June 22, 1998, TechWeb News
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Outcome could push China onto world consumer-electronics stage-or weaken its thriving industry -- China braces for video-CD format battle
By Junko Yoshida
Beijing - Government and industry officials will gather here this week at a meeting hosted by China's Ministry of Information Infrastructure (MII) to hammer out a specification for the next generation of Video CD equipment. At least three incompatible formats are already being promoted here by global groups of semiconductor and system makers for players that would stake out new ground between the Video CD and DVD digital video disks. At the same time, some are pushing for a quick, direct leap to DVD technology.
Depending on how the battle plays out, China might define a new class of consumer-electronics systems that could have a larger role on the world stage, or competing parties could fragment and confuse what has been a bustling Video CD market in China.
And with a growing number of American, European and Japanese companies forced to pick sides among the hundreds of Chinese OEMs and content providers competing in the world's biggest Video CD market-composed of a billion viewers-a format war, if one occurs, could claim a host of corporate casualties.
As China's information-infrastructure ministry gets set to propose the next-generation video-CD format, dubbed SVD (for Super Video CD), at issue is who will dominate tomorrow's digital video market in China and who will gain control over SVD's technical specifications.
Fiercely jockeying to influence the contents of the still-amorphous SVD format are China's domestic Video CD system vendors; title developers; U.S. chip companies; and the four consumer-electronics manufacturers that codeveloped the original Video CD standard: Sony, Philips, Matsushita and JVC. All are promoting largely similar next-generation Video CD formats. But the technical specs vary just enough from approach to approach to render the resultant products incompatible.
The original Video CD format was based on MPEG-1 audio/video coding. Chinese OEMs hope to improve Video CD's video quality to near-DVD level by using MPEG-2 variable-bit-rate video encoding.
The resultant images "look really good, especially when viewed on the 27-inch TV set typically used in China, with 350 to 400 horizontal resolution lines," explained David Andaleon, director of strategic content at C-Cube Microsystems (Milpitas, Calif.).
The next-generation spec is likely to feature MPEG-1 audio, sans support for Dolby Digital. The objective here is "to reuse the existing Video CD infrastructure as much as possible, thereby keeping the cost difference between the new-format player and the current Video CD player as small as possible," Andaleon said.
Despite the respect for legacy formats, the Video CD market is growing increasingly fragmented. The quest for a follow-on has yielded three distinct formats: the China Video Disk spec, backed by C-Cube and its Chinese OEM partners; HQ VCD, touted by Video CD Consortium members Philips, Sony, Matsushita and JVC; and SVD.
They seek to follow three other conventional and emerging digital video standards: Video CD, the conventional format, which last year saw sales of 15 million units; Video CD 3.0, an interactive standard, formalized last fall, that's proving popular for educational use; and DVD, for which demand is already being seen in some areas of China.
CVD, SVD and HQ VCD appear to differ primarily with respect to the video resolution supported, with developers having chosen various points between the 352 pixels per horizontal resolution line of today's Video CD spec and the broader resolution range, from 352 to 720 pixels, of DVD.
The C-Cube-backed CVD supports so-called half-D1 resolution (352 pixels per horizontal resolution line) and 2/3-D1 resolution (480 pixels per horizontal resolution line), according to Andaleon.
The SVD working group, meanwhile, is said to be favoring support for 480 pixels. There has also been a proposal to support 3/4-D1 resolution within the working group, according to some sources familiar with the discussions.
The Video CD Consortium's HQ VCD, like CVD, supports both 352-pixel and 480-pixel horizontal line resolution. "The basic concept is similar, but there are some fine-line differences" between the formats, said one Video CD Consortium member, who asked for anonymity. He declined to elaborate.
C-Cube, which has been supplying empirical data on a variety of encoded materials, considers support for 352 pixels a critical component of CVD. "When one encodes video materials that have already gone through so many generational copies in tape, instead of a pristine studio master, 480 pixels could actually make the encoded picture look worse," Andaleon asserted.
A CVD player, using a x2 CD loader, will offer two-channel stereo decoding, 5.1 channel sound, multiple language support, lyrics insertion and smooth scrolling and clear color change, according to C-Cube. The company is shipping a single-chip CVD solution, called CDVx1.
Groaning board
Some in the industry warn that the glut of formats may spoil consumers' appetite for digital video products and may prompt consolidation among China's consumer-electronics companies.
Yet C-Cube and its Chinese OEM partners, apparently unwilling to wait for the information ministry's blessing, have bolted out of the chute with the proprietary CVD. OEMs ChangHong, Idall, Malata, SAST, Xiamin Solid, BBK, TCL and DiWA joined C-Cube earlier this month at the format's launch in Shanghai.
