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China's DVD challenge falters


China's plans to replace DVDs with a "home-developed" next-generation disc format called EVD (enhanced versatile disc) don't appear to be going too well.


"Players powered by EVD technology are expected to offer as much as five times the quality of image definition compared with DVD players that dominate the market at present, and that is EVD's biggest advantage over DVD technology," said a Xinhua News Agency report last November.


EVDs could challenge Blu Ray disc technology from founded by Sony Corp, Matsushita Electric Industrial, Philips Electronics NV and seven other major electronics companies, it said.


Blu ray is reported to have caught the eye of the US Department of Justice.


And soon after the first 1,000 EVD players went on the market, users are reporting video quality isn't good as they thought it would be, and the costly discs are hard to find.


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EVD players not selling as expected in China
People's Daily


Beijing resident Xiao Li loves listening to music and watching movies.


About one week ago, he bought an enhanced versatile disc (EVD) player, which is said to have a picture quality five times clearer than digital video disc (DVD) players and was developed in China. He paid 1,998 yuan (US$241), which is about two times higher than an ordinary DVD player.


Excited about his purchase, he slipped in a disc but was disappointed that there was little improvement in picture quality. Then he was told that he needed to buy a digital TV set to see the real difference, which is also twice more expensive than analog TV sets now dominant on the market. What was even more frustrating was that after he finished watching the four free movie discs provided with the EVD player, he found there were few discs on the market."


Fan Wenjian, a spokesman with Shinco, a major force in the nine-member EVD industrial alliance, said more than 1,000 EVD players, including 500 in Beijing, were sold in the past week across the country following the national product launch on January 1.


But the company has shipped 100,000 units to the Chinese mainland, Hong Kong and Southeast Asian markets.


SVA, the other of the two companies now providing EVD products, said it would push EVD player sales over the weekend and expected to sell 2,000 units in the first week.


The EVD industrial alliance aims to promote the new digital disc technology in China and has submitted the technology patent to the Ministry of Information Industry and the International Standardization Organization.


The EVD standard is expected to expand research and development of this technology in China so that the heavy royalties paid to foreign DVD patent owners will be avoided.


It is reported that Chinese manufacturers need to pay US$13.8 in royalties for every DVD player they make.


The Gome Electronic Appliance store, the biggest home appliances chain in Beijing, already received a shipment of EVD players on January 2, but the store was apprehensive about putting them on the shelves for fear of lack of response from customers.



Bottlenecks
The reasons for the low market response to EVD players are simple.


According to a poll conducted by the website CCDINet.com, one of the biggest information technology websites, 63 per cent of 1,940 people polled say the lack of EVD discs is the biggest obstacle to the popularization of EVD players and 20 per cent complained that the price of EVD players is too expensive.


Although Shinco's Fan says the EVD alliance has already received support from some entertainment content providers such as Metro-Goldwyn Mayer Studios and 21st Century Fox in addition to the fact that there will about 1,600 titles available this year, it is hard to say if buyers"enthusiasm will last that long and if they will be able to afford an EVD movie disc, twice the cost of a DVD disc.


What is embarrassing to manufacturers is that, due to low market reception during the initial stage, EVD players have to be compatible with DVD players, so EVD makers may still need to pay the US$13.8 in royalties, in addition to US$2 in royalties related to the EVD standard.


All these factors lead to the higher price of EVD players over DVD players.


If the cost of buying a new digital TV set is added on, EVD players become even more disadvantaged.


However, the future may not be that discouraging.


China has been pushing for its own standards for digital TVs, audio and visual compression and EVDs, so the success of one component will greatly promote the others.


As well, the government's determination will have a considerable influence on foreign manufacturers and content providers because no company can afford to ignore a market with 1.3 billion people where more than half of the world's DVD players are produced.

(Friday 30th January 2004)