China muddles the picture for high-def format
EVD raises concerns; DVD Forum votes for Toshiba
By Paul Sweeting
November 24, 2003
c 2003, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.
A government-backed consortium of DVD manufacturers in China has thrown a major and unpredictable wrinkle into worldwide efforts to develop a unified high-definition DVD system.
The nine-member consortium, which includes some of the world's largest producers of DVD players, unveiled a new disc format, called Enhanced Video Disc, based on technology developed in China that is different from either of the two major HD-DVD efforts under way in Japan, Europe and the U.S.
As the world's largest maker of DVD players and with a domestic market of 1.3 billion people, China now stands as a major obstacle to Japanese or U.S. hopes for a single, worldwide HD-DVD standard.
The announcement last week in Beijing comes at a critical time for the Japanese and U.S. efforts. Last week, the steering committee of the DVD Forum, the worldwide standards body for DVD, voted narrowly to adopt technical specifications for an HD standard developed by Toshiba Electronics and NEC Corp.
The Forum has been split between rival HD camps with Toshiba Corp./NEC on one side and the Blu-ray Disc camp, led by Sony Corp., Matsushita Electric Industrial and Philips Electronics, on the other.
Earlier this year, Toshiba failed to get the nine votes needed on the 17-member steering committee to carry its proposal.
For last week's vote, the committee's rules were changed so that abstentions were not counted, allowing the Toshiba/NEC proposal to pass with an 8-6 majority of votes cast and three abstentions.
Although the Toshiba/NEC system is now the quasi-official HD-DVD format, the Blu-ray Disc Group continues to develop its format outside the auspices of the DVD Forum. Blu-ray Disc recorders have already reached the market in limited numbers in Japan.
Unlike the blue-laser-based Blu-ray and Toshiba/NEC systems, EVD is based on the current red-laser technology.
EVD uses a new, high-level compression system called VP6, developed by New York-based On2 Technologies, to squeeze 120 minutes of HD movie footage onto a single disc.
Another American company, Milpitas, Calif.-based LSI Logic, is providing the encoder/decoder chips used in the EVD format.
Last week's announcement caught many involved in the DVD Forum and Blu-ray Disc Group off guard. Although China had been known to be developing a new DVD format since 1999, when its leading manufacturers and the government collaborated to form the Beijing E-World Technologies consortium, few were expecting anything so soon.
Chinese manufacturers account for more than half of all DVD players made in the world, including most of those sold under Japanese brand names. China has also become one of the largest markets for DVD players.
The Chinese have long chafed at paying the steep patent fees and royalties associated with the current generation of DVD technology, and the new format is seen as a way to break the hold of the primarily Japanese companies who control those patents.
The Chinese move leaves the U.S. studios in an uncertain position.
China has become a sinkhole of DVD piracy, largely scuttling studio hopes of developing the vast Chinese mainland as a legitimate market. A homegrown format with explicit government backing could provide a stepping stone toward addressing the piracy problem, especially if EVD includes some measure of copy protection, as the announcement suggested it would.
On the other hand, studios have grown increasingly alarmed about the split between the two blue-laser camps and the prospect of multiple HD formats.
Last month, 20th Century Fox Home Entertainment joined Warner Home Video and Buena Vista Home Entertainment as a member of the DVD Forum in a bid to exert more Hollywood influence over the development of an HD standard.
Warner is the lone studio to sit on the Forum's steering committee, but studio sources say Fox is considering an application to join.
Of particular concern to the studios is the relatively little information they've been provided about copy-protection schemes by either the Blu-ray or Toshiba camps.
"It hasn't been as high a priority as we think it should be," said one studio executive involved in the discussions.
Even without major studio product, the vast Asian market for Chinese and Asian-language films gives E-World a solid base on which to build the EVD format.
The Chinese are also not closing off the possibility that they will seek to export the format to other territories, putting further pressure on Blu-ray and Toshiba/NEC.
On2 Technologies CEO Douglas McIntyre said that E-World had put great emphasis on export markets in negotiating the rights to On2's codecs.
"There are many long and involved clauses in the contract covering their right to export the technology beyond China," McIntyre said. "For the Chinese, it has become a question of, why just be the manufacturer for some other guy? Why not just be the guy?"
