December 29, 2003

A New DVD Format Fight [9:55 am]

Heavyweights Are Choosing Sides in Battle Over Next DVD Format [pdf] - a subtle story with a host of conflicting interests. With IP at the center, but also the issue of what might happen if either (a) the Chinese decide to play hardball with technology restrictions and (b) what the PC business might bring to the picture. This should be a really interesting fight — on many levels. (Slashdot discussion: Tech Titans Prepare to Battle Over Next DVD Format)

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.

[...] 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.”

[...] 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.

[...] 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.

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