DVD Formats Getting Ready to Rumble

Remember Betamax?

For those of you who can't recall the early 1980s, there was a nasty format war between the Betamax videotape standard, created by Sony, and its rival, VHS, created by JVC and backed by virtually every other consumer-electronics company.

Betamax promised home users higher quality in a smaller package, but VHS (for "Video Home System") players cost less and, crucially, had tapes that ran two hours at high resolution, twice as long as their Beta counterparts and enough to hold full-length movies.

By the time the bitter, decade-long battle among manufacturers, retailers, Hollywood studios and rental stores for control of the world's home video market ended, VHS reigned supreme and Betamax found itself relegated to the dustbin of technological history.

History may be about to repeat itself.

The Blu-ray DVD format, again backed by Sony, and the rival HD DVD format, backed by Toshiba, are competing to become the standard for high-definition DVD players. Once again, the grand prize is a space in living rooms around the world.

The essence of the battle deals with memory. A full-length movie in high-definition video simply can't fit into the 4.7 gigabytes per side available on a standard DVD.

But high-definition DVDs are read by blue-violet lasers with much a shorter wavelength than the red lasers that read regular DVDs and CDs. Because of the tighter focus, they use smaller digital "pits" to encode information, meaning they can hold much more data.

After that common basis, the two formats split.

HD DVD is in some respects just an upgrade to the current DVD standard and is recognized by the industry's DVD Forum as the official successor.

HD DVD and regular DVD discs are exactly the same thickness, the arrangement of pits is similar, and HD DVDs can be pressed on modified existing DVD machines, requiring minimal capital investment from the manufacturer.

Blu-ray discs are less compromising. They are thinner, with less clear plastic to protect the data layers in order to facilitate maximum laser focus. They can pack in up to 54 GB of data as opposed to HD DVD's 30 GB, but will need to be manufactured on entirely new presses.

For the consumer, either format would require upgrades to HD DVD or Blu-ray players, neither of which has hit the North American market yet. Most players will be able to read regular DVDs and CDs, good news for consumers who won't want to part with their existing collections.

Despite the common technology behind the formats, there has never really been any attempt at reconciliation.

Sony, with its longtime ally Philips (together they developed the CD), may still feel bitter about being cut out of the success of the regular DVD, largely developed by Toshiba after intervention by IBM prevented an earlier format war from taking place in the mid-1990s.

Instead, both sides have scrambled to gather allies in Japan, Europe, Hollywood and Silicon Valley.

Sony and Philips, based in the Netherlands, have enlisted Pioneer, Sharp and Matsushita (maker of the JVC and Panasonic brands), as well as the French manufacturer Thomson, to support Blu-ray exclusively. Toshiba has gotten NEC, Sanyo and Onkyo to jump aboard the HD DVD bandwagon.

In the computer field, Dell and Apple back Blu-ray, while Intel and Microsoft support HD DVD. The latter's Xbox 360 video game console will handle HD DVD discs with an add-on player, while its much-anticipated rival, Sony's PlayStation 3, will play Blu-ray from the get-go.

Among the six major Hollywood movie studios, NBC Universal backs HD DVD, while Sony's Columbia and MGM, naturally, along with Twentieth Century Fox will issue only Blu-ray discs.

But then it gets complicated.

Two of the other three Hollywood titans — Paramount and Warner Brothers — first signed on to HD DVD, but now plan to release movies in both formats. The third, Disney, has announced it will ship Blu-ray titles, but won't rule out HD DVD releases.

In Japan, recordable-media giant TDK supports Blu-ray, and so naturally, its nemesis, Maxell, backs HD DVD — but Maxell's owner Hitachi is listed as a Blu-ray supporter.

Korea's Samsung is on the Blu-ray board, but is making HD DVD computer drives and is rumored to be working on the Holy Grail of high-definition players — a machine that handles both formats.

And U.S. computer behemoth Hewlett-Packard, an early Blu-ray supporter, recently fell out with the rest of the camp over copyright-protection standards and has decided to support both formats.

Despite all this brouhaha, neither side has bothered to ask retailers what they think.

At January's Consumer Electronics Show in Las Vegas, representatives of large retailers expressed frustration at the prospect of a long, bloody format war.

"The Beta-VHS wars lasted 10 years. We are doing it again, and we are just stupid as an industry," CompUSA Chief Executive Larry Mondry told Reuters. "I don't care which way it goes, I just want it to go one [particular] way."

"We are going to wind up with some number of consumers probably buying a format that dies, and we are probably going to wind up having to sell it to them," added Best Buy CEO Brad Anderson. "They are not going to be happy with us."

Even more worrying is the prospect that consumers will buy neither format as they wait to see which one wins, thus setting back further development several years.

According to a recent market study, it could take up to two years for consumers to decide on one format or another.

"Consumers are still working out the benefits of owning an HDTV; as of the end of 2004, fewer than half of HDTV owners had high-definition TV service," wrote study author and Forrester Research vice-president Ted Schadler, referring to the open secret that many HDTV owners are unwittingly still watching regular TV.

"For many consumers," he added, "watching today's progressive-scan DVDs on an HDTV is such a step forward that there will be little urgency to upgrade to a high-definition DVD player."

Schadler thinks that the sheer number of regular-format DVDs in American households — $21.8 billion worth were sold in 2004 — means that Hollywood studios will need to do something big to convince Americans to try something new.

"Consumers will have to own an HDTV, and be very impressed with the higher quality of a high-definition DVD, to buy the same title again. And that means that only new titles will motivate buyers to upgrade," he said.

President Bush this month signed a bill to mandate digital-only television broadcasts by 2009, but Congress' addition of subsidies of analog converters for people who don't want to switch means that the anticipated rush on high-definition sets may never materialize.

In addition, the sheer number of alternatives to DVD out there — digital video recorders, video on demand and Web-based video — doesn't bode well for a speedy resolution.

In the end, Blu-ray and HD DVD manufacturers may be faced not with the question of who wins the format war.

Instead, the question may be whether consumers will even care.

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