HD-DVD Backers Plan Q4 2005 Launch16 Sep, 2004 By: Jessica Wolf
One of two competing camps for a next-generation optical-disc format shifted into high gear this week, with the announcement that HD-DVD could come to market as early as next year.
Toshiba Corp. and Sanyo Electric Co. will launch the first HD-DVD hardware players into the American and Japanese markets by the fourth quarter of 2005. Computer manufacturer NEC Corp. will simultaneously release a HD-DVD-enabled computer hard drive.
The three companies announced release plans this week in Hollywood despite the fact that not one major film studio — save Sony Corp.'s Columbia TriStar Home Entertainment in the Blu-ray Disc camp — has so far lined up on either side of the next-generation DVD fence.
The announcement came amid speculation that Sony's intended purchase of MGM will throw significant weight to the competing Blu-ray Disc camp, thanks to MGM's deep vault of catalog product. The purchase will give Sony a catalog of about 8,000 titles, a heady arsenal given that catalog sales typically dominate in the early stages of a format launch.
But that's an “overstated” premise, said Warren Lieberfarb, the former president of Warner Home Video and father of DVD who is now a big HD-DVD backer.
“If you took VideoScan data and segmented it by new releases and catalog, you'd likely find that the combined market share between Sony catalog and MGM catalog is in the high teens or less than 20 percent,” he said. “So the combination of Sony and MGM still does not have a significant market share in back catalog to create a de facto standard.
Regardless of that issue, the industry cannot afford a format war, Lieberfarb said, and now is the time for the seven majors to make a decision. He warned that without a new optical disc format to excite them, consumers will likely be further enticed to piracy through growing access to broadband technology. He also noted that 11 U.S. million homes are already equipped with HD-enabled TV sets, upon which regular DVDs cannot provide the enhanced visuals consumers are expecting. That base is expected to reach 23 million homes by the end of 2005.
“The bottom line is [next-generation DVD] is a win-win-win for electronic companies, Internet technology and consumers if there is not a format war,” Lieberfarb said. “We have to overcome that, and the answer to that is with the major studios who have the ability, by deciding which format they will support, to create a de facto standard.”
That standard, according to backers from Toshiba, Sanyo, NEC, Microsoft Corp. and replicator Memory-Tech — all present at the briefing — should be HD-DVD, because not only is it ready to launch, but all the copy-protection mechanisms are ready to roll, as well.
“The studios have started to realize the importance of copy protection,” said Taizo Nishimuro, chairman of the board of Toshiba Corp. “Our property is the only property that allows that copy protection to be implemented in the next year.”
A Blu-ray representative did not return calls by press time.
But critics note that the main ingredient hardware needs at launch is content, particularly since first-generation players are expected to carry a hefty price tag of $999 when they become available in the fourth quarter of next year.
And presenters admitted that content providers need a lengthy lead time — as long as 18 months — to begin rolling out software, which means commitments need to come soon if software is to be available at the same time as hardware.
One advantage HD-DVD backers tout is the fact that existing replication facilities could be used, which is not the case with Blu-ray. Replicators Cinram and Memory-Tech are already in the HD-DVD camp. Memory-Tech has the capacity to produce 700,000 HD-DVD discs monthly and plans to add two more HD replication lines in October, which will up that monthly production number to 4 million units, said Matsato Otsuka of Memory-Tech.
The company uses the same machines for HD-DVD as it uses for regular DVD, and the switchover between formats takes only five minutes, Otsuka said.
Japanese production company Pony Canyon Inc. announced last month it will develop HD-DVD software of its product to coincide with the hardware launch. Pony Canyon titles include the feature film Moonlight Jellyfish and the company's label of environmental films, the “Virtual Trip” series.