"We believe DVD will replace CVD at the end of next year," a C-Cube representative said...
Video discs Battle rages to grab control of consumer video standard
Three formats, with different backers, want to become the next VCD standard, reports Yang-Wahn Hew
09/10/98 South China Morning Post Page 4
(c) Copyright 1998 South China Morning Post Publishers. All Rights Reserved.
Due to timing, price and technology, the Video CD format reigns supreme in the mainland video market over videotape and laser discs.
Videotape players not only were too expensive for mainland users until recently, the sound and the picture quality were poor. LDs provided high-quality images and sound, but were even more expensive.
Introduced in early 1996, the VCD format represents an attractive compromise of low price and adequate quality. Mainlanders have been further ensnared by karaoke VCDs, and low-cost VCD players built locally. One estimate says 10 million VCD players - costing about 1,000 yuan each - will be sold in the mainland this year.
Now the battle for the next mainland consumer video standard has started.
Three formats, with different backers, are battling it out to become the next-generation VCD standard. These include Super Video CD (SVCD), backed by the government's Ministry of Information Industry; China Video Disk (CVD), backed by a US video hardware company, C - Cube , and several mainland Video CD player manufacturers; and HiQ VCD, backed by the original VCD consortium of Sony, Philips, Matsushita and JVC.
Proponents of next-generation VCD see it replacing the existing VCD standard as a mass consumer product, with DVD (digital versatile disc) remaining an expensive, high-end product.
But DVD backers argue that next-generation VCD will be a short-lived phenomenon. Consumers, they say, will choose instead to upgrade immediately to DVD.
Just within VCD, factions backing CVD and HiQ VCD are battling it out, trying to persuade the ministry to drop its specification for SVCD, and replace it with their own.
It would appear that HiQ holds the upper hand. In July, the HiQ faction announced it had worked out a deal with mainland authorities to develop jointly a new VCD standard. Muddying the issue was a warning in August by a senior mainland official against foreign companies trying to impose a new VCD standard.
Jin Honglong, deputy secretary-general of the China Electronic Audio Industry, said foreign firms were interfering with mainland sovereignty.
By contrast, CVD backers emphasise their format's technical advantages, including low price and compatibility with products already owned by consumers.
"Customers will buy CVDs due to players being priced at about 300 yuan [about HK$280]," claimed a spokesman from C - Cube . CVD players also would be much cheaper than DVD players because Japanese companies did not control the availability of CVD components.
CVD players, backers say, also can play most pirated VCDs, which constitute the majority of VCDs sold in the mainland.
That was a problem with DVD players, which occasionally had difficulty playing pirated products, and faced a limited stock of legitimate DVDs, according to the C - Cube spokesman.
CVDs also can be produced by existing CD-manufacturing plants, of which there are many in the mainland, unlike DVDs, which require staff re-training and the integration of new equipment.
One expert, however, sees SVCD as the likely winner of the standard war.
"We think CVD won't become too popular since the government has quite a grip on the situation," Calvin Foo, GartnerGroup semiconductor analyst, said.
Meanwhile, DVD's proponents point to its extra features and storage space.
For instance, SVCD discs can hold only 90 minutes of programming, meaning multiple discs would be needed in most cases.
"Everyone sees SVCD as a stop-gap solution," said Andy Lau, sales manager for AVT Industrial, distributor for LSI Logic, a provider of components for manufacturers of DVD players. He sees SVCD lasting for a year before DVD supplants it.
But when will that happen? It depends on two factors, experts say: the pricing of DVD players, and the pricing and the availability of DVD-formatted movies.
DVD player prices will drop to nearly 1,000 yuan by mid-1999, compared with the present costs of 2,000 yuan for the lowest-priced models, according to AVT's Mr Lau.
GartnerGroup's Mr Foo was less positive, expecting most prices to hover around 1,500 yuan for the next couple of years.
More importantly, the adoption of DVDs also has been slowed by measures to combat piracy and grey marketeering, which have had the knock-on effect of limiting legitimate supply.
The mainland has its own DVD "zone", which is separate from that of Hong Kong and the rest of Asia. Movies coded for Hong Kong cannot be watched on a DVD player sold for use in the mainland, and vice versa.
That means mainland DVD owners have to buy DVDs from authorised distributors. However, experts say there are no authorised mainland distributors for the large United States studios.
Mainland consumers, fearing the low supply of Hollywood movies, had been more hesitant to buy DVD players.
However, it seems that users may no longer face this problem as most players can be easily modified by distributors or users to play discs from any zone. In addition, many manufacturers have shipped DVD players that are "Area 0" - that is, they can play discs from any zone.
This could ease broad acceptance of the DVD format among consumers.
Indeed, the high rate of VCD piracy was a crucial reason why the format has taken off.
Organisations such as the Business Software Alliance (BSA) already are preparing to combat DVD piracy.
BSA regional vice-president Tom Robertson said DVD piracy presented even larger problems to movie-makers than VCD piracy.
"You can already put a lot of programs on a CD-Rom, but with a Video CD you are pushing the limits of the media," he said. "DVD will attract pirates due to its ability to hold multiple or higher-quality movies on one disc."
However, if DVD player prices fall as some expect, the format could take off among less scrupulous consumers.
DVD player prices also depend on the licensing of DVD technology, which is protected by the Japanese companies that make up the DVD consortium.
Mainland manufacturers need to license technology from the Japanese. Players also need to be tested for Dolby standard compliance, which takes about six months.
Andy Ho, technical director of marketing at ESS Hong Kong, which produces VCD and DVD decoding products, described the licensing process as "painful".
However, he added: "We are working to provide links between Japanese companies and Chinese manufacturers so that the licensing process will be made simpler and faster."
In addition, Cirrus Logic claims it has released a chip that can replace the three or four chips required in a Japanese DVD product. The new chipset also can support VCD formats, according to Cirrus Logic's Hong Kong sales director, Peter Mak.
He was optimistic that this would help mainland DVD player manufacturers offer players for about 1,500 yuan.
At the end of the day, DVD seems likely to prevail among mainland consumers. The question is: when?
C - Cube admits that it is covering its bets by also pushing a DVD product into the market.
"We believe DVD will replace CVD at the end of next year," a C - Cube representative said.
Until player and software prices drop, however, a next-generation VCD format - such as SVCD and CVD - could present an attractive alternative to mainland consumers.
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