In the high-stakes war of high-def DVD formats, there are two major combatants: HD-DVD and Blu-ray Disc. While neither is expected to make a splash until 2006, the battle heats up next year. That's when Hollywood studios need to get ready to manufacture DVDs for the new formats, for players costing roughly $900. The problem is, the studios and retailers aren't interested in selling two new formats. "Retailers don't want to stock multiple versions of movies," says one major studio executive. "The hope is there's some way to come together."
Whichever triumphs in the marketplace, industry executives believe a high-definition DVD format will help drive HDTV set sales. With broadcasters and cable networks making the move to HDTV, an HD-based home video format completes the HD content circle. For consumer electronics retailers, it becomes another sales weapon to drive the HDTV conversion. Also, as more prime time series are being produced and broadcast in HD, giving HDTV set owners access to HD versions of their favorite shows increases revenues.
The need for a new technology format arose as soon as HD sets hit the market.
The current DVD format has a resolution of 480 progressive lines. HDTV sets display 720 progressive lines or 1080 interlace lines. That leaves set owners with a resolution gap and consumer electronics makers with a product opportunity. So in 2002, the tech giants went to work.
Toshiba is backing HD-DVD; Blue-ray Disc is backed by Sony. And both companies have been drumming up support for their formats.
JVC recently became the 14th manufacturer to sign on with the Blu-ray Disc Association, giving the group an edge in terms of industry support. JVC joins Sony, Thomson, Panasonic, Pioneer and nine other companies. By contrast, HD-DVD has four companies behind it: Toshiba, Memory-Tech, NEC and Sanyo.
Dominic Ainscough, senior analyst with the Yankee Group, believes the backing Blu-ray has is key. "It has pure scale of support, and that is critical for the consumer electronics industry," he says. Having big guns in the Blu-ray camp, he adds, gives the company leverage power.
But those big guns are missing one thing: content. For now, HD-DVD is more attractive to studios because the technology employs current DVD manufacturing techniques.
"Until you know how you make the razor blades, it doesn't matter how many people want to make the handles," says a studio executive.
Still, both formats use "blue laser" technology. A blue laser has a shorter wavelength than the current DVD's red laser and, coupled with a light-gathering lens, can focus on a smaller spot than a red laser. A smaller spot means more data can be stored on the disk, because it can fit the data in less space. It's like using a fine-point pen versus a magic marker.
Here's where Blu-ray pulls ahead: Of the two formats, Blu-ray can store more content because the protective substrate coating on the disk is only .1 mm thick (HD-DVD, like current DVDs, has a substrate of .6 mm). A thinner substrate means the laser can get even closer to the data. The closer the laser, the smaller the focus spot. As a result, a dual-layer Blu-ray disc has room for 50GB of data (25 GB on each layer), while the HD-DVD format can only hold 30 GB (15 GB on each layer).
Storing a film that runs 135 minutes—98% of movies are less—needs 17 GB of data using MPEG-2 compression, giving the Blu-ray format plenty of room for additional features. "We shouldn't accept anything less than the very best in terms of capacity," says Andy Parsons, senior vice president of advanced product development for Pioneer Electronics (USA). "This is a format we expect to be around for 10 to 15 years," he says.
Junko Furuta, with Toshiba's corporate communications office in Japan, doesn't agree. Japan's Toshiba Corp. says it would introduce notebook computers with HD-DVD technology in the last quarter of 2005. The move is designed to pressure rivals in the battle over formats for next-generation DVDs. Furuta says new technology, like MPEG-4 and Microsoft's VC9 format, will allow eight hours of HD content to be stored on the disks. "We don't believe in a 'bigger is better' kind of competition," he says. "We believe in adopting an overall perspective, considering all related industries and consumers."
The studio executive concurs. He says the 50-GB capacity of Blu-ray has yet to be seen outside of a laboratory and would require exacting manufacturing and handling standards. If Blu-ray can only operate in a single-layer mode, it will only hold 25 GB of data—less than a dual-layer HD-DVD. Without the capacity advantage, Blu-ray is a nonstarter.
Furuta also points to HD-DVD's advantage in manufacturing costs and maximum compatibility with existing technologies. Yankee's Ainscough agrees, noting, "The primary selling point of HD-DVD is that it requires less manufacturing investment because it doesn't require retooling of the manufacturing plant."
Parsons, however, says being attracted to HD-DVD simply because of manufacturing costs is a trap. "There's a tendency to go with a technology that is understandable and has relatively low risks," he explains. "But I've been warning people not to stumble over short-term issues."
In Hollywood, content is king. So expect the studios to knight the format heirs to next-generation DVD technology.