A Clash Of Titans
Consumers get stepped on when behemoths like Sony and Toshiba can't agree on a new standard for the enxt generation of DVD players.
Hollywood has a nightmare, and it isn't a movie.
This bad dream is about how a duel between two high-tech giants could force consumers to make a costly bet on the wrong technology, or slow the adoption of high-definition DVD players due out next year.
Such a delay would be bad news for consumer electronics retailers such as Best Buy, which count on new products to spur sales growth. The rival technology standards could jeopardize future profits at movie studios, which count on home movie viewing for nearly half of all revenue. Sales of DVDs have slowed, and high-definition DVDs, a natural companion product for new HDTV sets, would open a whole new sales opportunity for new and existing movies.
In Hollywood's disaster epic, Sony and Toshiba might force a rerun of the famed VHS-vs.-Betamax videocassette war of the 1980s. That contest required movie studios to choose between formats, and it forced consumers to bet on which standard would become the future of home movie entertainment. JVC's VHS format won, leaving an army of embittered Sony Betamax owners whose pricey machines became instant relics.
This time around, analysts say competition between the two would-be DVD player standards -- Blu-ray from Sony and HD DVD from Toshiba -- could force movie studios to shell out billions of dollars to duplicate and market movies in the two incompatible DVD formats. Consumers could wind up investing hundreds of dollars in a DVD player, only to have it become the new Betamax.
A Toshiba representative declined to comment, and a Sony spokesman was not available.
Battleground 2006
The first Toshiba HD DVD players are expected to hit stores in March, while the first Blu-ray DVD player might be the disk drive in Sony's PlayStation 3 videogame console, which is expected to debut by late 2006, analysts said. (Microsoft's Xbox 360, which will be introduced late next month, won't have a next-generation DVD drive, analysts said.)
The PlayStation 3 is expected to help bring prices of the new DVD players down, said Josh Martin, an analyst with IDC in Framingham, Mass.
"How can you sell a new high-definition DVD player for $1,000 when the PlayStation 3 is selling for $400? I think the HD DVD players may cost $1,000 in March, but they'll come down to $500 or so when the PlayStation 3 comes out," Martin said.
The next-generation movie disks are expected to sell for more than $20 each, but it's unclear how much more, said Gerry Kaufhold, an analyst at research firm In-Stat in Scottsdale, Ariz.
The arguments over the competing formats mostly involve storage capacity and start-up production costs. Sony's Blu-ray requires more start-up investment to produce the disks in bulk than Toshiba's HD DVD does, Martin said. But Blu-ray holds out the promise of greater storage capacity, which means the movie studios might not have to change disk formats again for several years.
But Toshiba's HD DVD has another, less apparent advantage for movie studios that are worried about film piracy. The first HD DVD units will support only playback, not recording, which means in the short term that movie disks will be impossible to copy, Kaufhold said. Blu-ray, on the other hand, will record blank disks the day it is introduced.
The Sony and Toshiba obsession with DVD storage capacity is understandable. High-definition video requires a lot more storage space on a DVD disk than today's lesser-quality digital images, and both companies have solved this problem with blue-light lasers that can store six to 10 times more data on a standard-sized DVD disk than today's red lasers can.
While a typical DVD today stores 4.7 gigabytes (less common dual-layer DVD disks store about 8.6 gigabytes), Toshiba would increase that to 30 gigabytes and Sony would boost it to 50 gigabytes. By some estimates, a high-definition version of a Hollywood movie will require up to 13 gigabytes of storage space, 5 gigabytes more for a high-quality soundtrack and additional capacity for DVD extras such as "behind the scenes" video and star interviews.
While no one seems to view a standards war as desirable, analysts say neither Sony nor Toshiba will back down, because owning the next-generation home movie technology would be so lucrative. Talks between the two companies about merging the rival technologies collapsed earlier this year. The only hope of a peaceful resolution appears to lie with Hollywood. If enough movie studios endorse one technology, the other would be forced to capitulate, analysts say.
No Negotiations
"I don't think there will be a negotiated pact between Song and Toshiba," Martin said. "There is so much riding on it, and each company is firmly entrenched in believing in their technology."
So far the studios are split over the formats, with Twentieth Century Fox, Vivendi Universal and Walt Disney supporting Sony's Blu-ray and New Line Cinema, Universal Studios Home Entertainment and Warner Home Video supporting Toshiba's HD DVD. Paramount Home Entertainment recently caused a stir by saying it would support both formats.
Computer and software companies are interested because DVD computer drives are a key element in making PCs the center of home multimedia networks.
"The next generation of entertainment PCs will be all about home networking, and one of their features will be storing HD DVD mocies on the PC's hard drive," Kaufhold said. You'll be able to play those movies back on any TV in the the house that's connected to the network, either by cape or wirelessly."
Intel and Microsoft recently endorsed Toshiba's HD DVD format based on the technical benefits such as initial storage capacity and the ability to copy a DVD movie to a PC hard drive. Sony Blu-ray supporters dispute those supposed advantages, and computer manufacturers Hewlett-Packard and Dell remain firmly in the Sony Blu-ray camp.
The first evidence of a crack in the resolve of either next-generation DVD camp was the recent decision by Paramount to support Sony's Blu-ray in addition to Toshiba's HD DVD, Martin said. That clears the way for other studios to do the same -- or perhaps to shift to Blu-ray altogether.
"The biggest studio concern was the cost of developing the Blu-ray technology, but Paramount said Sony had proved the cost-effectiveness to them finally. That removes a barrier for the other studios," Martin said. "If one more movie studio says it will release movies on both formats instead of HD DVD, then I think HD DVD is doomed."
Source: Minneapolis Star Tribune
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