Saturday, January 06, 2007

Warner’s DVD format is just a band-aid

The first new DVD readers and discs are getting onto the market and will have a real first chance of exposure at the CES exhibition next week. But the market does not like this dichotomy, so equipment manufacturers and disc producers are attempting to bridge this format war with readers that read both formats and discs which can contain both formats. Next week Warner will announce a new disc format. TotalDVD, for reading Blu-Ray and HD-DVD formatted productions.

Warner will package its movies in this new format as it wants to penetrate the market and not get stuck with producing two types DVDs (it will have to pay twice the licence fees all the same). Also equipment manufacturers are to announce machines which can play discs in both formats. But despite all this well-intended help for the consumer, the dichotomy will show even more, while the consumer is left with incompatible machines and discs and the Betamax tape format war repeats itself.

The dichotomy started by companies having to choose between two formats Blu-Ray and HD-DVD. It showed two industrial and entertainment conglomerates, one led by Sony and one led by Toshiba/Microsoft. Both leaders are involved in manufacturing consumer equipment, but are also involved in producing and distributing movies.

As for the consumers they will be confronted with different formats and machines. And it is not just a machine and a video tape like during the Betamax war. This time it is the DVD recorder, the DVD player and the console. Playstation 3 takes Blu-Ray, while the XBox plays the HD-DVD format. So a new machine handling both formats and a disc containing content in both formats gives some relief, but it is no more than a band-aid. Besides consumers will have to hope that they can play their first generation DVDs. Blu-Ray players do play standard DVDs, as do HD-DVD players. One difference is that some new HD-DVD discs are sold in a combination format that will also play on standard DVD players, while Blu-Ray discs currently do not have this feature.

So now the giants will have to fight their formats in the market. They still could have agreed on one format last year, but now they will have to fight the format to death. What a pity. What a waste of money and what a hassle for the consumer. Could not have one person in the consumer electronic industry stood up and banged the heads together as was done during the first round of DVD format decisions.

In 2005 I wrote about the upcoming dichotomy and offered the story of Jan Timmer, the former CEO of Royal Philips, negotiating one format with the Toshiba consortium. I recently found some more background to this story in the Herald Tribune (25 February 2003). One of the former Philips researchers, Dr Klaas Schouhammer Immink tells about the development of DVD: ‘At first the (Philips-JB) Natlab management wasn’t interested in the CD at all. Philips only jumped on it when Sony appeared to be on to it as well. Similarly, Philips and Sony tried to stop the development of DVD, because they wanted to milk their CD patents for as long as possible. When competitor Toshiba was having at it, Philips and Sony quickly sprung into action’.
According to Immink, the company owes it DVD license to IBM top man Lou Gerstner. IBM didn’t like the idea of two world standards. After seeing presentations from both sides, Gerstner chose the Philips/Sony DVD, because he preferred its code system.

Since 2003 IBM and Philips have lost industrial and market power. Now the Sony/Philips and the Toshiba/ Microsoft consortia will have to fight it out on the market.

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