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DVD Insider #37 - Blu-Ray - How Long Is the DVD Bridge?

Lots of folks say that the two technology approach camps are holding things up
from getting burners, recorders and media to the market and making it hugely
successful. But that runs counter to logic since the organizations are working
real hard to see how they can make the units - profitably - for sale under $1,000
and to make media that is priced under $35 per disc.

The word that Sony and Toshiba are now in discussions to develop one standard
has been heralded as the definitive breakthrough and we can expect a "new" solution
shortly. Of course they want a single standard as long as it incorporates "their"
royalty-producing technology.

While all of those with vested interests have joined in the discussions, Matsushita
(better known as Panasonic) has said they'll let the key parties hammer out the
details. Of course Nakamura-San the company's president was quick to add …"We
cannot compromise on the point of the 0.1 mm [cover layer]."

Want to guess whose technology revenue stream that is?

Compromise Is Really Hard
Everyone - Studios, hardware folks, software developers, media producers and
retailers - wants a compromise. It just makes good business sense.

Hollywood wants to cut its "piracy" losses. New disc technology will mean people
will have to throw out existing players and recorders. Obviously the technology
revenue stream is a lot more than an accounting rounding error.

By upgrading DVDs with HiDef content and interactive features it's something
they all hope you just gotta have!

Engineers on both sides of the aisle have spent years on their formats and compromising
their technical children will be a hard pill to swallow. Each side has convinced
him/herself that they are the best solution.
The two formats' discs are made very differently. HD DVDs put the data layer
in the middle. Blu-ray discs store data close to the surface and add a thin protective
coating on the top.

A true compromise will send the engineers would be sent back to the drawing board.
It will add years to the timetable.

Merging the formats will mean one side's format is adopted, with a few compensating
bones thrown in to satisfy the losers. That will require a helluva sales/spin
job!!!

Common logic says that with the manufacturers and content owners involved it
will take four to six months to hammer out the details of the compromise. Then
they have to develop, verify, test and fine-tune the specs. Then the firms have
to develop the prototype hardware, firmware and media so we're really looking
at 2008 before we see serious new products at retail.

That's making IDC's projections that Blue technology will only have about 1%
of the DVD burner sales by 2010 look dramatically optimistic…

Oh Yeah…Security
Lest you forget there is one little item that also needs to be solved - content
protection. The approach that currently has broadcasters' and content owners'
blessing is the Advanced Access Content System (AACS). This is designed to control
digital rights on downloading movies, burning them to DVDs, sharing them at home
or using them in your portable/car video players. HiDef content won't be delivered
until this protection has been hammered out. And you can be certain that the
music industry is working on a similar solution to get the horse back in the
barn.

But HiDef can be stored on today's DVD media especially the 8.5GB DL media (double
or dual layer, +/- respectively). Especially if you are using DivX or MPEG-4
(H.264 can put a complete HiDef on a single layer disc). You may have to get
a new DVD player but even with combination codecs they would cost almost nothing.

Analysts at Semico, a market research firm, say recorders are going to grow from
22.8 million this year to 86.9 million by 2009. There's very little profit in
these units which is why people are increasing their purchases with Europe, Japan
and the U.S. with an average of about 70% plus of the total purchases annually.

Of course Blue units don't make a lot of sense if all of the movies you rent/buy
are in today's standard. Playing them on your HD TV after watching your TV shows
in HiDef is a little brutal unless you have an upconverter like ADS Tech's HD
UpConverter. The $500 box (and there are others) converts standard interlaced
video and standard definition television signals into HDTV, progressive-scan
resolutions.

And there are a lot of DVD movies to choose from according to the Digital Entertainment
Group (DEG). They note that the total number of DVD discs shipped since the
launch of the format to more than 4.3 billion discs and that there are now more
than 43,000 DVD titles available today.

DEG notes that since their launch, more than 135 million DVD players, including
set-top and portable DVD players, DVD recorders, home-theater-in-a-Box systems,
TV/DVD and DVD/VCR combination players, have sold. They estimate that the number
of DVD households in the U.S. is 73 million and that about 46 percent of DVD
owners have
more than one player.

