NY Times article on HD-DVD format wars

Old 12-29-03, 01:16 PM
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NY Times article on HD-DVD format wars

December 29, 2003
Heavyweights Are Choosing Sides in Battle Over Next DVD Format

TOKYO, Dec. 28 - When Hisashi Yamada pulls back his bow, he thinks of only one thing: Hitting the bull's-eye 92 feet away.

"When I concentrate on the target," said Mr. Yamada, a champion archer who demonstrates his skill dressed in the traditional blue-and-white hakama, "I forget about everything else."

In his regular job, Mr. Yamada, a 60-year-old electrical engineer, is putting that same single-minded focus to work for the Toshiba Corporation, which is battling like a Japanese samurai warrior of old in a fight to the finish over whose format will be used in the next generation of DVD's.

The discs, which have been under development for several years, will hold four to five times more digital video and audio data than those now on the market. They are needed because broadcasters and movie studios are planning to take advantage of the spread of high-definition television screens to produce more digital programming with multitrack sound and much better resolution.

The new discs and their players will not be widely available until at least 2005, but already the world's largest electronics, computer and entertainment companies are embroiled in a multibillion-dollar fight over whose technology will become an industry standard.

The arguments are in many ways reminiscent of the Betamax-VHS showdown in the 1970's and the clashes over digital audiotape, compact discs and the original digital videodiscs released in 1997. As in those battles, technology is just the starting point for debates filled with emotion and industry politics.

Beyond the technical details like tracking speed and tilt is a serious tussle over how to divide - and protect - the billions of dollars in royalties from the licensing of this technology and the content sold on the discs. Also at stake is an effort by electronics makers to prevent emerging Chinese rivals and well-established Silicon Valley computer makers from making significant inroads into the home entertainment business.

"This is a very intense conflict over intellectual property," said Warren N. Lieberfarb, a driving force behind the development of the original DVD format. It has the added overlay, he said, "of the Japanese, Korean and European consumer electronics industries fearing China's aggressively emerging consumer electronics industry as well as the PC industry."

At the technological level, the combatants are divided roughly into two camps. Under Mr. Yamada's leadership, NEC and Toshiba have formed a group that has developed the HD (high definition) DVD, a disc that is 0.6 millimeter thick and made with machinery similar to that used for today's DVD's. On the other side is the 10-company Blu-ray Group, led by Sony and Matsushita, whose best-known brands are Panasonic and JVC. That group has developed a disc only 0.1 millimeter thick that can hold more data but needs additional investment to be produced. Information on the discs can be overwritten after it is recorded, something that is not possible with the HD DVD's now.

At 12 centimeters in diameter, both discs are similar to today's offerings, though Sony's discs are protected from fingerprints, dust and scratches by square plastic cartridges when not in use. The HD DVD group has developed a single lens that emits red and blue rays to read both current and next-generation discs. The Blu-ray machines require two separate lenses.

While the discs are still at least a year away from mass production, both sides are expected to be out in full body armor trying to win new allies at the big Consumer Electronics Show in Las Vegas, Jan. 8 through 11, where they are planning to show prototypes of their devices.

There are many battles left to fight, though, before these new DVD's hit the shelves, and it is entirely possible that the camps will never reach a consensus, forcing consumers, retailers, movie studios and others to adapt, at least initially, to two competing standards.

In the Betamax-VHS war, one standard ultimately triumphed. That is an important reason the two chief antagonists in that fight - Sony, the loser, and Matsushita, the winner - are now allies. In the wake of other format conflicts, including the one over the first generation of DVD's, multiple standards co-exist, with the differences papered over by machines that can play several formats. But in other cases, including the development of higher-quality music discs, the disputes seem to have scared away consumers and retailers caught in the middle.

The ideal, everyone involved insists, is for one format to emerge as the winner so costs can be kept to a minimum. But as Mr. Yamada knows, that is about the only thing on which people can agree. In addition to his role at Toshiba, he is chairman of the powerful Technical Coordination Group at the DVD Forum, a six-year-old group of more than 200 companies that is trying to decide on one format.

In November, the HD DVD camp's specifications were endorsed by the forum's steering committee. The victory was significant, but tellingly contentious. The format was not approved until the third ballot, and only after voting rules were changed and several companies abstained. The Blu-ray Group did not submit specifications for a read-only disc, which Hollywood is eager to have for movie sales and rentals.

