Are these the future of home movies?
The Big Question: What are the technological and cultural factors shaping the 'standards war' between HD-DVD, and Blu-Ray DVD? Will technology, or cultural and economic factors, be the biggest factor in shaping the outcome?
INTRODUCTIONA standards war over home video is brewing... again! As with previous generations of disk and home video formats, there are two major formats competing to become the new standard. The first of these formats, produced by NEC and Toshiba, is HD-DVD (formerly known as AOD); its competitor is Sonys Blu-Ray format. Over the coming months, the competing technologies, and their backers, will battle to determine the new standard. In this essay, I will explore whether the outcome will be ultimately be determined by technological, or cultural factors, and what possible outcomes these factors lend themselves towards.
Before moving forward any further, it is worth examining what, exactly, Blu-Ray and HD-DVD are. According to Rich DAmbrise, ...the next milestone in DVD development is the new class of blue-violet laser-based products. Blue laser technology combines a shorter wavelength laser diode with other media and drive improvements to boost capacity by a factor of four or five over standard DVD products.1 Blu-Ray and HD-DVD involve two different methods of applying this blue laser technology to store, and retrieve, data off CD sized disks.
TECHNOLOGY Vs. CULTURE
Given that we are examining whether technology or culture determines the success or failure of a technology, an obvious point to begin our quest is to examine the relative technical merits of both formats. Two key measures of the technical merits of a disk format are its capacity, and the speed at which data is transferred from it. Dan Daley notes that A recordable version of AOD will be able to hold 20 GB on a single-layer disc, and 40 GB on a double-layer disc. Pre-recorded AOD will be able to hold 15 GB on a single layer, and 30 GB on a double layer.2 In contrast, Blu-Ray's specifications call for smaller pits and tracks to fit about 25 GB... on a single layer, read by a blue laser at a numerical aperture of 405 nanowebers and combining the MPEG-2 codec with a data transfer rate of 36 mbps. A read-only (ROM) version... will use a dual-layer disc storing about 50 GB on a single side.3 In contrast to Blu-Rays 36 mbps, Toshiba and NEC showed several titles encoded in VC-9 and H.264 at data rates of 8 to 12 Mbits/second on giant monitors using prototype players and software...4 So based on two key measurements of technical superiority for a disk format, Blu-Ray is the clear winner.
Yet, according to Marie DAmico, we should not feel so certain about Blu-Rays impending victory:
When videocassette recorders (VCRs) were initially introduced, two competing formats were submitted for consumer consideration. Sony Corporation hawked Betamax, considered by the congnoscenti to be the technologically superior standard. JVC and Matsushita Electric Industrial Co., Ltd. marketed VHS. Like Apple Computer, Inc. with its Macintosh, Sony refused to license its proprietary Betamax to original equipment manufacturers (OEMs) for wide-scale production. JVC and Matsushita licensed VHS to every comer. Apple and Sony learned two lessons which cost them millions and market share: First, you can make a mint off of mediocrity and , second, you must license or you'll languish.5
What BetaMax and the Apple Macintosh show us is that superior technology does not necessarily win out; an economic factor like effectively licensing the intellectual property rights to manufacture (in the case of Blu-Ray and HD-DVD) the disks, and the drives to read them, is a critical factor in determining the success or failure of a format. In failing to licence BetaMax to third party OEMs, Sony found itself effectively competing against the entire industry. It is a lesson not lost on either Toshiba or Sony, who have attempted to attract as many OEMs for their respective formats in 2005. Blu-Ray lists its OEMs as being Apple Computer, Inc., Dell Inc., Hewlett Packard Company, Hitachi, Ltd., LG Electronics Inc., Matsushita Electric Industrial Co., Ltd. [note Matsushita is known as Panasonic outside Japan], Mitsubishi Electric Corporation, Pioneer Corporation, Royal Philips Electronics, Samsung Electronics Co., Ltd., Sharp Corporation, Sony Corporation, TDK Corporation, [and] Thomson Multimedia6 . Meanwhile, an International Herald Tribune article notes Toshiba has some pull of its own on the HD-DVD side, with NEC and Sanyo as major backers7 , with a less trusted website noting HD-DVD is currently supported by Toshiba, NEC, Sanyo, Memory Tech and the DVD Forum... Microsoft are expected to be using the HD-DVD format for their upcoming next generation Xbox console8 9 .
