Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : C-Cube -- Ignore unavailable to you. Want to Upgrade?

To: BillyG who wrote (24606)	10/29/1997 4:47:00 PM
From: John Rieman	Respond to of 50808

Toshiba's DVD self interest........................... Divx dirty little secret <Picture><Picture><Picture> An article in BusinessWeek (13 October) threw new light on Warren Lieberfarb's profound aversion to Divx, the 'pay-TV' disc based on DVD-Video technology (see IM 152). It reveals how Toshiba's president Taizo Nishimuro is betting the farm on DVD. He has been relentlessly pushing the technology since the early 90s; jawboning entertainment moguls in California and New York with the aim of acquiring a commanding lead in the new technology. In June 1994 he returned to Tokyo and put together a group of 100 of Toshiba's finest engineers that developed DVD. He threw his efforts into winning industry support for the Toshiba standard. He worked particularly closely with Time-Warner, in which Toshiba has a $500m stake. Time-Warner was looking for an optical disc that would deliver a 2-hour movie with better resolution than laserdisc. The Time-Warner link was decisive in persuading Hollywood to gang up on Sony and Philips in rejecting their original MMCD proposals. Nishimuro saw that DVD players could be the VCRs of the digital age. Hundreds of millions in royalty revenues could flow into Toshiba's coffers if its format became standard. The DVD spec book costs $5,000 and a format license $40,000, only obtainable from Toshiba. Not bad, eh? Unfortunately his Japanese buddies have recently been rocking the boat. It started in August when Sony, Philips and H-P proposed an alternative DVD-RAM standard that uses a different proprietary technology. Then Matsushita, Zenith and Thomson Multimedia unveiled plans for Divx. They are just the first licensees for the Divx feature; there will be others. Trouble is Divx will not launch till next summer. BusinessWeek claims the industry chaos that these two events will cause will take the fizz out of this year's DVD Christmas sales. If so it will put off the day when the royalties start to flow into Toshiba's coffers. All this must be extremely galling for Nishimuro. Toshiba has been trumpeting its multimedia alliance with Time Warner. It thought that its sideways investment in Tinseltown would give it an edge. So it is no surprise that Warren Lieberfarb, president of Warner Home Video, has been enlisted to rubbish Divx. Warren hates Divx because it contradicts his vision of DVD as the ultimate transformation of home video from rental to sell-through (although he started to back-pedal from that position at the last VSDA conference).