Universal Pictures: "DRMs do not stop piracy"

Las Vegas (IL) - The battle between HD DVD and Blu-ray is in full swing: The first players are out, content follows. Now it's up to the marketing talent to get consumers excited. TG Daily spoke with Universal's Jerry Pierce about HD DVD's advantages and opportunities now and in the future, copy protection and the impact of IT in Hollywood.

There are very few industries that have seen an equal amount of buzzwords and confusing information surfacing in recent years than digital entertainment. HDTV, HD video, HDMI, HDCP, Blu-ray, progressive and interlaced resolution, HD DVD, AACS are just part of the current flood of keywords and abbreviations that describe a transition from the way we watch TV and movies today and in the future. For the average consumer and sales assistant, it is almost impossible to decrypt spec sheets and get an idea what certain feature sets of high-definition devices really mean.

One of those areas is high definition resolution, which is available today in 720p, 768p, 1080i and 1080p versions. Each resolution is typically associated with image quality, with 720p being the lowest and 1080p the highest. In the HD format race, the 1080i limitation of currently available HD DVD players is seen as a disadvantage for the format, while the 1080p capability of Blu-ray players as an advantage. If you follow our coverage of this industry, then you already know that we are highly critical of this topic, as it offers the marketing departments of IT and consumer electronics (CE) companies a huge playground to blur specifications by overstressing certain aspects or leaving out key characteristics of devices.

Supporters of the HD DVD camp, including Universal Pictures, recently announced the formation of "North American HD DVD Promotional Group" that will be funding a $150 million marketing and advertising campaign - "The Look and Sound of Perfect" - to counter the perception of a superior Blu-ray format. This event provided an opportunity for TG Daily to chat with industry executives not only about HD DVD, but also about the current HD environment and developments as well as digital rights management approaches. In the past, we have covered multiple angles of HD from the IT and CE perspective. This time, Jerry Pierce, senior vice president of technology at Universal Pictures, offered the opinion of a major film studio.

TG Daily: Let's cut to the chase right away. What we know today is that Blu-ray players support output in 1080p [progressive] and HD DVD devices are limited, at least for now, to 1080i [interlaced]. So, Blu-ray has the edge right now? Does the difference between 'p' and 'i' matter?
Jerry Pierce: No, it's not really an issue. Picture quality depends on several different things. For example, look at the first Samsung Blu-ray player and you'll see that Blu-ray does not offer mixed in system sounds. HD DVD does, since our bit-rate is higher. Right now, HD DVDs offer more capacity, which means we can use VC-1 compression to give us the best quality. Of course, we'd like HD DVD to move forward, but picture quality is really a question of how a player is designed. Most TVs actually do a really good job on 1080i.

TG Daily: What was the key reason for Universal to go with HD DVD and not Blu-ray?
Jerry Pierce: I would say it is total consumer value. This is really an important area. We need to have a good price for players as well as content. HD DVD offers that and has the most potential of becoming the best value to the customer. One other aspect that speaks for HD DVD is iHD, which we think is easier to program and provides a richer set of extras that can be produced in a shorter period of time.

TG Daily: Rich features - or interactive features - are one of the big advantages that HD media promise to offer over a regular DVD. What exact features could that be?
Jerry Pierce: There is a lot going on in this area, especially in Internet connectivity. We've already started to experiment with things like director's commentary and pushing that to the next level. If you look back at DVDs, we put a lot of hooks and gizmos into the content that we could use to go into different and multiple directions. We are doing the same with HD DVDs.

TG Daily: When will we see such interactive content on discs and what exactly will they allow us to do?
Jerry Pierce: We have some titles already under development; I can't talk about them yet. The feature I personally like best is Internet connectivity and to offer access to uploadable information for updating existing content. You'll be able to get information on a movie that has happened since that movie has been released.

TG Daily:Internet connectivity appears to be enabled by Ethernet ports that are integrated into HD players. Why aren't there wireless capabilities available today?
Jerry Pierce: It will go wireless at some point in time. The way wireless is restricted today, it will provide us only small amounts of information moving back and forth. But, yes, we are absolutely in favor of wireless connections. Not a lot of people have an Ethernet port behind their TV.