Mr. Yamada called the negotiations "very delicate," and said the Blu-ray Group was trying to prevent the HD DVD from becoming the industry standard because it does not yet have a solid alternative.

"They don't want to approve HD DVD in the forum, but since they only have rewriteable discs, they can't say theirs is better than ours," said Mr. Yamada, who argues that his goal is to produce an open format that all companies can share. The Blu-ray Group, he said, "wants to control the technological standards themselves."

The HD DVD group may get an additional lift in February, when the Walt Disney Company, Microsoft and Sanyo are expected to take over leadership of the DVD Forum. The three companies have not sided with either format, but are seen by some as friendlier to the Toshiba-NEC group.

Though the two camps produce discs that store similar amounts of data, manufacturers say that the HD DVD discs cost only 15 percent more to produce than current discs, a fraction of what they say the Blu-ray discs will cost. Stamping out prerecorded discs cheaply is the key to wooing Hollywood studios, which want to keep their retail prices low in a business that now brings in more money than movies in first-run theaters. Retailers also want one standard so they do not have to stock two versions of every movie.

"What Hollywood cares about is cost," said Kanji Katsuura, the chief technical officer at Memory-Tech, the second-largest maker of DVD's in Japan. "They basically want the same price as discs now."

Sony and its allies dismiss claims that their technology is too expensive, saying that the cost per disc will naturally fall as production takes off. They also say their rewriteable discs are what consumers really want because they can be used not only to play movies but also to record high-definition digital television programming, now available selectively in the United States and offered on a limited basis in Japan starting this month.

"What we are striving for with Blu-ray is the next stage in the evolution of this technology," said Yukinori Kawauchi, a manager in the planning and control division at Sony's broadband network unit. Such a leap happens only "every 10 or 20 years, like the transition from CD's to DVD's," he said. In April, Sony started selling Blu-ray DVD recorders in Japan, where they cost 378,000 yen, or $3,500, and take discs that sell for 3,000 yen, or about $27. Sony does not release sales figures, but industry sources said only a few hundred players had been sold so far.

Mr. Yamada said Toshiba wanted to introduce DVD recorders in 2005 that cost less than $2,000 and players priced below $1,000. They would be much cheaper than machines using the competing format, but would still be aimed mostly at the early adopters, who are the first to try new technologies. As in the past, the new formats are not expected to take off in the mass market until the price falls sharply.

"The battle really depends on the price level," said Yuki Sugi, a consumer electronics analyst at Deutsche Securities in Tokyo. "When the price falls to 120,000 yen ($1,080), it will catch on. This is a kind of magic number for high-priced electronics."

History indicates that the magic number might be reached earlier than anticipated. Sales of DVD discs and players gathered steam when production began in China, pushing prices lower. But some manufacturers worry that their technology could be used by Chinese rivals, legally or otherwise. This fear, some critics say, is why the Blu-ray group has kept a tight lid on its technology instead of sharing more of its specifications with other members of the DVD Forum. Striking back, nine Chinese companies have said they plan to develop their own DVD formats.

Copyright infringement is another worry. After the rapid spread of illegally copied DVDs, Hollywood is pushing both technical groups to come up with new security measures to protect their movies. Neither group has developed a prototype that satisfies the movie industry - a major impediment to a commercial launch.

"We are very much focused on both picture quality and content protection," said Peter Murphy, senior executive vice president and chief strategic officer at the Walt Disney Company, which has about one-fourth of the home video market. "The consumer electronics manufacturers can come up with the technical standards for the next-generation discs, but unless we also agree on the content protection standards, many of the studios may choose to wait before releasing content in the new format."

Also lurking nearby are giants like Microsoft, I.B.M. and Intel, which are eager to work their way into family rooms by promoting their technology for use in set-top boxes, DVD players and digital video recorders with hard disk drives. American computer makers, adept at producing hardware on thin margins by building sophisticated global supply chains, could also develop competing products, turning television into just another function of the home computer.

"Younger generations are completely happy working with a mouse, which is better than a 1,000-button remote," said Tom Adams, president of Adams Media Research in Carmel, Calif. "Microsoft can dominate in ways that Sony or Toshiba can't."

