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Technology Stocks : How long till 3DO hits $20?
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To: Dave Nagy who wrote (9)7/26/1996 6:37:00 PM
From: Bruce Prescott   of 16
 
Dave,

Thanks for putting me on to the DVD info site. There is a lot of good information there. This copyprotection dispute looks like a mess to me. Here is what I think is happening.

The issue seems to be some movie studios wanting hardware on DVD players to prevent them from permitting analog recording. I read that to mean that movie studios do not want consumers to be able to copy a DVD movie onto video tape. One article at the site had MEI and Thompson in the electronics manufacturer's consortium agreeing to add on the hardware.

At the same time, MEI has proposed some encryption method that would do the same thing. An encryption method was already being developed to prevent digital copying -- I take that to refer to copying from DVD to DVD or to digital tape.

It looks to me like MEI is proposing encryption to prevent analog recording that would make additional hardware unnecessary. It still seems to me that MEI is in the driver's seat. They can use hardware, encryption, or both to protect copyrights. They've already agreed to do whatever it takes to get DVD's launched. I think all that the groups studying the MEI encryption proposal are doing is trying to determine whether the encryption does what the hardware would do. If it does, then they could decide to scrap the hardware and save the consumer a few dollars.

Reading between the lines, I think Sony and Philips are way behind MEI in their ability to launch DVD machines and they are using their movie studios to try to slow MEI down. MCA doesn't seem to be part of the movie studio group slowing down DVD's. If MEI is really bold, and they get MCA to go with them, they could launch DVD's with encryption only by themselves. Thereby, they would force Sony and Philips to either join them or risk an incompatible standard -- revisiting VHS and Betamax. Sony and Philips have already blinked once at this when they were deciding whether DVD's would be single sided or double sided. In addition, Toshiba is as determined as MEI to get DVD's to market this year. They will make machines compatible with MEI's and Thompson is already on board.

I still think we will see DVD machines by Christmas.

Bruce



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