But if you want HiDef movies in HiDef, don't worry. While Panasonic agrees that
a compromise Blue-ray solution is best, they have begun BD-ROM pilot production
down in Hollywood. Of course they will need titles and you will need a BD player
but that's a small problem…

Content Control
We'll admit right off the bat; we have never ripped a music CD. If we wanted
a second copy - for the office or car - we bought one. Just seemed to be a lot
easier even though there are some excellent hardware/software products available
that will let you convert your old music to disc or put together music lists
and burn them to CD.

While we're at it, we've never copied a movie even though there are solutions
to let you do it almost flawlessly.

With that said the RIAA and MPAA lawyers can start looking elsewhere for people
to sue.

While the record industry recently saw an uptic in CD sales (the first in a couple
of years) they are determined to press their lawsuits at every turn. They may
have taken on more than they bargained for with Carnegie Mellon University when
they claimed their high-speed Inet2 was a license for students to steal music.
Professor Roger Dannenberg responded by saying that the claim was as one-sided
and illogical as the organization. He noted he has musician friends who cannot
get paid the royalties due them by RIAA members.

At the same time there are thousands - if not hundreds of thousands - of musicians
who can't get their creative work heard by the consuming public. These folks
have found a great way of reaching the music loving public by online sites like
artistserver.com and other free and minimal fee posting sites.

But if the RIAA's sales had been damaged by music pilfering as they assert, you
have to wonder why so many radio stations are changing their formats. An article
in a recent issue of The New York Times recently reported that in recent months
stations across the country in big media markets have switched formats in an
effort to retain listeners.

Music is a long way from a fading art form if you visit events like the Coachella
Valley Music Festival, Bonnaroo Music Festival, Austin Arts Festival, Monterey
Blues Festival and the hundreds of local and regional music events held around
the country and around the world. Some encourage/condone capturing the music.
Others sell their DIY CDs at a very low price.

Content protection seems to be designed to protect the machine, not the individuals.

The Polished Approach
On the other hand the MPAA has taken their case to the Supreme Court and Congress
where their financial muscle does more good. They've had mixed success in this
"professional" approach.

They did stumble occasionally because at the Grokster trial. An MGM spokesperson
admitted that ripping movies for personal backups could be legal. However, the
movie industry has claimed all along that any and all copying of DVDs is illegal.

When asked the spokesperson said that at the time the iPod was invented, it
was clear that there were many perfectly lawful uses for it, such as ripping

one's own CD and storing it in the iPod. Ooopppsss! Now they won't be able
to challenge ripping again under the doctrine of judicial estoppel.

France has said that adding an anti-copying mechanism violates the consumer's
rights to have and make a private copy. While they pressed forward in the U.S.,
they didn't count on the Bible belt's push for clean visual air.

With the Family Entertainment and Copyright Act of 2005 (has a nice friendly
ring doesn't it?) they got the content protection law they wanted. But those
sneaky guys on The Hill snuck wording that would in effect terminate a lawsuit
that film directors and Hollywood studios brought against ClearPlay whose electronic
filters let viewers skip over violent, suggestive or profane sections of DVDs.

The Electronic Freedom Foundation (EFF) got a lot of support from "red state
voters" when they said, "Once you have the DVD in your living room, it's nobody's
business how you choose to watch it."

Boy…you know that had to hurt!

But don't start cheering.

Remember…the FCC's broadcast flag may have been recently ruled illegal by the
Supreme Court but the NAB and MPAA will now head to the Hill for assistance.
We're not certain if one Supreme Court beats a full house but you can bet all
the cards haven't been played.

Just remember those immortal words of the NAB Chairman, ""Without a broadcast
flag, consumers may lose access to the very best programming offered on local
television."

Translation: If we don't get our way, we'll pick up our chips and go home.
Then what will you watch? Of course why would they bother to "create the very
best programming" if they will be the only ones viewing it?

Talk about self-adulation!!!!

Don't worry…it isn't over till the fat Congressman sings.

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