The OEMs are a key promoter of new technology for several reasons, the biggest being that new technology is critical in ensuring their profitability. This point is noted in an article on the introduction of DVDs by David Lammers, who writes Getting DVD systems out on the market in late 1996 is of critical importance to Japan's electronics companies, which continue to suffer from a lack of new products and market price destruction 10 . In other words, selling the latest and greatest technology to consumers at premium prices, rather than undercutting their competitors prices on commodity technology, is critical to the profitability of transnational technology companies.
But perhaps just as important an economic factor as securing the support of OEMs is getting content providers aboard - after all, how much use is a video format without any videos to watch on it? HD-DVD had an early advantage in this regard, as according to InternetWeek, Siding with the Toshiba standard were General Electric's Universal studios, Viacom's Paramount, and Time Warner's Warner Brothers. All said they plan to offer DVD movies before the 2005 holiday season. Lined up against the Toshiba group are Sony's MGM studios and its Columbia TriStar Home Entertainment unit11 While, as I mentioned earlier, Blu-Ray is generally the superior medium, HD-DVD has one compelling technical advantage working in its favour: HD-DVDs ...lens aperture is 0.65, slightly higher than DVD's 0.6. The similarities make it easier to develop a single lens-pickup head that can drive all CDs, DVDs and HD DVDs; it also facilitates disk replication.12 What this effectively means is a lower cost for video publishers transitioning from DVD to HD-DVD than from DVD to Blu-Ray; a technical advantage of little immediate consequence to most consumers (most consumers not pressing commercial quantities of DVDs), yet of tremendous benefit to content providers.
But where HD-DVD had a clear early advantage with the movie studios, this changed ...when Disney (NYSE: DIS) broke from the studio ranks to line up on Sony's side, it made it obvious that Blu-ray wasn't going to bow down so easily.13 The significance of this move was more than just Blu-Ray consumers gaining the possibility of watching Mickey Mouse on their Blu-Ray players in the future; it meant that Blu-Ray had secured a group of content providers whose market share equates to 50% of the US home video market. This point was made in an article in the Japan Computer Industry Scan, which wrote at the time that:
Walt Disney joins Hollywood studios including Sony Pictures Entertainment Inc., Metro-Goldwyn-Mayer Inc. and Twentieth Century Fox Film Corp. in adopting the Blu-ray Disc... Walt Disney's decision gives Blu-ray Disc's developers -- Sony, Matsushita Electric Industrial Co. and others -- nearly 50 percent of the U.S. DVD software market, slightly surpassing the market share held by developers of the rival technology, HD DVD.14
But big Hollywood studios are not the only content providers that the two camps need to secure - video game companies are increasingly important. One analyst notes that Perhaps having the computer makers on Blu-ray's side inspired Electronic Arts (Nasdaq: ERTS) and Vivendi to follow suit and proclaim their allegiance to Sony's new platform. So Blu-ray is not simply the most capable platform from a spec sheet angle. It also has the country's largest video game company in EA... lending support.15 It is also interesting to note that several of the OEMs supporting Blu-Ray also own content or software divisions. beyond the obvious example (Sonys Colombia TriStar and MGM studios, and Playstation game console licensing) we see Apple, who (beyond producing the Macintosh line of computers) also produces software (like the Mac OS-X Operating System, iLife, iWork, and Final Cut Pro) which may be distributed on the Blu-Ray disk format. Similarly, Microsoft is both an OEM (producing the XBox Game Console) and the publisher of software applications like Microsoft Windows and Microsoft Office.
According to John Arledge, perhaps as important as the big media conglomerates may be the adult entertainment industry. Arledge notes US pornographers' decision to adopt the cheap convenient VHS - rather than rival Betamax - when the two systems were introduced in the 1970s killed off Betamax while sales of pornographic films drove take-up of video recorders... - in this view, if Sonys failure to licence Betamax did not kill that particular format, the pornographers did. Arledge continues Dario Betti, an analyst at London-based digital media consultancy Ovum, says: 'Like it or not, pornography drives each new, convenient visual technology16 . It may not be politically correct to discuss adult entertainment in a refined academic essay. But though few may be willing to admit it, sex sells, and there is certainly a case that more convenient nudity (and the pornographers preferred choice between HD-DVD and Blu-Ray) will play some role in determining which of the two formats are, ultimately, successful.
