DVD Maker Says Hollywood Will Decide Format War
Fri Aug 30, 5:34 PM ET
By Lucas van Grinsven
AMSTERDAM (Reuters) - A format fight over a future generation
of DVDs will be decided by the entertainment industry which
will back only one horse, a European consumer electronics
executive said Friday. The DVD industry, already divided into
three camps backing different recordable DVD formats, had
been expected to close ranks when it moved to the more powerful
blue laser successor to the current red laser DVD technology.
However, this week Toshiba and NEC said they would launch
their own blue laser DVD format.
Jean Charles Hourcade, Chief Technology Officer at France's
Thomson Multimedia, said it would be wrong to "repeat
the mistake the industry has made with recordable DVDs."
"In any case, in the pre-recorded market there is a
powerful third party we all have to work with and that's the
content industry. Whatever the media owners say is decisive,"
he said.
He is the first senior executive in the consumer electronics
industry to speak openly about the surprise move by Japan's
. Toshiba and NEC. Hourcade said dual formats once again threaten
to confuse consumers and slow down adoption rates.
The media industry, mainly film studios, has not yet decided
which format it will back. But analysts agreed with Hourcade
it is unlikely that major media companies such as Disney and
AOL Time Warner will sell their films on competing blue laser
DVD formats alongside the existing DVD format, which will
remain on sale for a while.
"It is unlikely that the film industry will support
different formats," said Ben Keen at British market research
group ScreenDigest.
Disney and Time Warner were not immediately available to
comment.
Blue laser DVDs could be on sale by around 2005, some eight
years after the debut of the first red laser DVDs. They have
much higher capacity, which allows for play-back and recording
of films in high-definition format.
CHEAPER?
Toshiba and NEC, which go it alone against a powerful group
of consumer electronics rivals including Sony Corp ( news
- web sites), Panasonic brand maker Matsushita, Philips, Pioneer
and Hitachi Ltd, claim their format will save manufacturing
costs and allows for smaller players.
Hourcade believes that the two, whose market share in the
DVD equipment market is just a fraction of their rivals',
are overestimating the manufacturing advantages.
"It's only significant if it allows equipment to be
re-used or if the production equipment is significantly cheaper.
But the market for DVDs is growing 100 percent a year. For
any additional capacity companies will have to invest. And
we don't know how in real terms Toshiba's replication systems
and ours are going to compare in investment terms."
Netherlands-based Philips Electronics said that Toshiba's
claim that its new format would play back old DVDs was irrelevant,
because both competing blue-laser formats will allow for DVD
players and recorders that will play back current discs. Asked
if Toshiba's move could be explained as a strategic move aimed
at renegotiating the lucrative royalty revenues on its DVD
patents in return for joining the Sony alliance, Hourcade
said: "It's not unrealistic. It's a reasonable guess."
Toshiba in Japan was not available to comment and NEC in
Japan declined to comment.
Many consumer electronics companies make hundreds of millions
of euros (dollars) in royalty revenues they receive for every
DVD disc, player or recorder sold. Sony, Philips, Thomson
and Toshiba all hold significant DVD patents.
"A lot of companies make significant revenues from their
patents. There are deep commercial forces at work here,"
said ScreenDigest's Keen.
Toshiba and Sony have been here before. In 1995 the two were
heading two different consortia and ready to go their separate
ways with DVD formats, when Hollywood's movie industry forced
them to agree on a single standard. It is widely believed
that Sony and Philips, which had jointly invented DVD's forerunner,
the CD, were forced to give up a large chunk of their royalty
streams. Source
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