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Friday, December 02, 2005
Some Comments on the Next Generation DVD Formats

Despite the talks and general announcements, it seems that we are still one year away from the availability of the early models of the next generation of video disc players, and a modest selection of high-definition titles.

Questions such as whether these first high-definition disc products will be available only in Japan at that time, or more broadly available, or whether these initial products will be based on the Blu-Ray format or on the rival HD-DVD format, or even both cannot be answered at the moment.

Japanese experts are not optimistic about a potential compromise between Sony and Toshiba. This means that both formats will probably become available sometime in 2006, and both will be actively wooing early buyers by the end of that year.

The advantages and disadvantages of both proposed formats have been discussed many times. The greatest importance however, remains the fact that each one can meet the initial requirements for high-definition video software distribution. While the first high-definition players are almost certain to be introduced sometime in 2006, along with a limited number of software titles. It will be well into 2007 before the high-definition video program really begins to gain real momentum.

Outside Japan, most of the public has yet to see full-scale demonstrations of either format. They will need to see for themselves the improvements in picture and sound quality these new formats offer, and then convince themselves that these improvements make the considerable investment in new equipment required, worthwhile. Initial players are likely to be quite expensive, although none of the industry insiders is certain about either player or software prices. Most of the original players to be made available will likely be priced in the U.S.$500-$750 range, almost ten times the average street price for a DVD player in the U.S. today.

Japanese customers are already thoroughly familiar with high-definition video (Digital Satellite, Digital Cable, Digital Terrestial HDTV), and are expected to enthusiastically embrace the new video format(s). Many Japanese homes already have flat-panel TVs, which are all the rage there at this time, and are thus able to view high-definition satellite broadcasts of stunning quality. However, it will take quite some time for retailers to convince American and European buyers with the merits of these new high-definition products, and further time for the buyers to decide that the considerable costs involved can be justified. Therefore, 2006 is seen as the year of introduction and familiarization, and 2007 as the first period of general sales worldwide. By the 2007 holiday season, second generation players will probably have been introduced, and it is even possible that the first consumer-priced high-definition disc recorders and recordable media will have become available.

While there have been many arguments advanced that the availability of two competing new video disc formats that are completely incompatible could so confuse would-be buyers that they might choose to buy neither, the more likely result, many observers believe, is that the ability to make that choice will actually stimulate overall interest and lead to a more rapid acceptance of high-definition video than might otherwise have occurred.

Although the VHS - BetaMax example has been mentioned several times lately, it has a point here. VHS recorders were introduced and thus offered the public a choice of tape formats (Betamax was already on the market), there was very little confusion amongst would-be buyers. Most people could detect little difference in quality or ease of operation between the two warring formats, and once Sony introduced units that could record and playback for at least two hours, there was little difference in performance capabilities between them. The deciding criterion that led to the eventual acceptance of VHS as the dominant format had nothing to do with comparative merits or even price. It was nothing more than the superior merchandising capabilities of the companies promoting VHS recorders that led to the eventual demise of Betacam. This, some observers believe, will also decide which of the high-definition formats survives.

On the other hand, a recent reserach conducted in Japan by Techno Systems Reasearch, says that the price of the HD hardware (players, HD TVs etc) is the key for the expansion of the market of either HD formats. The HDTV and movie content penetration is also an aimportant factor, according to the research. The research results were presented at the 2nd Blu-ray Disc Seminar held in Taiwan last month.

Actually, there may be little or no need to make a choice between formats, even if both are initially introduced. It seems likely that players capable of accepting both Blu-Ray and HD-DVD recorded media will be introduced once it becomes certain that no compromise between formats can be reached. These "universal" players, which will almost surely also play CDs and DVDs, would assure the buyer that any pre-recorded 120mm disc titles purchased, whatever the format, can be played on the newly purchased high-definition player. While these multi-format playback units will undoubtedly cost more to manufacture during the early years after their introduction, once that production reaches fairly high annual volumes, player costs and end-user street prices can be expected to follow the same downward price curves that characterized first VHS and then DVD. Today, just eight years after the initial introduction of DVD players, their average end-user price is less than one-tenth the average price at introduction.

A universal high-definition player will require a complex optical head, because the two blue-laser formats are completely different in the way they read back the information recorded on the disc. In addition, the head will also have to include a red laser unit for reading DVDs, and an infrared unit for CDs. Several companies, including Matsushita and Sony, have already announced the development of such multi-laser heads, but these are units that can read only one of the high-definition formats, as well as both DVDs and CDs. It is assumed that heads have already been developed that will allow both high-definition formats to be read, along with the older formats.

Any differences that may initially exist in the cost of producing the pressed discs for each format will soon be eliminated as production know-how improves and a market for millions of discs monthly develops. DVDs were much more expensive than CDs to produce when they were first introduced, due mostly to yield losses. Some specialists even insisted at the time that dual-layer DVDs could never be produced at acceptable yields. They were, of course, wrong. It may very well be true that material costs and especially yield rates may favor HD-DVD production over Blu-Ray media initially, and that the costs of reequipping production facilities to produce Blu-Ray discs will be substantially higher than for HD-DVD. However, these are relatively minor matters of very little importance in the longer term. Whatever fabrication or yield problems exist initially in either format will soon be eliminated, just as they were in DVD.

The very fact that the Blu-Ray format is a completely new format is seen by some as an advantage. The technology behind the Blu-Ray format offers certain performance capabilities that have yet to be fully explored. Blu-Ray is not simply a variation on the DVD, with the same limitations inherent in that format. Instead, it will offer initially a considerably higher storage capacity per disc than HD-DVD, and this capacity can be increased using known technology to at least 100GB, and probably to 200GB or even beyond. Blu-Ray also meets the storage-capacity requirements of current data applications better than does HD-DVD.

If we were considering only home-video applications, either format would probably be equally acceptable. But the successor format to DVD must accommodate the expanding capacity requirements for advanced video and games software, and for various data-storage applications as well, and must be able to do this for the next ten years or more, including requirements for soon-to-be-introduced write-once and rewritable high-definition media. Blu-Ray meets all of these requirements better than does HD-DVD. Thus, the arguments being advanced at this time, to wit that HD-DVD should be chosen over Blu-Ray simply because its software production costs initially may be lower, are not of much importance when viewed against the advantages that Blu-Ray inherently offers, especially in initial storage capacity and the ability to increase that capacity over time. These were exactly the thoughts that had initially led some observers to believe that the Blu-Ray will be established as the main format for video distribution by Hollywood, while the HD DVD will take a position inside the PC.

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