While I have mentioned the standards war between VHS and BetaMax, there was a more recent standards war in the video market, in the mid 1990s. The companies involved in this standards war were - for the most part - the same companies involved in the blue-laser disk battle (though some have switched side); according to Alfred Poor On one side was the SD Alliance--a consortium including Hitachi, Matsushita, Mitsubishi, Pioneer, Thomson, and Toshiba--which backed the Super Density (SD) design. On the other side was the MMCD Group, led by Philips and Sony, with its proposed Multimedia CD (MMCD) format.17 The biggest distinction between the two formats was that Sony's MMCD system... has a shorter recording time because of the companies refusal to use double-sided disks which it says will mean a break in playback when the disk is changed over18; in contrast to this, Toshibas SD disks were double-sided.
Rather than repeat previous standards wars - like those between VHS and BetaMax or Macintosh and IBM PC - Sony and Philips pursued negotiations with Toshiba. The support of content providers and OEMs was critical in forcing negotiations, with a NewsBytes article written at the time noting that The SD format is currently enjoying more support than MMCD, one of the reasons behind the common format talk that has come mostly from Sony and Philips, analysts believe.19 There was also public displays of bravado by both sides at the outset of negotiations, with a Toshiba spokesperson stating that A unified system would be ideal from the customer's viewpoint. We'd like... (Sony) to come to accept our standard rather than developing a combined system which would be very costly and not beneficial. These comments were matched by a Sony spokesperson,who stated that ...A single format is better,... We believe MMCD is superior, he said. The spokesman added that Toshiba is welcome to come over to the MMCD side.
Once it became obvious that both standards were to heavily backed to withdraw altogether, negotiations began in earnest. Where the resulting hybrid format was based on Toshibas more strongly backed SD format, The MMCD camp prevailed in the spec's adoption of the Eight to Fourteen Modulation (EFM) Plus data-encoding format proposed by Philips and Sony20, as well as the hybrid format adopting single-sided (rather than double-sided) disks. The hybrid format resulting from these negotiations is known today by a name that came about during the course of negotiations: DVD.
Thus far I have premised this essay on the two most obvious outcomes (that one consortium will either defeat its opponent in the marketplace, or that one consortium will withdraw its format altogether). However, a negotiated settlement (like the one which led to the creation of the DVD) is a very real possible outcome of the battle between Blu-Ray and HD-DVD. Recent news suggests that Sony and Toshiba have - as was the case with DVD - begun negotiations on a compromise. Given that, in a recent DVD Recorder World article Taro Takamine, a Sony spokesman in Tokyo, has now said that the only talks that Sony would entertain were those of the HD-DVD supporters dropping their format and supporting Blu-ray Disc21 , and Toshiba assumably mobilising its own spokespeople for a round of pro-HD-DVD bravado, we can safely assume that negotiations are progressing smoothly.
In such negotiations, the proponents of the competing technologies, and their negotiating tactics, are critical. However, the other factors I have discussed so far (such OEM, and content provider support) are a very important bargaining chip. The level of third party support for both parties was an important factor in the earlier negotiations, as they would be in any HD-DVD / Blu-Ray negotiations. Note that the fact that these negotiations are taking place may not mean a new, half-HD-DVD and half-Blu-Ray format; one alternative ...is a hybrid solution that would support Blu-ray for recording and HD DVD for ROM disks.22 In other words, while both formats would be available to consumers, the higher capacity Blu-Ray (with its higher support amongst OEMs) would become the medium of storage for computer files, while HD-DVD (until recently, more heavily backed by Hollywood movie studios) would become the medium for home movies.
Finally, while consumers have not played a part in the standards war thus far, they will take a pivotal role in its outcome. The decision of consumers will be most influential if both HD-DVD and Blu-Ray technology is available in the marketplace. The decision consumers make in such a situation may be based - in part - on factors already discussed here; including which format is included in computers and video game consoles, the range of available movies and software, availability, and price. Consumers will decide how they use the new formats, and whether the new formats are used in the manner intended by manufacturers.
Even if Sony and Toshiba negotiate a settlement, consumers will still wield significant (if reduced) power. Consumers may chose another alternative, such as video-on-demand, or may stick with existing technologies (such as CDs and DVDs) and avoid the blue laser format. Given that, over 5 years after the widespread adoption of the DVD format, Compact Disk remains a viable medium in spite of competition from DVD-Audio, a similar situation is a possibility in regards to DVD and blue-laser disks. Content providers may need to provide compelling reasons - perhaps a forced upgrade or killer application - to persuade consumers to upgrade. While the OEMs, content providers, and other backers will almost certainly undertake significant marketing efforts to persuade the consumers - who will ultimately make the purchasing decisions.
