Studios: No Rush for HD

[Gregg Lengling]

By Terence P. Keegan

Jun 11, 2004, 12:04
 

Despite continued development of the HD-DVD and Blu-ray Disc specifications and intensifying rhetoric of the consumer electronics and IT firms behind each format, the home video heads of Hollywood's leading studios are calling for a less aggressive timetable for the introduction of DVD's "next generation."

@Body:At the third annual Home Entertainment Summit for retailers and distributors, held in West Hollywood June 8, a panel of nine studio chiefs unanimously agreed that 2006 or even 2007 would seem the most opportune launch date for a high-definition home video format. That's months, if not years, later than developers of both Blu-ray and HD-DVD called for in their preceding presentations at the conference.

"We'd like to have something in the market by late '06 or '07," said Bob Chapek, president of Buena Vista Home Entertainment. "We're in no real hurry to align ourselves with one format."

The margins may be gone from DVD hardware, but content providers continue to see revenue growth--in some cases, from markets entirely new to home video, like TV programming. What's more, consumers' value perception of DVD titles remains high, as studios continue to explore the possibilities of the sell-though model that they never established in the heyday of VHS.

The "president's panel" also belied studios' concerns that HDTV is a confusing technology in its earliest stages of adoption in the U.S., and that would-be additional features of HD formats, like "enhanced interactivity" over current DVDs, are amorphous concepts.

"If we don't offer a wider array of benefits [than high-definition audio and video], it could turn into a Laserdisc-like niche," said Chapek, who also is president of the studios' Digital Entertainment Group (DEG). He also voiced his personal opposition to a "format war" between HD-DVD and Blu-ray, stating that such an event would diminish HD packaged media's chances of ever gaining mass acceptance.

The prospects of a format war seem unlikely if the nine studios represented on the panel have anything to say about it. "We're firmly on the fence," said James Cardwell, president of DVD pioneer Warner Home Video, when asked whether the studio favored one HD format over another. While Cardwell said that Warner would endorse whichever HD format "was most likely to succeed," he noted that "the timing is not crucial, especially given penetration rates of DVD outside the U.S."

"We're comfortably on the fence," said MGM Home Entertainment's David Bishop, "but we encourage [the development of] a single format. We cannot go to market with two."

"Having one format is the only way we will be successful," said Steve Beeks, president of Lion's Gate Entertainment. "But we would all be doing ourselves a disservice if we stepped on the growth curve of DVD. There's a good 2-3 years left."

Other panelists echoed Beeks' comment on the DVD's projected lifespan. DreamWorks Home Entertainment's Kelly Sooter noted that consumers' "appetite for DVDs" remains "ferocious." Mike Dunn, president of Twentieth Century Fox Home Entertainment, observed that that despite ever-lower pricing of DVD titles at mass merchandising outlets, DVD "is still a sexy format."

And though DVD's copy protection may be long broke, studios are in no rush to fix it with a new technology. The panel conceded the magnitude of professional piracy in countries like Russia, and the potential for the "Napsterization" of studios' business (as Henry McGee of HBO Home Video put it), but maintained that paying closer attention to DVD release windows and pricing is working as an increasingly effective suppressant of pirate markets worldwide.

The studio chiefs' panel all but made moot the heated debate of the summit's preceding session, where Warren Lieberfarb--the "father of DVD" formerly of Warner Home Video, now the public face of Toshiba Corp. and NEC's HD-DVD marketing efforts--traded barbs with a Blu-ray team led by Benjamin Feingold, president of Columbia TriStar Home Entertainment, and Mike Fidler of Sony Electronics.

Backed by a PowerPoint slide that questioned whether Blu-ray was "vaporware," Lieberfarb asserted that 50GB, dual-layer BD-ROM products were "not manufacturable," and that components of the Blu-ray system, such as disc mastering technology and optical pickup heads for portable playback devices, were not as far along in development as the Blu-ray Disc Founders claimed.

While he did not demonstrate an HD-DVD prototype (the format purports a 30GB capacity), Lieberfarb noted his expectation that the Windows Media and MPEG-4 advanced video codecs would be approved by the DVD Forum's Steering Committee at its meeting in Tokyo June 9 and 10. He also said that specifications for HD-DVD's "application level," dealing with features like interactivity and Web connectivity, will be completed "in the next several months."

Feingold and Fidler, along with executives from Hewlett-Packard (HP) and Panasonic Hollywood Labs, denied all of Lieberfarb's charges against Blu-ray in a demonstration of the technology. "With the support and credibility of the 13 companies comprising the Blu-ray Disc Founders, there's no issue of bringing BD to market," said Fidler, who is senior vice president of Sony Electronics' home products division.

Feingold added his opinion that HD-DVD was an "interim technology: it has advanced codecs to utilize the physical space, but the physical space is less." In comparison, he said, Blu-ray technology has a longer, more extensive product roadmap.

"HD packaged media will be empowered by new CE, IT and game platforms," Feingold said, adding that PlayStation 3, Sony's presumed next-generation game console, would support Blu-ray playback if it wasn't driven by the technology entirely. "The HD revenue opportunities override remaining technical considerations."

Market analyst Tom Adams, who moderated the HD-DVD v. Blu-ray debate, concluded the session by sharing some recent research: of the 10 million U.S. homes with high-definition digital TVs, just 2 million are "actually watching HD programming."

On a more anecdotal level, several conference attendees and speakers admitted that, until recently, they thought current DVD-Video was

"high-definition resolution," or capable of it.

The Home Entertainment Summit was produced by Video Store

magazine in cooperation with the Digital Entertainment Group and The Hollywood Reporter