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New Era of the Digital Video Disk Is Postponed Again
01/20/98
KRTBN Knight-Ridder Tribune Business News
Copyright (C) 1998 KRTBN Knight Ridder Tribune Business News; Source: World Reporter (TM)
From: The Boston Globe.
New Era of the Digital Video Disk Is Postponed Again By Hiawatha Bray, The Boston Globe Knight Ridder/Tribune Business News
Jan. 20--It's a movie lover's dream. A complete two-hour film on a disk the size of a music CD. Each disk features a razor-sharp digital picture, exquisite stereo surround-sound, subtitles, even multiple soundtracks in English, Spanish, and French.
It's all possible with the new digital video disk movie players that have begun to appear atop TV sets and inside some high-end personal computers. To a consumer electronics industry that hasn't had a big hit since CD players were introduced in the 1980s, DVD looks like the next big thing.
But the DVD boom was first predicted in 1996, then in 1997. Now a report from the Yankee Group, a Boston research firm, predicts that DVD 's golden age will be delayed yet again, thanks to a dispute over technical standards that will leave consumers perched on the sidelines. "There's really a mess in terms of standards," said Yankee Group program manager James Penhune, who prepared the report. Not only are there warring factions for home-entertainment DVDs, but there are also competing, incompatible formats for recordable DVDs for use in personal computers.
For a while, it looked like smooth sailing in the home-video DVD market. Electronics giants like Sony Electronics Inc., Matsushita Electric Corp., and Toshiba Corp. had settled on a technical standard by late 1996, and last year products began landing on store shelves. They didn't do badly, either. Penhune estimates that about 200,000 were sold. But that's a slower sales rate than he and others in the industry had expected.
Some blamed a shortage of movies in the DVD format, but Penhune says this isn't the main problem. About 500 titles are now available, including many recent Hollywood hits.
Instead, Penhune thinks the market stumbled last autumn when an unlikely pair of partners announced a new, incompatible version of DVD . The Hollywood law firm Ziffren, Brittenham, Branca & Fischer teamed up with Circuit City Stores Inc., the Virginia-based home electronics retailer, to devise a kind of "pay-per-view" DVD disk called Divx.
Divx disks are very similar to regular DVD disks. But they're designed for rental rather than permanent ownership. A customer would pay $5 for a disk that could be played an unlimited number of times within a 48-hour period. After that, the disk stops working. There's no need to return the disk; the customer can throw it away. But he can also reactivate it by connecting the Divx player to the video store via a telephone line. By punching in a credit card number and paying $3, the customer gets another 48 hours of use.
Divx disks also have built-in safety features that make it extremely difficult to copy them. That's why some major film studios, including Disney and Paramount, say they'll offer movies in the Divx format.
But Divx machines won't be available until this spring at the earliest. These machines will be able to play standard DVD disks. However, today's DVD machines can't play Divx disks.
"Everybody agreed to play nicely, they got the thing out on the market and it did well," said Penhune. "Just as everything was coming together, somebody had to step in and fragment everything." Now Penhune predicts that only about 450,000 DVD players will be sold this year, and that only 3.6 million will be in use by 2001. That means that by century's end, DVD won't even be close to catching up with videotape recorders, which are found in about 85 percent of American households. Penhune predicts greater acceptance for DVD drives in personal computers, with 19 million units in service by 2001. Each DVD disk could hold four gigabytes of data or more, compared to the 650-megabyte limit of today's CD-ROMs.
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