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New Blu-ray member Warner Bros. would support iHD layer, oppose mandatory managed copy
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Burbank (CA) - In an interview today with TG Daily, Warner Home Video senior vice president for marketing management, Steve Nickerson, told us his company would support a motion by fellow Blu-ray Disc Association member Hewlett-Packard to adopt iHD as the interactive program format for BD discs, either in addition to or in place of the currently supported BD-Java.

However, he reaffirmed his company's stand in favor of studio-directed management of the AACS managed copy provision. The system Warner supports, said Nickerson, gives content providers - including studios such as Warner Bros. - final say over which BD discs can be copied from a player, at the time the copy is requested. The AACS system is supported by both Blu-ray and its rival high-definition optical disc format, HD DVD.

"Managed copy, as it's defined within the AACS, creates an obligation [for a content provider] to offer the ability for the consumer to create a copy," Nickerson told us. "If you use AACS, you are obligated to give the consumer the ability to make a copy or copies. However, the studio defines the terms under which those copies can be made." Whether an unlimited number of copies can be made, and to what devices or media a copy can be made, are all determined by the content owner or studio, said Nickerson, and represented to the consumer by way of the offer the made to the consumer by the studio, through the AACS network.

This interpretation stands in stark contradiction to the picture of AACS emerging from Microsoft, which is one of the system's principal architects and, along with Warner, is a member of the AACS Licensing Administrator (AACS LA) governing body. As we reported last month, Microsoft and Intel together joined the HD DVD Promotions Group, and released a joint list of grievances they had against the Blu-ray format. One of their grievances concerned Blu-ray's implementation of managed copy, especially since managed copy is one of the key components of AACS. Soon after those grievances were published, an HP official defended Blu-ray, as well as the rights he believed it gave studios to govern the copying of content.

Since that time, meetings between Microsoft and HP officials led to a complete change of stance by HP. In an interview with us published this morning, the same HP official, Josh Peterson, revealed that Microsoft had successfully persuaded HP that the AACS system that Microsoft is co-engineering will guarantee that consumers will be able to copy licensed, legally obtained content, without intervention by the studios. This persuasion led HP last week to request that the Blu-ray Disc Association change its position on whether studios should govern the Clearing House - to use the AACS term for its automated, Internet-based broker of duplicable media - as well as the BDA's choice of interactive layer.

Nickerson acknowledged that he was not familiar with the use of the term "mandatory" with respect to managed copy. That acknowledgement alone is interesting, since HP is stating that the revelations Microsoft made to it about AACS, refer to mandatory managed copy explicitly. However, Nickerson explained that Warner's understanding of AACS is that, when the consumer places a disc in the player, the AACS system is contacted over the Internet. Then the content provider (which, in the current specification, is represented by the Clearing House) provides the consumer with a set of terms for applying the inserted content, the minimum of which is the offer to make a copy. "The content holder has the ability to set additional terms beyond that minimum term. We support that concept," added Nickerson.

Our check of the public v.0.9 specifications for AACS reveals neither a minimum set of terms, as Nickerson referred to it, nor a mandatory managed copy, as Microsoft refers to it. But the zero in the specification number obviously points to a gap between the published specifications and those currently under formal consideration. HP says there are unpublished specifications; if so, we are clearly witnessing two separate interpretations of them. But Microsoft is a principal AACS engineer, not just a member of its steering committee; its assertions are less likely to be interpretations, and more likely decisions. With an apparent discrepancy already existing between the interpretations, if Microsoft were to steer AACS in a direction contrary to the BDA's stated position on AACS, it may very well be in a position to pull the rug out from under Blu-ray, forcing members to either fight to change AACS, or adopt an alternative network-based copy protection and rights management initiative. Without Microsoft's support, such a move on the part of BDA would be risky, time consuming, and perhaps even impossible. If you're in the business of choosing victors in technology battles, you may not want to count all the cards just yet.

2. Warner convinces Blu-ray to adopt red laser as a fallback

For Warner Bros. to accept membership in the Blu-ray Disc Association's board of directors, the studio requested that the BDA adopt certain changes to its technology. According to Warner, its requests were approved. One such request was for Blu-ray drives to support a red laser-based high-definition disc format, albeit with lower capacity than BD, as a low-cost alternative. The HD DVD group has already made provisions for a very, very similar (read: unofficially identical) format, which it calls HD-9 (or "HD DVD-9"); for Blu-ray, the format is called BD-9.

