News

Next-gen tech tries to keep the DVD juggernaut rolling

While DVDs and their players are still selling robustly at all levels of retail, the industry is already buzzing about what will shape the next phase in a never-ending format evolution. Two distinct camps have emerged, and only one point of agreement unites them: Consumers are starting to invest in high-definition TVs at a good clip (see charts on page 64), and standard DVD players and disks aren't currently up to the task of delivering HD content. It's clearly time for an upgrade since nobody wants the multi-billion-dollar DVD business to get knocked out of the market by competing HD content delivery modes like VOD. But with a format prizefight brewing, that may be exactly what happens if the two sides can't find a way to come together.
January 1, 2005

While DVDs and their players are still selling robustly at all levels of retail, the industry is already buzzing about what will shape the next phase in a never-ending format evolution. Two distinct camps have emerged, and only one point of agreement unites them: Consumers are starting to invest in high-definition TVs at a good clip (see charts on page 64), and standard DVD players and disks aren’t currently up to the task of delivering HD content. It’s clearly time for an upgrade since nobody wants the multi-billion-dollar DVD business to get knocked out of the market by competing HD content delivery modes like VOD. But with a format prizefight brewing, that may be exactly what happens if the two sides can’t find a way to come together.

So who exactly are the contenders? In one corner of the ring, there’s the Blu-ray Disc Association. Led by consumer electronics giant Sony and its Hollywood studio subsidiary Sony Pictures, and supported by the likes of Dell, HP, Hitachi, LGE, Mitsubishi, Panasonic, Pioneer and Samsung, the association touts proprietary Blu-ray HD technology as the clear next-gen choice. Blu-ray’s key point of difference is that at 50GB, its disks have almost six times the storage capacity of standard DVDs, which means they can easily accommodate the byte-heavy demands of HD content.

In the other corner, competing format HD-DVD comes up a little short on the storage scale at 30GB. But Toshiba argues that because HD-DVD builds on existing DVD technology, new players and disks should be easier and cheaper to produce. The format’s advocates claim that manufacturing plants would only need to make minor adjustments to existing replication machinery to accommodate production of the new disks, while Blu-ray would require new systems altogether.

The bells and whistles

When players supporting both formats hit North American retail in Q4 2005 at prices in the US$600 to US$1,000 range, they’ll use technology that could transform the home entertainment experience – it’s like standard DVD on steroids. To begin with, HD content makes for a much sharper picture and crystal-clear sound quality. (Pictures in standard-def DVDs contain 480 lines of video data, while those in HD are supersized to top out at 1,080 lines.) Both formats will be backward compatible with existing media, and the Blu-ray models from Sony and Panasonic will feature recording capabilities from the get-go. Also, both HD-DVD and Blu-ray will have enhanced content encryption systems that change the digital code key every few minutes of video play, making it more difficult to pirate disks.

But beyond that, there’s the potential to make these next-gen DVDs completely interactive, which opens up new possibilities for enhancing kids content once the switchover takes hold of the mass market in roughly three years.

HD-DVD and Blu-ray disks have enough room to house an HD movie and a full-length video game, for starters. And while Toshiba has been less forthcoming about HD-DVD’s capabilities in this regard, Blu-ray Disc Association managing director Richard Doherty (who’s also director of professional A/V at Panasonic) says Blu-ray wants to erase the line between TV and computer and is testing the devices for network connectivity. For example, Blu-ray companies have produced disks that let users replace subtitles by hooking up to the Internet via the player and downloading new ones.

More specifically for the kids market, Ross Rubin, director of industry analysis for NPD Techworld, says these next-gen players won’t be passive playback devices. ‘It allows [kids] more interaction with characters and the brand,’ he says, pointing to Blu-ray’s ability to build more unlockable content into the optical disk. He floats the hypothetical example of McDonald’s teaming up with Disney on Happy Meals. The companies could give out special codes with each meal, and kids could enter these codes via an on-screen interface to unlock special disk features such as deleted scenes or messages from the lead character. ‘There’s an opportunity to add a lot of features that drive collectibility,’ he says.

Where the kidvid market is sitting

There’s no guarantee that the adoption rate of these hi-def DVD players and disks will mirror the meteoric rise of DVD. Judging by sales figures, standard DVD is hardly on the wane. According to non-profit industry org the Digital Entertainment Group, Q3 2004 DVD shipments were up 59% from the same period in 2003 to 340 million units. Nearly 110 million DVD players have sold through since 1997, and in Q3 2004, U.S. consumers purchased roughly 6.6 million DVD players, making it the best quarter to date for sales of the device.

And it’s numbers like these that have kids content producers and video distributors in a wait-and-see holding pattern. Kids DVD sales are growing by leaps and bounds as DVD players spread to new rooms in family homes and cars. For example, the kids direct-to-DVD market grew between 10% and 15% last year and took in US$1 billion. However, U.S. VHS tape sales still make up roughly 40% of the US$5-billion kids home entertainment market. Tony Vandeveerdonk, director of home video sales for indie kidvid distributor FUNimation, expects VHS to stick around ‘well into 2005.’

