[opendtv] Analyst predicts stalemate in next-gen DVD war

Seems to me that even Beta vs VHS would have been a stalemate, had
players been able to play both formats.

The reason 45s and 33 1/3 LPs coexisted for so many years was because
the vast majority of players sold from 1949 or 1950 could play both
formats. (They would probably still be going strong, were it not for the
fact that the CD introduced an incompatible physical format.) 78s were
another matter. Tonearms optimized for LPs could play 45s well enough,
but really could not play 78s well. And vice versa.

Bert

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Analyst predicts stalemate in next-gen DVD war

Dylan McGrath
(06/23/2006 8:06 PM EDT)
URL: http://www.eetimes.com/showArticle.jhtml?articleID=3D189601178

SAN FRANCISCO - The conventional wisdom holds that, much like the
Betamax-VHS war of the early 1980s, one format will emerge the winner of
the HD DVD versus Blu-Ray next-generation DVD format battle that is
shaping up to start this summer. But that's not necessarily the case,
according to at least one industry analyst.

Chris Crotty, senior analyst of the consumer electronics segment at
market research firm iSuppli Corp., believes the DVD format war will
result in stalemate, at least in the short term.

For one thing, according to Crotty, neither technology offers a distinct
technology advantage over the other. "It's not as if you can point to
one of them and say, 'this is significantly better, for these reasons,'
" Crotty told EE Times Friday (June 23).

Both formats, for example, are build on the Advanced Access Content
System (AACS), the new standard for content distribution and digital
rights management intended to limit sharing and copying of the next
generation of DVDs.

A second rationale for Crotty's predicted stalemate is content
providers. For now, some have said they will publish in both formats,
and some say they will publish in only one.

"I personally think that studios are very interested in making money,"
Crotty said. "You have to think that the smart studios are going to have
to ask themselves very seriously, 'are we leaving money on the table?'"

Just as video game companies routinely publish games for use on
different gaming systems, the majority of studios will soon be
publishing movies for both HD DVD and Blu-Ray, Crotty said, adding that
the resources and effort required to publish on two DVD formats are
significantly less than programming video games to work on other
consoles.

Crotty acknowledged that publishing in both formats would be tougher for
a company like Sony Pictures. Sony Corp. and Matsushita Electric
Industrial Co. are the primary backers of the Blu-Ray Disk format.

Crotty said that it's likely that forward-thinking consumer electronics
companies will offer DVD players that support both formats by the
holiday season. Companies like South Korea's Samsung Electronics Co.
Ltd. and LG Electronics Co. Ltd. are rumored to be developing
dual-format players, he said.

HD DVD versus Blu-Ray will be a lot different than Beta versus VHS,
Crotty said. For one thing, unlike the 1980s, when VHS bested Beta,
which was considered to be the better technology, through sheer
marketing efforts, today's consumers have access to a great deal more
information through the Internet. Once companies bring to market players
that support both formats, it will also be less of an issue, he said.

"The consumers in the market will not tolerate two formats, unless it
doesn't matter, unless it's moot," Crotty said.

Toshiba, the main backer of HD DVD, has fired the first shot in the
next-generation DVD format war. The company got the technology out of
the gate ahead of its Blu-Ray rivals and is now offering an HD DVD
player for $499 that, an iSuppli "teardown" analysis revealed, actually
contains nearly $700 worth of components. Toshiba's willingness to take
a loss of nearly $200 per unit is a clear indication that the company is
trying to press its first-to-market advantage by permeating the market
with HD DVD. But Crotty noted that the strategy may backfire, invoking
the law of unintended consequences.

"There are already reports that companies that sell high-end computers
are buying the player to rip out the drive and install it in a
computer," Crotty said. "The only reason they can do that is because
Toshiba has priced it so low."

Companies such as Zoran Corp. are currently developing chip sets for
next-generation DVD players that are "format agnostic," Crotty noted.

Toshiba and its Blu-Ray rivals tried last year to reach a compromise on
the next-generation DVD standard. But the effortsbroke down last May,
with each side saying they would go ahead with their own
formats-creating a situation where consumers will be forced to choose
between equipment and content for two different formats.

"If you just stand back from a business strategy standpoint, it's a
little absurd to think, 'we're going to win,' given how entrenched the
other side is," Crotty said. He acknowledged that one format may
eventually win out, noting that each has some subtle non-technology
advantages.

Crotty pointed to a surprising factor that could influence the ultimate
outcome of the DVD format war. "Some people will argue that the ultimate
winner in these situation is based on what the adult film business
adopts," he said, noting that that industry sells a very high volume of
DVDs.

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