TG Daily: Copy protection or digital rights management (DRM) is another major issue in high definition video. What is your view on necessary DRM?
Jerry Pierce: Different studios have different philosophies in this area. It is our view that we have to provide customers a rich experience so they can do what they want to do within their home. We don't expect them to make copies of HD DVDs for their friends. And we don't think customers want to do that either. So, DRM needs to give them some restrictions beyond what both the customer and we believe are the proper usage rules. That's what we need to achieve. DRMs enable business models, they don't stop piracy. And we want to make sure that we have a rich one without making it so easy so that you can violate what we agreed on when you purchased a movie.

TG Daily: Let's go into the other direction: What would be an acceptable DRM approach?
Jerry Pierce: I don't think DRM is about a certain technology, DRM is about usage rules. If consumers purchase an HD version of one of our movies and if they make a same quality copy and they can hand that to their friends - and if that was easy to do - they cross the line. But streaming around the house is fine with us. We absolutely support that.

TG Daily: What about private copies of movies?
Jerry Pierce: A properly controlled private copy, with a version that runs on the consumer's hard drive and their media server, yes, I believe that there should be ways to enable that.

TG Daily: DRM appears to need some sort of a compromise between want the content industry feels is necessary to protect its content and consumer's expectations of what they can do with it. Do you feel that you have found that middle ground yet?
Jerry Pierce: I think we are still in a phase where we still have to figure out what the consumer wants, but I would also say that the consumer does not know yet what he really wants. Let me point you to the music industry: In the music industry, consumers were offered with the SACD a brand new format with much higher quality and very restrictive DRM rules. And consumers chose MP3 as their solution. They could have had higher quality, but they chose flexibility and usability. Switching over to TV and movies, we haven't yet discovered what the consumer really wants.

TG Daily:For the first time, IT companies are deeply involved in the generation of a new video format. This scenario is especially apparent in the creation of entertainment center PCs. What value do such devices represent to Hollywood?
Jerry Pierce: IT, CE and Content is a triad that together is creating a new value, a better experience for the home. I feel that IT is playing a bigger role in this environment than it ever did before. In that sense, by the way, you cannot really compare HD DVD and Blu-ray to the Betamax/VHS case. IT is evolving into a major entertainment platform, this is where Intel's Viiv, Microsoft and Apple are trying to go to. They must be part of the solution, simply, because we believe that consumers will be viewing content on a lot of new devices that we envision, at this time, to be there in less than five years.

TG Daily: So, you have this apparent need to collaborate with IT, but there appears to be this gap of understanding each other and it looks like that it will mostly depend on IT to learn how Hollywood works in order to be able to develop successful technologies. How much work is left to be done on that end?
Jerry Pierce: Well, I have a presentation here that includes a 'Hollywood 1:1' slide for IT guys. What it basically says is 'don't get star-struck'. Stars are the ones who make things happen for customers. It's what you buy in the store and how it is put together. But while I think there are some very good actors out there, Hollywood is much more in the nuts and bolts of getting the pieces together, for example, to make sure that we have a consistent delivery package for the customer. I am not saying that Tom Hanks does not matter, he's our lifeblood. But in terms of getting the content to the customers, I think there are a lot of other people, who are trying to help the customer to get efficient ways of consuming our content when they want to. In the future, you will see more executive crossover and you will see more IT people in the studios - many more than you saw a few years ago. Yes, I agree, IT is a different world and a different mindset, but we are making good progress.

TG Daily: Is the current confusion around HD a concern for you?
Jerry Pierce: Absolutely. You see people having new TVs and then they hook up their yellow video wire and say 'look I have high-def'. That happens a lot. That problem begins when people are buying their HD equipment. I don't think that store people mislead customers. It's more that store people do not understand and cannot explain the complexity of HD. This isn't easy and there are a lot of buzz-words floating around. This is part of why we created the promotion group and we will be addressing those issues.

TG Daily: Do consumers have to understand what HD is about?
Jerry Pierce: No. They simply have to plug in the wires and make it look good. But, in terms of HD DVD and Blu-ray, the consumer is doing most of the evaluation of those two formats and will decide what feature set and value is important.

TG Daily: Thank you for the interview.