In conclusion, there are clearly a number of factors at play in determining a blue-laser disk standard. The biggest factors I have come across are content providers and OEMs (increasingly including video game publishers, and adult film producers, as well as Hollywood Studios). Flowing from the level of corporate support for the formats are consumers, or negotiations, as the arena where the standard is set. These factors are not technological but, rather, cultural (or, more specifically, economic). Technological superiority may play a significant role in setting a standard - technological merit may persuade consumers, OEMs, or content providers in their decision making. But it is far from the only, or even most important, factor.
1. Arlidge, John, The Dirty Secret that Drives New Technology: it's Porn in The Guardian, uploaded Sunday March 3, 2002.
John Arledge puts forward an interesting theory of how new media technology develops. While I think that Arlidge overstates the significance of pornography in determining the development of new technology - there are other factors worth mentioning - there is (as I mention in the essay body) a reasonable argument that, as a form of content, pornography is more significant than it has been given credit for.
2. Cave, Damien, The Netflix Way, in Salon.com, Uploaded June 6th, 2002; http://www.salon.com/tech/feature/2002/06/06/netflix/ .
This is an article about an online / postal DVD hire service named Netflix. While brainstorming this essay, I considered many other factors which may affect the outcome of the Blu-Ray / HD-DVD standards war. One such factor was the video hire business, and a company like Netflix could conceivably have an important impact if it chose to side with one particular format. This did not end up getting used in my essay, as I believe that the factors I cover have a more direct impact, and introducing yet further factors would both blur its focus, and create excessive length. Nonetheless, an interesting article about an interesting company.
3. Munarriz, Rick Aristotle, Goodbye to DVDs, http://www.fool.com/news/commentary/2005/commentary05012403.htm uploaded January 24, 2005.
One of several economic essays Munarriz has written for a business-news site called The Motley Fool. As such, it is more interested in investigating which companies shares will benefit as a result of the twists and turns in the format war - indeed one of the subheadings within the article is Theres always an investing angle. Its coverage overlooks other important aspects for this reason. Nonetheless, its commentary - particularly on video game content provider Electronic Arts, and other content providers - is insightful.
4. Linecker, Anton, The race is on: Apple calls 2005 the year of HD video--is Steve jumping the gun? in Macworld, May 2005 v22 i5 p16(2).
While I did not quote Linecker directly, this is a good background article - written when Apple joined the Blu-Ray Disk Association - on Apple as both OEM and Software company. Linecker also raises the possibility of a slow consumer adoption for whichever format (or combination of formats) ends up becoming the industry standard, due to the fact that few people own High-Definition television sets at the moment. Linecker notes that Apple is especially important, as much of its video production software is used by other content providers, and its choice may be influential in persuading content providers to use Blu-Ray.
5. Norah, Laurence, Sony and Toshiba in talks over DVD format war http://itvibe.com/news/3483/ Uploaded Saturday, April 23, 2005 at 14:52.
In the essay body, I referred to this source as a less trusted website. My reason for including it was because it had a succinct quote listing the supporters of the HD-DVD format. All of the backers were mentioned - in some form - in other news and journal articles I came across during research, so the information in the quote was verified with other sources, The problem is that none of the other sources listed them all in one quote, and given that I could get a quote that listed them all, it seemed redundant to quote from multiple sources.
6. Poor, Alfred, DVD: coming soon to your PC?, in Computer Shopper, March 1996 v16 n3 p189(1).
Poor describes the outcome of the earlier negotiations over DVD. Given the similarities in circumstances between the DVD format war and the current blue-laser disk format war, the settlement in negotiations between SD and MMCD may be a good indication of the kind of settlement that may emerge between HD-DVD and Blu-Ray (assuming negotiations are successful).
7. Shannon, Victoria, The End User: Betamax déjà vu? in International Herald Tribune, Saturday, April 16, 2005, downloaded from http://www.iht.com/articles/2005/04/15/business/ptend16.html
Shannons news article for the New York Times - owned International Herald Tribune provides a good basic rundown of the current state of affairs between Blu-Ray and HD-DVD. Shannon perhaps relies to heavily on the assumption that VHS Vs. BetaMax is a good model on which to base assumptions of the outcome of this format war (I disagree; it is far more likely that there will be a negotiated settlement).
8. Unknown, Disney backs Sony's 'Blu-ray' as next-generation DVD format, in Japan Computer Industry Scan, Kyodo News International, Inc., Dec 13, 2004, p0.
As noted in the essay body, the emergence of Rupert Murdochs News Corp., and Disney as supporters of the Blu-Ray format represented a major shift in the balance of power between Sony and Toshiba. This shows exactly how much power content providers including, but not limited to, Hollywood Studios (like Fox and Disney). This article, while perhaps overstating that significance somewhat, provides a good background on the shift in power balance that occurred.
