from forbes digital tool ....
STILLBORN
By Michael Noer
In the annals of business innovation, decisions made by a committee are hardly ever accorded lasting praise. Group-think is all well and good but committees often have too many agendas to satisfy.
Consider the sad saga of DVD. What does it mean? Sadly, given its contentious history, no one can agree on what DVD actually means. Is it Digital Versatile Disc or Digital Video Disc?
Whatever DVD stands for, this much is known: DVD is an optical storage system that can store a huge amount of information--how much is also a matter of debate--on a gleaming platter the size of a compact disc. Only a few years ago, DVD seemed like the Holy Grail of digital storage. It could store gigabytes of high-quality audio, video, computer data and multimedia on a single disc. DVD was touted as a universal storage medium that would replace laser discs, CD-ROMs, CD-players, and VCRs with a single blow.
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No one can agree on what DVD actually means. Is it Digital Versatile Disc or Digital Video Disc?
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Nothing but pipe dreams. Reality has not been kind. Presently, there are at least six mutually incompatible DVD standards in development or on the market (see Standards tangle). The result? Consumer confusion and disgust have dramatically slowed sales. Only a couple of years ago, market researchers were forecasting DVD-player sales as high as 3 million in 1997 with 22 million more in 1998. In reality only about 500,000 players (both in PCs and for home theaters) were shipped last year and the latest forecasts by the Yankee Group, a consultancy company based in Boston, estimate that less than 3 million DVD-devices will be sold this year.
What went wrong?
In a word: Infighting. DVD standards were originally set by a consortium of ten technology and media companies, including such heavyweights as Time Warner, Matsushita/Panasonic, Sony, Philips Electronics, JVC, and Toshiba. After a great deal of hand-wringing and last minute negotiations, an agreement for a DVD-player was reached. But just as soon as the standard deal was inked, various consortium members began to launch competing standards for the real prize: a DVD that could not only read, but record video, audio (click here for troubles with audio DVD) or computer data. Several companies began playing on more than one team. Sony, which lost an earlier standards battle between VHS and Betamax, has been particularly prolific in this area. Currently the Japanese giant has no less than three engineering teams and two groups of executives working on three different versions of DVD. Wasted money or covering all the angles?
What about Hollywood?
[ continued from "Stillborn" ]
Confuse thy customer
The murky DVD waters were roiled even further when Circuit City Stores, a Richmond, Va.-based chain of 460 electronics stores, teamed up with the Los Angeles entertainment law firm of Ziffren, Brittenham, Branca & Fisher to announce Digital Video Express (Divx), a pay-per-view DVD video standard.
The idea is that instead of renting a movie, a customer buys a DVD disc for five or ten dollars. The disc can be played for free for 48 hours, but after that the customer must pay an additional fee each time the disc is played.
Not surprisingly Hollywood loves the concept--think of the ongoing royalty stream from a Divx version of a children's favorite like The Little Mermaid or The Lion King. Twentieth Century Fox, Disney, Paramount and Universal have all signed long-term agreements to release titles on the Divx format. Divx-players and discs are expected to be available later this year.
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Think of the ongoing royalty stream from a Divx version of a children's favorite like The Little Mermaid or The Lion King.
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Consumers and video stores generally hate Divx. It's an obvious ploy to wring more dollars from movie lovers and cuts into video store margins in the process. But here's the real rub: standard, first-generation DVD-video players--the ones on store shelves today--won't play Divx discs. And in a brazen slap to their own customers faces, Divx-players are being manufactured by many of the very same companies, like Panasonic and JVC, that make standard DVD-players.
So potential DVD-player buyers are staying away in droves. Smart move. Especially considering that all of the current generation of machines will be obsolete when recordable devices become available. That may not happen soon. Enticed by the lure of long-term licensing fees, the various industry members seem to be digging in behind their own standards. Just this week Pioneer introduced the first DVD-R drive, which can record data only once, for the staggering list price of $17,000. DVD-RAM drives, which can record and erase information, have yet to hit the market, although Toshiba, Hitachi and Matsushita/Panasonic have all annouced plans to make them. They are expected to sell for under $1,000 and hold under 3 gigabytes. Sony and Philips meanwhile are working on a different standard DVD+RW RW. You guessed it, DVD+RW isn't compatible with DVD-RAM.
The real beneficiaries of all the DVD wars could be makers of competing storage technologies. TeraStor Corp., a well-financed San Jose, Calif. startup, is planning to release a magneto-optical drive this fall that will store up to 17 gigabytes (click here for the skinny on TeraStor). That is more than the most ambitious DVD-drive (15 gigabytes from Toshiba) in the works and, even better, TeraStor can set its own standard. And stick to it.
Related stories:
Trillions of bytes (Forbes, Mar. 24, 1997)
Geekdom gone gaga (Forbes, Mar. 9)
See also:
Standards tangle
The nitty-gritty of the various recordable DVD standards.
I want my DVD
DVD in action can be pretty incredible. |