Some analysts contend that high-speed Internet connections will ultimately make discs less relevant as consumers download more music and movies, though this is a more distant threat.

For now, discs remain the medium of choice, and the decision on a format will ultimately be up to Hollywood. Some movie executives are leaning toward the HD DVD format because it is seen as the cheaper of the two. But others are still weighing the technological and financial arguments from both groups.

Many in the industry say the worst case would be an endless fight, forcing the public to wrestle with two formats.

If that happens, said Mr. Lieberfarb, the developer of the original DVD format, "everyone is a loser, particularly Hollywood studios, the retailer community and, most importantly, the consumer."

Copyright 2003 The New York Times
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Old 12-29-03, 01:40 PM
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That was way to much to read
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Old 12-29-03, 03:06 PM
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It's going to be years before we have a dominant format.

Way too much politicing by hardware manufacturers and studios.

I say it's ten years minimum before we get a clear-cut HD-DVD format.
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Old 12-29-03, 03:36 PM
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I think any format of HD-DVD will have a hard time displacing DVD now that Joe Six Pack has bought into it.

I mean CDs have been around for like 23 years and I don't see anything overtaking them anytime in the foreseeable future.

It takes a lot more than just better A/V quality to get the mass market to adopt a new entertainment medium, and that's all HD-DVD can offer.

CDs offered better sound, but also no rewinding or fast forwarding with instant access to tracks, as well as being more durable. DVD-A and Super CDs just offer better sound and thus aren't a thread.

Same with DVD, it offered a lot over VHS, but HD-DVD can only offer better picture and sound quality over DVD, thus Joe Six Pack isn't going to be likely to trash his DVD player and library and upgrade.
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Old 12-29-03, 03:42 PM
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I agree with both Josh's.

Going from 480P to 720P (or 1080i) isn't anything like going from VHS to standard DVD anyway. Also, it's going to be a while before J6Ps get HDTVs. The average person (which is over 90% of the population in this case), is perfectly happy with a medicore 25" tv for $299.00. They aren't even considering a $1500+ HDTV.
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Old 12-29-03, 04:04 PM
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Yep, don't hold your breath.
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Old 12-29-03, 04:56 PM
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Should be interesting to watch unfold, slowly though it will be...
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Old 12-29-03, 05:02 PM
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I don't think HD-DVD will replace DVD, nor do I think it's meant to.... just like HD television broadcasts won't make regular television broadcasts obsolete.

I think HD-DVD will carve itself a nice niche market - and I'm fine with that... as long as the prices of HD-DVD movies aren't ridiculous. I'm willing to pay an additional 50% for films in this format.
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Old 12-29-03, 05:11 PM
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Originally posted by Coral
I don't think HD-DVD will replace DVD, nor do I think it's meant to.... just like HD television broadcasts won't make regular television broadcasts obsolete.

I think HD-DVD will carve itself a nice niche market - and I'm fine with that... as long as the prices of HD-DVD movies aren't ridiculous. I'm willing to pay an additional 50% for films in this format.
I hope your right on both. I'm not a videophile, and don't plan on buying an HD-TV in the foreseeable future.

Hell, I'd be perfectly happy if CDs and DVDs stuck around as the dominant format (or at least mainstream enough that I with my mainstream movie and music tastes can find everything I want) for the rest of my lifetime.

I have no interest in rebuying my collection for better A/V quality. I was fortunate to be young enough not to get a music collection before CDs, and not into buying movies before the advent of DVD, thus I didn't face this dilemma before.
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Old 12-29-03, 06:24 PM
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Interesting article. Regarding Blu-Ray, I thought I read somewhere that they opted to abandon the cartridge and are going to use some kinda protective coating instead. Anyone else hear that as well?

Microsoft and Disney running the forum? yeesh.

The studios insistence on stricter copy protection will no doubt throw a monkey wrench into this process. The one thing I want though is recordability. I want the convenience of being able to record HD content if I'm viewing it. We're only now starting to see stand alone players that can record DVD. I hope this isn't a feature that gets dumped along the way to save costs or appease content providers.

In any case I agree it's going to be some time before this is worked out and there will probably be another format in the works by the time I'm able to afford any of this.
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Old 12-29-03, 06:31 PM
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I like that idea of cartridges protecting the discs.

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