C-Cube and its OEMs believe that the evolving format battle is more an issue of semantics than of specs, Andaleon said. C-Cube claims to be far along in working with Chinese publishers to create authoring and encoding systems, and "we are going to make sure that CVD will be compatible" with the government-promoted SVD format, he said.
The Video CD Consortium, meanwhile, says it has been negotiating with MII officials over the past several months to stump for its HQ VCD proposal, released in March for review by worldwide Video CD licensees. The consortium has "every hope to convince the Chinese government to embrace HQ VCD as China's SVD," a high-level executive from one of the member companies said, speaking on the condition of anonymity.
The group's pitch is exports: If China is serious about becoming an export leader in Video CD players, the executive said, they'd "better make sure that players produced in China are compliant with HQ Video CD. It's "not a China-only Video CD but HQ VCD that the rest of the global market will push." Consortium members were still engaged in last-minute negotiations with Chinese government officials last week.
MII officials remain tight-lipped on the specifics of SVD and turned down repeated requests for interviews. Yet every company that has a stake in the digital video market in China is seeking to exert its own spin on the standard.
ESS Technology, a leading digital video chip vendor that competes head-to-head against C-Cube, is portraying SVD as a "superset" of current-generation Video CD players. SVD definitely "offers more features and better audio/video resolution," noted Fred Chan, chief executive officer and president of ESS Technology. But ESS will move into the SVD market only "when the new format becomes a legitimate standard recognized by the legitimate government body," Chan said.
ESS played a pivotal role in establishing the Video CD 3.0 standard for the Chinese market (see Nov. 24, 1997, page 1). That standard offers more interactive features for current Video CD titles by using unique authoring tools based on HTML conversion technology developed by EnReach Technology Inc. (San Jose, Calif.), a small software concern.
ESS believes that the emergence of SVD will not alter the status of the Video CD 3.0 spec; indeed, the company is hopeful that SVD, as a superset format, may integrate elements of Video CD 3.0.
The DVD factor
To muddy the waters further, the emergence of SVD coincides with the first major attempts by some Chinese OEMs, together with foreign companies such as LSI Logic Corp. and its partner Sanyo, to establish a Chinese market for their DVD kits.
Alain Bismuth, director of consumer DVD products at LSI Logic, acknowledged the "great deal of variety in competing digital video standards in China." While calling SVD a "potentially interesting idea," Bismuth said he believes the next-generation format "is coming to the market a bit too late." Had it been launched here a year earlier, it could have had a serious impact, he said.
LSI Logic has signed up a number of major Chinese OEMs to produce DVD players, and Bismuth said he expects those OEMs to produce more than 100,000 units before the end of the year. The players will sell for roughly $200, he said.
Of course, China's geographical vastness and economic diversity may accommodate multiple formats better than some expect. Even China's political leaders leaders are divided on the best route to better digital video for the nation's consumers. Even as the MII pursues the SVD format, the Sichuan provincial government is investing tens of millions of dollars to fund local manufacturers' development of DVD-player technologies, according to Bismuth.
LSI Logic predicts that more DVD players than Video CD players will be sold in China by 2000.
Even C-Cube has acknowledged that SVD and CVD may prove to be interim products with a sales life of only a few years. Initial sales over the next eight to 10 months may determine SVD's and CVD's ultimate success in the Video CD/DVD market, some observers said.
How sales of the next-generation formats shape up against conventional Video CD sales is anybody's guess. C-Cube thinks sales of players based on its CVD format will account for no more than 10 percent of the total Video CD market in 1998. "It may have the potential to grow to 20 percent to 30 percent in 1999," said a company spokeswoman.
But C-Cube's own OEM partners appear to differ in their view of their home market. Idall, for example, predicts that one-third of all video CD players sold this year will be CVD players.
Meanwhile, proponents of the various formats are closely weighing when and how to claim their intellectual-property rights with respect to potential application of their IP in MII's emerging superset format.
"We think that it's up to the Chinese government and OEMs who control the spec to discuss the IP issue," C-Cube's Andaleon said. One motivation for the next-generation video-CD-format push is Chinese OEMs' desire to improve video quality without bearing the cost burden of obtaining licenses for DVD and its associated technologies, such as Dolby and MPEG-2, he observed.
The Video CD Consortium members, in proposing HQ VCD, would like to address the IP issue eventually, but "so far, we have not brought that up with MII," said the consortium source.
Copyright r 1998 CMP Media Inc. |
