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Wednesday, August 18, 2004
Battle Over Next-Generation Optical Disc Standard


Two groups of powerful companies are battling to provide the successor to DVD technology, but the spat--and resulting consumer confusion--could help extend the reign of today's DVDs.

The companies behind the rival Blu-ray Disc and HD DVD formats are racing to complete their technical specifications, with each camp claiming its approach to higher-capacity optical discs makes more sense for storing high-definition television shows and movies.

Already, the two sides are trading salvos over issues such as the likely cost of producing discs and how much capacity consumers will want. Winning this standards war could be lucrative in terms of royalty payments and consumer sales. But the sides may yet decide to forgo all-out victory in favor of a technology merger. That could dilute the spoils but spare consumers and content companies like Hollywood studios the headache of incompatible formats along the lines of VHS versus Betamax.

Another possibility is that standards could coexist--as is case with DVD recordable disc formats. Many new DVD burners work with media that is both "plus" and "dash"--solving the frustration caused by earlier burners that would not accept some kinds of discs, though perhaps not eliminating confusion in consumers' minds.

Wrestling with recordable DVD discs that may not work in their DVD writers has dampened consumers' enthusiasm for DVD burners, said IDC analyst Bob O'Donnell. He said the same sort of problems could emerge from the rivalry between Blu-ray and HD DVD--including lagging sales of next-generation DVD movie titles. "That's a mess," O'Donnell said. "That's going to slow down the adoption of high-density recorders, and it's going to really slow down the adoption of prerecorded high-density media."

Room to grow
At this point, the tussle over higher-capacity DVD standards is largely academic to most consumers. Blu-ray recorders from Sony and Panasonic are available in Japan. But both the Blu-ray and HD DVD backers are still working to complete all their technical specifications--which are likely to include a variety of interactive features. And other next-generation DVD products remain a ways off. Movie titles and disc players based on Blu-ray may not arrive until the end of next year or early 2006, said Richard Doherty, a director in Panasonic's Hollywood laboratory.

HD DVD and Blu-ray advocates say they're confident their products will be needed by consumers in the not-too distant future. Roominess in the era of high-definition video is their main rationale. A common DVD, with two layers of information on a single side, holds 8.5 gigabytes--a typical movie and, say, the director's commentary. But two hours of high-definition video would require a 15GB disc; high-definition video's more vivid picture requires more data. Both camps promise discs storing at least 15GB.

Aside from prepackaged content such as movies, there's the gradual arrival of high-definition broadcasts that consumers may want to record. The 2004 summer Olympics, for example, can be watched in high-definition format.

HD DVD's main advocates are NEC and Toshiba. The Blu-ray side boasts a larger number of technology and consumer electronics powerhouses, including Sony, Matsushita Electric Industrial (Panasonic's parent), Royal Philips Electronics, Samsung Electronics, Hewlett-Packard and Dell. Enhanced Versatile Disc (EVD) technology, a format developed in China, is also vying to replace standard DVDs, but Blu-ray and HD DVD have dominated discussions so far.

At least one member of each of these camps is involved in a high-profile effort to create a new copy-protection standard for next-generation DVDs, which could allow high-definition movies to be copied and used inside home networks.

Structural differences
Blu-ray and HD DVD have much in common. Both depend on blue lasers, whose shorter wavelength can read and store more data than the red lasers in today's DVD devices. Both are designed to be compatible with current DVD technology--users won't have to throw out their DVD collections when they upgrade. Each camp also plans to include advanced video compression-decompression (codec) technologies to pack in more data. Discs for both standards are the same diameter and thickness--1.2 millimeters--as today's DVDs.

However, a difference in structure between Blu-ray and HD DVD discs leads to storage capacity differences. Like today's DVDs, HD DVD sandwiches data between two foundation layers, each 0.6 millimeters thick. The foundation, or substrate, layer of Blu-ray discs is 1.1 millimeters thick. The data sits on top of that, followed by a bit more substrate and a hard coating. This design allows machines to focus the laser on smaller spots than with HD DVD, Doherty said, and therefore cram more information on each disk.