The new bypass format will use the 650 nm red laser that already exists in today's DVD, and which would be necessary anyway for the new drive to read existing DVD discs (the blue laser for Blu-ray and HD DVD has a 405 nm wavelength). BD-9 will use the same disc substrate as DVD, so existing manufacturing facilities can produce BD-9 discs with no mechanical alterations. It uses the same single-sided, dual-layer format as existing "DVD 9," which is used today to hold movies that are about two hours long, plus extra content.

Of course, high-definition movies will require greater encoding per frame, so a BD-9 or HD-9 disc will not hold as much content in terms of time as its DVD counterpart. But Warner Home Video's Steve Nickerson said the bypass format can still be advantageous to Warner and other content providers. "That still allows for us to put short-form programming, whether it be TV episodes or short-form children's programming, etc., without having to use a BD-25," which is a single-sided, single-layer BD disc. (Currently, the BD disc with the greatest theoretical capacity is the BD-50, which is single-sided, dual-layer.)

The red laser, lower-cost alternative is part of what continues to attract Warner to HD DVD. As the HD DVD Promotions Group has asserted, along with Warner, the manufacturers' cost of replacing their mastering and duplicating equipment, just to support a new substrate - which is what BD will require - will translate into the price consumers pay for the BD disc. It also translates into content providers' cost along the way, said Nickerson, so having a low-cost alternative for lower-capacity content packages will help offset that cost.

There are packages that Warner offers today, and would like to offer in the future, Nickerson explained, which repurpose its television content without utilizing an entire season of a series, which might normally consume up to six DVDs. "There's people that have said, 'Well, in the HD world, you can put a whole season on one disc.' That's true, you could, but we don't necessarily sell everything in whole seasons. There may be a 'Best Of' collection that might be only five episodes, and that in fact could fit on a BD-9."

With both high-def formats now supporting the red laser alternative, a number of low-cost packaging options become available. Single episodes of shows, and conceivably entire movies without the extra features (perhaps as a low-price alternative for consumers) could eventually constitute a sizable percentage of the disc-based content market. Games that simply don't require 25 GByte will probably continue to be distributed on 9 GByte discs with conventional dual-layer DVD substrates, even when Sony's PlayStation 3 includes a BD player. In short, all the content that doesn't need even half of BD's 25 GByte could continue to be produced on conventional DVD substrates far into the future. Yet those discs may not be compatible with current DVD players, not because they use incompatible substrates but because they use incompatible file systems and logical formats, and also because they may require AACS to run.

Also today, Warner's Nickerson commented in favor of HP's request for the BDA to adopt iHD, the XML-based interactive technology format produced by Microsoft and Disney. Currently, Blu-ray supports BD-Java or BD-J, although as HP's official told us yesterday, Microsoft's inclusion of iHD as a native part of its forthcoming Windows Vista operating system, makes iHD the more attractive alternative from a PC manufacturer's vantage point. By Microsoft including iHD in Vista, computer manufacturers automatically pay royalties for it, and may not want to pay separate but simultaneous royalty fees to another party, for an altogether different system.

"We certainly would support iHD being included into the specifications of Blu-ray as an option for programming," Nickerson told TG Daily. Elsewhere in the press, a Warner spokesperson was quoted as suggesting the BDA could simultaneously support both iHD and BD-J. Such a provision may not be technically feasible, and some argue simultaneous support would be far from the most cost-efficient option. However, those objections aside, said Nickerson, Warner could conceivably support a simultaneous compromise for any number of reasons, "not the least of which, we're already familiar with iHD, so it takes some of the learning curve away from our folks." The DVD Forum has already chosen iHD as its interactive layer for HD DVD.

Yesterday, HP told TG Daily that if its requests weren't taken seriously by the BDA, it may pursue its option of joining the HD DVD Promotions Group, and adopt a public stance of neutrality in the high-def disc format debate. HP would be welcomed as a participant in the Promotions Group, Warner's Nickerson told us, "not only by Warner but probably by others, but I can't really speak for others. But if they're going to actively promote HD DVD, we would welcome them as part of the Promotions Group."

While formal unification talks between the two disc associations has been publicly suspended, Nickerson admitted, there remains plenty of dialogue between the multiple parties involved, particularly with Warner. "Warner has been, prior to last week, very actively engaged with any number of companies on both sides of the issue, in order to try to get a resolution to get to one format, and we continue after last week's announcement to work in that regard," he told us. But after all the talk has concluded, if it should happen that the market is left with two simultaneous formats (four, if you count BD-9 and HD-9), then Nickerson added, "We also have an obligation to those consumers that are going to buy machines that can play high-definition packaged media, to try to provide our content in either format."