg said.

Standalone HD DVD players have a bigger slice of the market than Blu-ray players. But when you count Sony's PlayStation 3 game console, which comes with a Blu-ray drive, there are more Blu-ray players in U.S. homes.

Rob Moore, president of Paramount Worldwide Distribution, said market data shows that people who own gaming consoles buy fewer movies than those who invest in a movie-only player.

Andy Parsons, chairman of the Blu-ray Disc Association trade group, questioned the studios' decision to adopt HD DVD over Blu-ray, saying price differences between players have diminished in recent months. He said the trend ''is on its way to eliminating any perceived cost advantage the HD DVD format has claimed to have.''

Blu-ray discs can hold more data - 50 gigabytes compared with HD DVD's 30 GB - but the technology requires new manufacturing techniques and factories, boosting initial costs.

HD DVDs, on the other hand, are essentially DVDs on steroids, meaning movie studios can turn to existing assembly lines to produce them in mass.

Studios and retailers have been choosing sides in recent months.

With Paramount dropping Blu-ray support, Time Warner Inc.'s Warner Bros. remains the only major studio releasing movies in both formats.

''Spider-Man 3'' will only be available in the Blu-ray DVD format when it is released by Sony Pictures, while people with Blu-ray players won't be able to enjoy the action-thriller ''The Bourne Ultimatum,'' which Universal Pictures will release only in HD DVD.

The Blu-ray format recently got a big boost as Blockbuster Inc. announced it would stock only Blu-ray titles when it expands its high-def DVD offerings this year.

Target Inc., the nation's second-largest retailer, said it will only sell Blu-ray DVD players in its stores in the fourth quarter.

Sony Corp.'s Sony Pictures, News Corp.'s Twentieth Century Fox, The Walt Disney Co., and Metro-Goldwyn-Mayer are releasing only in Blu-ray.

Universal, owned by General Electric Co., backs HD DVD exclusively.