[opendtv] News: Sony Set to Exert Influence on Discs
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Wed, 15 Sep 2004 08:18:24 -0400
Sony Set to Exert Influence on Discs
By KEN BELSON and ANDREW ROSS SORKIN
Published: September 15, 2004
The purchase of Metro-Goldwyn-Mayer by a group led by Sony will not
only give the company an enormous film library but also considerable
power in its fight to set the format for the next generation of
digital video discs.
The transition to the new discs, which are not expected to be widely
available until next year at the earliest, could generate billions of
dollars in royalties to the developers of the technology that runs
them. Sony, as part of the Blu-ray Disc Association, a consortium of
major electronics makers, is at the forefront of efforts to develop
the new technological standard.
As a major consumer electronics company, Sony could also reap the
benefits of selling the new generation of disc players the new format
would require. Sony's success in the standards battle is far from
certain, because the rival HD DVD group, led by Toshiba and NEC, is
championing its own format.
By buying MGM's studio and its library of movies, industry experts
say, Sony is trying to tilt the long fight over the new DVD format in
its direction.
Both consortiums say their new discs will hold four to five times
more digital video and audio data than the DVD currently on the
market, enough to store the high-definition programs and films that
are slowly making their way to the consumer market.
The HD DVD group, which is showing off its technology to Hollywood
studios this week, contends that its new discs are cheaper to make
and more compatible with existing DVD technology. The Blu-ray group,
which includes Panasonic, Philips and Samsung, however, says that its
discs have the advantage because they offer superior images, among
other benefits.
The key to resolving the tug of war between the two groups, experts
say, will depend on the Hollywood studios because they provide most
of the content that will go on the discs. The studios also have a
huge stake in the change to the new technology because they now make
more money from DVD sales than from box office sales. They also lose
millions of dollars a year from pirated DVD's.
But with the exception of Sony's movie division, which includes the
Columbia and TriStar studios, that naturally backs the Blu-ray
format, the movie studios have so far avoided backing one standard
despite intense lobbying by both the Blu-ray and HD DVD groups. By
buying MGM, Sony will be adding another studio to the list of Blu-ray
backers, and a catalog of 4,000 movies that could be issued
exclusively in the Blu-ray format.
"It further tips scales that were already tipped toward Blu-ray,"
said Ross Rubin, a consumer electronics analyst at the NPD Group.
Executives close to Sony said that bolstering its position in the
battle of DVD formats was one of several important factors in its
decision to pursue MGM. Indeed, the management of Sony of America
helped sell the idea of bidding for MGM to its Japanese parent in
some early internal meetings by promoting "the Blu-ray angle," the
executives said.
Still, the executives noted that the Blu-ray format was "only one
reason" for pursuing a bid for MGM. The executives cited a litany of
other financial and strategic reasons for the deal, including being
able to exploit MGM's films on Sony's other platforms like its
PlayStation game consoles and even its cellphones, which it makes
through a joint venture with Ericsson.
A spokeswoman for Sony declined to comment.
Sony, though, faces several risks in buying MGM. By building a large
film library, which makes up an estimated 17 percent of available
film titles, Sony could end up threatening the same studios it is
trying to win over to the Blu-ray group. Sony, intentionally or not,
may give the appearance that it is willing to start producing Blu-ray
discs on its own, regardless of what the HD DVD group does, or what
the studios want.
The studios and retailers do not want two formats because that would
confuse consumers, and may mean having to produce two sets of DVD's
for each film release.
Sony "can pose a more credible threat to launch on their own," said
Tom Adams, the president of Adams Media Research in Carmel, Calif.
"On the other hand, Sony of all companies has been badly burned by
having new technologies launched in two formats." Sony was the big
loser in the battle over the video cassette format, with VHS becoming
the dominant format over Sony's Betamax.
Indeed, if the studios sense that Sony and the Blu-ray group is
pushing its format too hard, it may benefit the HD DVD group. The
other studios could try to counter what they see as Sony's growing
influence by backing the opposing format, industry analysts say.
A Toshiba spokesman, Keisuke Oomori, said Sony's acquisition of MGM
would not affect the plans of the HD DVD group. The HD DVD group, he
said, has made "substantial progress standardizing our formats" and
is "gaining positive understanding for our format from the Hollywood
studios."
----------------------------------------------------------------------
You can UNSUBSCRIBE from the OpenDTV list in two ways:
- Using the UNSUBSCRIBE command in your user configuration settings at
FreeLists.org
- By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word
unsubscribe in the subject line.
Other related posts:
- » [opendtv] News: Sony Set to Exert Influence on Discs