9. Unknown, Japan - Competing CD Standards Talk Compromise in Newsbytes, August 31, 1995, pNEW08310009.
I would love to have cited an author for this article, but Newsbytes did not provide a name, which is a pity, because this article was useful in this essay. This article describes the beginning of negotiations between Sony and Toshiba over DVD, which is interesting in that it almost exactly parallels the current state of affairs between HD-DVD and Blu-Ray.
10. Yoshida, Junko, and Hara, Yoshiko, Rivals roll up sleeves to unify next-gen DVD -- Devil's in the details for forging HD DVD/Blu-ray in Electronic Engineering Times, April 25, 2005, p1.
This article describes some of the technical and cultural issues at play in negotiations to unify the competing blue-disk formats. Hara, in particular, has written a number of excellent journal articles at various points analysing the current state of affairs in the blue-laser disk format wars (several of which were used in researching this essay).
1 D'Ambrise, Rich, DVD update: from double layers to blue lasers in Computer Technology Review, May 2004 v24 i5 p30(2).
2 Daley, Dan, High-def discs: will HD-DVD or Blu-ray be part of your optical future?, in AV Video Multimedia Producer, Knowledge Industry Publications, Inc., Feb 2004 v26 i2 p14(2).
4 Hara, Yoshiko, Final HD-DVD standard promised by midwinter -- Proponents: Format allows easier transition than Blu-ray. in Electronic Engineering Times, August 2, 2004 p26.
5 D'Amico, Marie, Digital video discs: beta vs. VHS all over again? in Digital Media, June 5, 1995 v5 n1 p13(3).
7 Shannon, Victoria, The End User: Betamax déjà vu? in International Herald Tribune, Saturday, April 16, 2005, downloaded from http://www.iht.com/articles/2005/04/15/business/ptend16.html
8 Norah, Laurence, Sony and Toshiba in talks over DVD format war http://itvibe.com/news/3483/ Uploaded Saturday, April 23, 2005 at 14:52.
9 HD-DVDs website - HD-DVD.com - was inactive at the time of writing, and thus there is no official source with which to verify its backers
10 Lammers, David, Despite agreement, DVD camps still at odds., in Electronic Engineering Times, Oct 23, 1995 n871 p22(1).
11 InternetWeek, Blue Day For Blu-ray: Movie Studios Back Toshiba's HD-DVD; A group of movie studios threw support behind Toshiba Corp.'s high-definition HD-DVD format and, thereby, drew a line in the sand against Sony Corp.'s Blu-ray technology, in InternetWeek, Nov 29, 2004 pNA.
12 Yoshida, Junko, and Hara, Yoshiko, Rivals roll up sleeves to unify next-gen DVD -- Devil's in the details for forging HD DVD/Blu-ray in Electronic Engineering Times, April 25, 2005, p1.
13 Munarriz, Rick Aristotle, Goodbye to DVDs, http://www.fool.com/news/commentary/2005/commentary05012403.htm uploaded January 24, 2005.
14 Unknown, Disney backs Sony's 'Blu-ray' as next-generation DVD format, in Japan Computer Industry Scan, Kyodo News International, Inc., Dec 13, 2004, p0.
15 Munarriz, Rick Aristotle, Goodbye to DVDs, http://www.fool.com/news/commentary/2005/commentary05012403.htm, Uploaded January 24, 2005.
16 Arlidge, John, The Dirty Secret that Drives New Technology: it's Porn in The Guardian, uploaded Sunday March 3, 2002, http://observer.guardian.co.uk/focus/story/0,6903,661094,00.html
17 Poor, Alfred, DVD: coming soon to your PC? in Computer Shopper, March 1996, v16 n3 p189(1).
18 Unknown, Japan - Competing CD Standards Talk Compromise in Newsbytes, August 31, 1995, pNEW08310009.
20 Poor, Alfred, DVD: coming soon to your PC?, in Computer Shopper, March 1996 v16 n3 p189(1).
21 Unknown, Blu-ray / HD-DVD Truce Just Words, in DVD Recorder World, Uploaded April 19th 2005, http://www.dvdrecorderworld.com/news/205
22 Yoshida, Junko, and Hara, Yoshiko, Rivals roll up sleeves to unify next-gen DVD -- Devil's in the details for forging HD DVD/Blu-ray in Electronic Engineering Times, April 25, 2005, p1.