International intrigue

By Paul Sweeting -- Video Business, 9/1/2006

SEPT. 1 | THE MOST INTERESTING ASPECT of last week’s launch announcements by the Blu-ray Disc Assn. and its member studios was the location.

The first big wave of Blu-ray titles was initially unveiled in Tokyo, followed a few days later

by an even bigger bang in Berlin, at the Internationale Funkausstellung (IFA), the biggest electronics show in Europe.

Part of the timing of the announcements was dictated by events, of course. Funkausstellung comes but once a year, after all.

But the back-to-back press conferences, on two continents half a world apart, also effectively served notice to the HD DVD camp that it’s in for a global fight.

On the surface, HD DVD would appear to be outgunned.

In Japan, where recorders are more popular than standalone playback devices, the DVD Forum’s delay in finishing work on a recording standard for HD DVD has left the format at a disadvantage.

Unlike HD DVD, which is based on the DVD-ROM format, Blu-ray was first conceived as a recording format, and several major Japanese hardware makers announced plans in Tokyo and Berlin to introduce Blu-ray recorders in their home market.

HD DVD is also yet to establish a beach head in Europe. Toshiba announced last week that its first players will reach Europe in November—the same time the first Blu-ray produce arrives—depriving HD DVD of the first-mover advantage it had in the U.S.

Blu-ray could have an edge in Australia as well, where HDTV broadcasting is already well established and Blu-ray’s recording capability could be decisive.

By putting so many of its eggs in the ROM-only U.S. basket, Toshiba could be hard-pressed to fight a multi-front war—unless it gets some hardware allies soon.

THERE’S AT LEAST ONE other major international territory, however, that could play a major role in the outcome of the format war: China. And there, recent developments are more likely to favor HD DVD than Blu-ray.

After several years of government-sponsored effort, attempts by Chinese hardware makers to

develop a high-def DVD standard for the domestic market based on red-laser technology have largely failed.

Late last month, Zhang Bao Quan, head of Beijing eWorld and the principal force behind the Enhanced Versatile Disc (EVD) standard, acknowledged the format’s demise to the Chinese press.

“The EVD dream has become a soap bubble,” Zhang said, somewhat grandiloquently, adding that he himself has become a “tragic hero.”

At one time, EVD was the officially “recommended” format for China, per the government, and its collapse is a setback for the Communist Party’s efforts to establish China as a technology-standards setter.

At least one other red-laser Chinese format, HDV, is also now gone, while a third, HVD remains officially alive but is currently dormant.

The HD-FVD red-laser format developed in Taiwan currently exists more in press releases than in the marketplace.

With the collapse of China’s red-laser efforts, the most likely scenario there is the adoption of the proposed China-only version of HD DVD.

If ultimately approved by the DVD Forum, the sub-format could open up a vast new market for HD DVD outside of the U.S.

While that wouldn’t preclude Blu-ray from also gaining traction in China, given the cost differences between the formats and the DVD Forum’s greater willingness to play mahjong with the Chinese, HD DVD looks like a much better bet for the People’s Republic.

THE MAIN DIFFERENCE with the Chinese version of the format, moreover, is that it uses the official video codec of China, AVS, rather than the three Japanese/European/U.S. codecs used by standard HD DVD as well as by Blu-ray. From a player manufacturing point of view, that’s no difference at all.

A China-only version of HD DVD could mean a lot of Chinese factories—which currently produce over 70% of the DVD players sold around the world—geared to turn out piles of cheap HD DVD players.

And whether they drop in an AVS chip or a VC-1 chip will make little difference in their output.

That sort of economy of scale would only reinforce the worldwide cost differences between HD DVD and Blu-ray—and make the factory floors of China at least as important a battleground in the global format war as the retail shelves of the U.S. and Europe.