AJ,
First I can answer the technical question first.
The Macrovision process inserts electronic pulses into the blanking period of the NTSC analog video format. These blanking pulses are ignored by TV set, but they cause the automatic gain to supress in the VHS recorder. And this suppression of the automatic gain drops the recorded signal down below acceptable levels for playback. It works, and it only works for VHS recorders. This Macrovision process has no utility in protecting DVD from being copied onto a blank DVD disk, this protection requires a digital copy protection which the Macrovision process does not provide. However, the Macrovision process can be applied on the output of a DVD to protect DVD content from being copied onto a VHS recorder. And this leads to the second part.
Since Macrovision protects against DVD to VHS copies and against VHS to VHS copies, this process is only valuable in so far as consumers use VHS recorders to make copies. So we have to ask the question, how long will consumers keep their VHS recorders even after DVD sales increase? It is really a very complicated model, and depends on how well the studios support DVD disk. If studios keep their support very low, then DVD is a flop and Macrovision wins. The studios do not like to support the higher quality of DVD as it makes for better VHS copies. Also the studios do not like the idea of DVD recorders in the hands of consumers. Also, the studios probably have a fixed idea in their accounting sheets of how much the Macrovision process is worth to them. Finally, there is the possibility of studios release lower "VHS quality" content on DVD disk. All of these factors play into a very complex distribution model, and my guess that Macrovision revenues peak when DVD penetrates 15% is very approximate.
Matt |
