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To: JPM who wrote (24602)	10/29/1997 4:54:00 PM
From: John Rieman	Respond to of 50808

Phillips still not winning DVD audio war in Europe.......................... AC 3, MPEG2 <Picture><Picture><Picture> The battle over multichannel audio standards for DVD in Europe may have been lost before it has begun. Our article in IM 151, following the surprise announcement by Time Warner of support for MPEG-2 audio, suggested that the battle with Dolby was won. Far from it. At the DVD Forum conference in Berlin last week, support for AC-3 (Dolby Digital) was still very real. AC-3 looks likely to prevail in Europe as it does in the US. The multichannel audio war was a major issue at the conference. It is a thorn in the side of European encoders and disc producers. Several of these told us that they were unable to advise their clients on which standard to adopt. They were leaving the decision to them. The fact is that manufacturers in the UK are gearing up for AC-3. Toshiba has launched an AC-3 TV but will not put multi-channel decoders in its first DVD-Video players. Linn also does very nicely in the home cinema market with its AC-3 decoder. Read between the lines. Once again much of the blame lies at the door of Philips. It made a persuasive case for MPEG-2 multichannel based on three main reasons: 1 MPEG-2 was an open ISO standard, AC-3 was a closed proprietary standard; 2 MPEG-2 was royalty free, AC-3 was not; 3 MPEG-2 was based on variable bit rate encoding (VBR) allowing more bits for complex audio and saving space at other times. We swallowed that because it seemed logical at the time. Doubts are now creeping in. The standard argument We like open standards because they create markets and they bring prices down. Philips likes standards because it wants to extract zillions in royalties from them (think CD or tape). Standards give confidence and bring new suppliers and hence competition. On this measure MPEG-2 is not a standard. The only company supporting MPEG-2 is Philips. It has been labouring for over a year to produce the necessary encoding tools, without much success. The waiting and the prevarication brings to mind the endless delays which plagued the arrival of CD-i authoring tools. They became affordable and useable around the time that Philips was preparing to abandon the format. CD-i, you may recall, was also an open standard Royalty free? MPEG-2 audio is only royalty free as long as Philips chooses to make it so. MPEG video is not royalty free. The world and its wife are trying to get their hands in the till. They know that DVD sales are going to be enormous and a tenth of a cent in royalties per disc is worth fighting for. There are hundreds and hundreds of patents surrounding DVD. So much for an 'open non-proprietary' standard? Sound Blaster is a world-wide standard owned by Creative Labs. In the same way it could be argued that Dolby is a world standard owned by Dolby Labs. Variable bit rate encoding (VBR) We are not technically equipped to judge the relative merits of VBR versus fixed rate encoding, but Philips' argument for VBR was convincing. In Berlin last week the situation was not so clear-cut. Koos Middlejans of Philips Key Modules was admitting that they had misjudged the market. "We've had audio encoders available for some time, but from the start we concentrated on VBR. But customers were asking for fixed rate encoding at 384 Kbit/s and in real time. We have now validated a fixed bit rate encoder and will upgrade all systems out in the field." Ha! Another fine mess you've got us in, Philips. So what's the conclusion? It's looking like a case of too little, too late. No-one we spoke to at the Berlin conferenec last week was convinced. No-one had actually heard any MPEG-2 fixed bit rate multichannel audio (indeed how could they?). All were sceptical that it would compete with AC-3, bit-for-bit. It will be a bitter blow for Philips if MPEG-2 multichannel does not gain wide acceptance, but it has to be said the signs are not good. Philips desperately needs a nice little earner now that the CD patents are coming to the end of their life. This explains its tussle with Dolby and its break with the DVD Forum over rewritable DVD. But why dress simple greed up as better technology?