Lions Gate Family Home Entertainment president Glenn Ross says he’s paying attention but isn’t commissioning DTVs in HD. He puts it this way: ‘My six-year-old doesn’t care if he’s watching VHS or DVD. I doubt he’ll care if it’s hi-def. Kids just want to watch the movie.’

Anchor Bay Entertainment president Ted Green believes that both Blu-ray and HD-DVD have a lot of potential for the kids market, but says his Troy, Michigan-based company is holding off until it can gauge consumer preference. ‘We’re really technology agnostic,’ he says. ‘We’ll go wherever the market points us.’

Toronto, Canada’s Nelvana has at least dipped its toe into hi-def waters and is following the format war closely. Scott Dyer, executive VP of production and development, says that as HD appliances invade the home, eventually there will be a demand for hi-def kids content. Moving forward, his company is producing its direct-to-videos in HD, beginning with the upcoming sequel to 2004′s Carebears: Journey to Joke-a-lot. Interestingly, Dyer’s cohort Peter Maule, VP of home entertainment and retail distribution, says he’s tracking Blu-ray and HD-DVD, but he thinks the real action in kids home entertainment over the next three years will be in relatively low-res portable proprietary technologies such as Hasbro’s Video Now.

Waging war

The first port of call on the content side for both HD camps was Hollywood. Movies from the major studios drive the majority of DVD sales in the US$25-billion home video market and are fuelling the home theater trend. (Blu-ray Disc Association’s Doherty adds that movies shot on film are high-resolution by nature and make sense as the first candidates for hi-def DVD. By contrast, TV shows – and particularly children’s TV shows – are primarily shot in standard definition right now.) It’s believed that MGM’s video library was the chief prize driving the Sony-led purchase of the studio last year.

For a time, it looked like the Blu-ray side had successfully wooed the studios. Sony was poised to regain the home video ground (not to mention the lucrative technology patent licensing fees) it lost when its Betamax format fell victim to VHS in the ’80s. But Hollywood big guns Paramount, Universal and Warner Bros. (and sister company New Line Cinema) delivered a major blow to Blu-ray technology in late November 2004. The studios put their weight and collective home video market share of roughly 41%, not to mention their more than 50% market share of filmed content, behind Toshiba’s HD-DVD format.

So even though Blu-ray disks have a much larger capacity and the backing of most major consumer electronics manufacturers – which have the potential to ramp up the installed player/hardware base much more quickly than HD-DVD proponents Toshiba, Sanyo and NEC – these four studios remain unconvinced.

Craig Kornblau, Universal Studios Home Entertainment president, says because HD-DVD is built on the back of standard DVD technology, he knows his company can get it to market quickly and efficiently. ‘It’s proven technology,’ he says. ‘We can make it today with our existing manufacturing infrastructure. Nothing has to be torn down.’

Similarly, Paramount Pictures Worldwide Home Entertainment president Tom Lesinski says HD-DVD was a clear choice in terms of copy protection features, ease of replication and cost of manufacturing. Paramount, he says, will go to market with HD-DVDs culled from its library and current release slate in Q4, adding that titles from the children’s catalogue will not be in the initial offering.

What these four heavy-hitters have effectively done is drawn a line in the sand for CE manufacturers; they’re trying to force manufacturers into making hardware for one standard to avoid splitting the allegiance of consumers. ‘CE manufacturers will follow content,’ says Kornblau. ‘And content providers are making their decisions known.’

But it’s not as cut-and-dried as that. Sony Pictures/TriStar Columbia, and MGM by proxy, are marching ahead with plans to produce Blu-ray disks for Q4 2005. And in early December, citing what it believes is Blu-ray’s superior technology and CE manufacturer base, Disney/Buena Vista threw its support – not to mention its estimated 18% market share – behind the technology. Fox is the only studio biggie that has yet to declare its allegiance.

And it’s not even certain that content availability will drive format adoption as Kornblau suggests it will. ‘So there will be some content available for HD-DVD. There was content for Betamax, too,’ says NPD’s Rubin. ‘I just don’t see how Toshiba can overcome the production volume and user base of the [Blu-ray] companies.’

It’s also likely that the format war will confuse consumers, split the nascent market and, perhaps, sink the technologies before either has a chance to take hold. ‘Having two more formats [in addition to standard DVD] is destructive,’ says Lions Gate’s Ross. Publishing single titles in three formats, he says, will take up already precious retail space, and home entertainment distributors will have to spend a lot more cash on duplication costs, shipping and maintaining the inventory for multiple formats.

About The Author
Lana Castleman is the Editor & Content Director of Kidscreen and oversees all content for Kidscreen magazine, kidscreen.com and related kidscreen events. lcastleman@brunico.com

Menu

Brand Menu