Conflicting Technologies Killing DVD, Analysts Say
(12/30/97; 4:26 p.m. EST)
By Andy Patrizio, TechWeb
techweb.com
Conflicting formats from vendors with their own agendas are threatening to slow the acceptance of DVD in the mass market.
DVD is a single medium that can work interchangeably on both PCs and home video. It holds more than seven times the capacity of CD-ROM, or one full-length high-resolution movie.
A DVD movie disc can hold up to 130 minutes on one side of a disc, a major leap over laser disc. Laser discs were the size of LPs and only held 55 minutes of film per side, which required flipping the disc.
DVD promises to end almost every complaint renters have about video -- the picture is twice as sharp, and it doesn't degrade. The discs don't jam, and users can jump to any point in the movie instantly.
Divx Stirs Up Competition
DVD technology was rolled out in seven cities earlier this year as a test, which was followed by nationwide rollout in August. By September, early adopters saw their expensive investment undermined when retail giant Circuit City announced a joint venture with a Los Angeles-based law firm to create Digital Video Express, or Divx, a pay-per-view DVD format that's incompatible with DVD players.
In Divx, users can buys discs for $5 each and can watch it as much as they want for 48 hours from the first playing. After that, a credit card swipe through a reader is required to purchase more time, either for 48 more hours or permanently. The Divx player is hooked up to a phone line, which dials out and gets an authorization for the purchase.
Divx can play standard DVD movie discs, but not vice versa. Internet users who own DVD players have launched a boycott of the Circuit City chain, complete with an anti-Divx Website.
"Too many companies that are direct competitors don't want to let a competitor get a competitive advantage," said Wolfgang Schlichting, senior research analyst for optical storage at International Data Corp., in Framingham, Mass.
Every major movie studio except 20th Century Fox and Paramount have signed on to produce DVD videos, and Fox is heavily rumored to be ready to enter the DVD market early next year. Paramount, Universal, Disney, and DreamWorks SKG are officially on board with Divx.
Sony Pictures and Time-Warner, two of the earliest and most enthusiastic supporters of DVD, have said they won't make Divx titles. "Right away, that's a crippling blow," said Mann of Sony and Time-Warner's refusal to support Divx. Suncoast Video and Tower Records representatives have also said they won't sell Divx discs.
DVD drives for PCs are backward-compatible with CD-ROM discs, and many CD-ROM vendors are predicting the demise of CD-ROM in favor of DVD.
The PC side is less likely to suffer than products for home theater, which are more expensive. DVD-ROM will slowly make its way into the PC market in 1998 -- especially the home market, Schlichting said. Some vendors, such as Compaq and Sony, are already selling DVD-ROM drives in their consumer PCs, he said.
That spells out a big market to be had. "The winning format is a big enough prize that it's worth fighting over," said Warren Mann, group director of the NATM Buying Corp., in New York, a cooperative of regional electronics/appliance retailers. "It's not an altruistic industry out there."
However, PC DVD drives use proprietary drivers, and there are some compatibility issues. For example, Microsoft's ActiveMovie technology does not work with Creative Labs' DVD-Encore drive.
Rewritable DVD for the PC is in far worse shape, because it has two separate and incompatible formats: DVD-RAM and DVD-RW. Both can read a DVD-ROM disc, but are not compatible with each other.
"What happens is that when it's fragmented like this, it slows down the pace and freezes some other advantages that could come," Mann said. "The biggest problem is the potential that it could screw up a nice technical advance where people say, 'This is what I've been waiting for.' "
Rewritable DVD is more troublesome, Schlichting said. "Any form of rewritable DVD will not be an overnight success," he said. "Right now, its price is a very limiting factor. The street price at around the $800 range is not a mass-market product."
The rewritable DVD won't see market potential until 2001 and beyond, Schlichting said. "The determining factor will be the installed base of DVD-ROM drives that can read the rewritable DVD discs," he said.
Not Impressed With Divx
Mann said he is not sold on the Divx concept at all. "The only thing they tout is you don't have to return the Divx disc," he said. "Great. So in recycling centers all over the country will be green glass and Divx discs."
What the industry needs to set it in the right direction is a shakeout of competing formats -- one unit that plays DVD movies and DVD-ROM discs and records in both formats, said Schlichting, adding that he doubts that will happen soon.
"For that to happen, you'd have to have a convergence of the TV and PC, because I don't think the desktop PC will be a device to watch movies," he said. "So I don't see this happening in the short term. But what I see could happen is one device hooked up to both systems with cables running through the house."
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