HD DVD is designed to hold 15GB on a single-layer read-only disc and 30GB on a dual-layer read-only disc. HD-DVD also specifies a 20GB rewritable disc. Read-only and rewritable Blu-ray discs are designed to hold 25GB on a single layer and 50GB in a dual-layer arrangement. Backers of the Blu-ray format also are researching the possibility of four to six data layers, which would boost capacity to up to 150GB on a single disc, according to Doherty.

Blu-ray supporters say capacity is king. Consumers will be eager to buy next-generation discs storing whole seasons of TV shows, requiring capacious discs, they argue.

Hisashi Yamada, chief fellow of Technology of Toshiba's Digital Media Network Company, said HD DVD has more than enough capacity. Toshiba says HD DVD disc should eventually be playable on both sides. At two layers a side, that's 60GB, or eight hours of high-definition video.

Yamada also said HD DVD discs will cost only a bit more than current DVDs. Sony estimates that single-layer Blu-ray discs initially can be produced for 10 percent more than today's double-layer DVDs, while double-layer Blu-ray discs will cost 50 percent more. Yamada, however, said he doubts that dual-layer Blu-ray discs can be mass-produced inexpensively. He notes that in Japan, dual-layer discs from Panasonic cost about $68, and single-layer discs cost $32.

A blank, dual-layer recordable DVD can be bought on Amazon.com's Japan site for about $10, according to a spokeswoman from NEC. She added that single-layer recordable DVDs are on sale in Japan for less than $4.

The steep price for Blu-ray, Panasonic's Doherty said, reflects a limited market and therefore low volume--not trouble in making the discs.

And...action!
Hollywood studios are seen as the chief judges of these various arguments, given that a primary use of next-generation DVDs will be prerecorded discs. Studios have largely remained neutral over the format contest. But they have a strong incentive to coalesce around one standard, said IDC analyst Wolfgang Schlichting. Multiple technologies could slow consumer adoption--and lead to higher inventory costs if the same movie has to be produced and warehoused in multiple formats.

Schlichting said he "wouldn't be surprised" if the two camps agreed to a single hybrid technology. After all, he said, such an agreement among rival firms was reached in the evolution of the original DVD standard.

For history to repeat itself, though, HD DVD backers need more momentum to beat the larger group pushing Blu-ray, Schlichting said. "HD DVD has to be really a lot more of a threat to Blu-ray," Schlichting said.

Shyam Nagrani, an analyst with research firm iSuppli, is not optimistic about a truce, citing licensing and royalty payments--and engineering pride--as major stumbling blocks.

It's possible, of course, that one format will flat-out beat the other in the marketplace--as VHS vanquished Betamax years ago, despite its reputation for technological superiority.

If the sides don't reach an agreement and both technologies hang on in the marketplace, next-generation players and recorders may support both Blu-ray and HD DVD discs. O'Donnell said a similar evolution took place not only in the recordable DVD market, but also in the field of advanced audio disc technologies--specifically, so-called Super Audio CD and DVD-Audio. Many players now support both formats, O'Donnell said. But multiple standards help explain why higher-density audio hasn't taken off in the marketplace.

The early stage standards war in next-generation DVD risks alienating consumers in the same way, he said. Even apart from the format tussle, O'Donnell predicts the emerging optical formats will face a challenge from today's DVD technology related to so-called "upconverting"--extrapolating additional image data from the information available. The ability of DVD players to "upconvert" traditional DVDs, creating a higher-definition picture, could make consumers less interested in either Blu-ray or HD DVD devices, he argued.

Thus, resolution of the format struggle becomes more important. "I think it's a bit of a tough sale anyway," O'Donnell said. "But this just makes it even harder."

Panasonic's Doherty downplayed the threat of upconverting. He said the difference in viewing quality between an upconverted disc and a true high-definition video is like "night and day."

But he also indicated the Blu-ray camp is ready to avoid a war that could result in losses even for the winners.

Panasonic "might be open" to a merger of technologies as a way to head off another standards battle, Doherty said. "I don't think anyone wants that," he said.

From ZDNet



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