Industry Tries Again To Reach Agreement On New DVD Format

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Source: The Wall Street Journal
[The following is an excerpt from the article
''Industry tries again to reach agreement on new DVD format'']


Industry Tries Again To Reach Agreement On New DVD Format

By SARAH MCBRIDE, PHRED DVORAK and KATE KELLY
Staff Reporters of THE WALL STREET JOURNAL
April 15, 2005; Page B1

Hoping to avoid a costly war over the next generation of DVDs,
Hollywood executives and electronics manufacturers are discussing
whether to merge two competing formats that are on a collision course
and are threatening to delay the arrival of high-definition movies and
games in consumers' homes.

Sony Corp., with its Blu-ray format, is in a knockout battle with
Toshiba Corp. and its HD DVD format. Both formats promise better
picture quality, more-interactive features and stricter copy protection
than do today's DVDs. Each one has the support of several big
electronics makers and studios...

....The two sides have resisted years of pressure from studios and
consumer-electronics retailers to reach a compromise. Given the two
camps' dug-in positions, the idea of a merged format hasn't gotten much
traction, and even now, the chances of an agreement may be slim.

Still, talks recently have gained momentum, people familiar with them
say, in part because of Howard Stringer's recent appointment as chief
executive of Sony Corp. Mr. Stringer, who has led the U.S.
entertainment business at Sony for several years, is known as a skilled
diplomat, with close ties to Hollywood. He is said to be less concerned
with pushing Sony's proprietary technology than are the
electronics-focused executives who have run Sony until now. Sony said
Mr. Stringer declined to comment.

People close to Mr. Stringer downplay his role as a ringleader of the
talks. Still, brokering a compromise could be an important win for him,
sowing valuable goodwill in Hollywood and among consumer-electronics
retailers.

An agreement on a single new DVD format would help the industry avoid a
standoff, in which rival formats sit side by side on store shelves.
Such an outcome would probably deter a lot of consumers from upgrading
their DVD players and libraries...

....Bob Wright, chairman and chief executive of General Electric Co.'s
NBC Universal, said in a recent interview that Mr. Stringer was
interested in a compromise even before he rose to the Sony CEO post. He
recalls that Mr. Stringer said, "There must be a way to get both sides
together." Mr. Wright said he hasn't talked to Mr. Stringer since his
promotion but a compromise is in all the entertainment companies'
interests. "We don't want to be dealing with two standards....Our issue
is to try to encourage them both to get together," he said.

Sony's newly appointed president, Ryoji Chubachi, also has signaled a
willingness to be more flexible on Blu-ray. In recent interviews, he
said Sony "has not given up" on a single format. "In the area of
next-generation optical discs, we continue to be open to discussions
with supporters of other formats," a Sony spokeswoman said.

Toshiba, meanwhile, "remains interested in a single standard that would
be in the best interest of the consumer," says Warren Lieberfarb, a
former Warner Bros. executive who is a consultant Toshiba has hired to
advance HD DVD and bring studios on board...

....Each side has much at stake. Engineers in each camp have spent years
working on their respective formats and don't want to give up the
effort, an attitude shared by many of the company executives
involved...

....What makes compromise so difficult, engineers say, is that the two
formats' discs are made very differently. HD DVDs -- like current DVDs
-- are made like a sandwich, with a layer of data in the middle.
Blu-ray discs store data close to the surface, with a thin protective
coating over the top. Some electronics executives say that in a true
compromise, engineers would be sent back to the drawing board, adding
years to the timetable.

In reality, merging the formats is more likely to mean that one side's
format will be adopted, with a few minor software changes thrown in to
placate the losing side. If so, the deal would be similar to the
11th-hour compromise that produced the current DVD 10 years ago, in
which Sony agreed to dump its disc in favor of the one pushed by
Toshiba and Matsushita. In exchange, Sony's technology was included in
the final format.

Time is running out: Engineers on both sides say they now are
developing and marketing the machines that stamp content onto the
discs, making compromise more expensive with each passing week. The HD
DVD camp says it plans to have its players out in time for Christmas,
and Paramount, Universal and Warner have announced the titles they plan
to make available. Blu-ray products aren't expected to hit store
shelves until early 2006.

Archived from groups: rec.video.dvd.tech,alt.dvd.video,alt.tv.tech.hdtv,alt.video.dvd,alt.video.digital-tv (More info?)

"Sprite Scaler" <spritescaler@directvinternet.com> wrote in message
news:1113545213.565496.177330@g14g2000cwa.googlegroups.com...
> Source: The Wall Street Journal

>
> ...Each side has much at stake. Engineers in each camp have spent years
> working on their respective formats and don't want to give up the
> effort, an attitude shared by many of the company executives
> involved...
>
Engineering hours are a sunk cost. It's the IP royalties that are at stake.

Glenn D.