A Clash of Titans

[Gregg Lengling]

Toshiba's HD-DVD has an advantage for movie studios that are worried about film piracy. The first HD-DVD units will support only playback, not recording, which means in the short term that movie disks will be impossible to copy, In-Stat analyst Gerry Kaufhold said. Blu-ray, on the other hand, will record blank disks the day it is introduced.

Hollywood has a nightmare, and it isn't a movie.

This bad dream is about how a duel between two high-tech giants could force consumers to make a costly bet on the wrong technology, or slow the adoption of high-definition DVD players due out next year.

Such a delay would be bad news for consumer electronics retailers such as Best Buy  , which count on new products to spur sales growth. The rival technology standards could jeopardize future profits at movie studios, which count on home movie viewing for nearly half of all revenue. Sales of DVDs have slowed, and high-definition DVDs, a natural companion product for new HDTV sets, would open a whole new sales opportunity for new and existing movies.


History Repeats Itself
In Hollywood's disaster epic, Sony and Toshiba  might force a rerun of the famed VHS-vs.-Betamax videocassette war of the 1980s. That contest required movie studios to choose between formats, and it forced consumers to bet on which standard would become the future of home movie entertainment. JVC's VHS format won, leaving an army of embittered Sony Betamax owners whose pricey machines became instant relics.

This time around, analysts say competition between the two would-be DVD player standards -- Blu-ray from Sony and HD-DVD from Toshiba -- could force movie studios to shell out billions of dollars to duplicate and market movies in the two incompatible DVD formats. Consumers could wind up investing hundreds of dollars in a DVD player, only to have it become the new Betamax.

A Toshiba representative declined to comment, and a Sony spokesman was not available.

Battleground 2006
The first Toshiba HD-DVD players are expected to hit stores in March, while the first Blu-ray DVD player might be the disk drive in Sony's PlayStation 3 videogame console, which is expected to debut by late 2006, analysts said. (Microsoft's Xbox  360, which will be introduced late next month, won't have a next-generation DVD drive, analysts said.)

The PlayStation 3 is expected to help bring prices of the new DVD players down, said Josh Martin, an analyst with IDC in Framingham, Mass.

"How can you sell a new high-definition DVD player for US$1,000 when the PlayStation 3 is selling for $400? I think the HD-DVD players may cost $1,000 in March, but they'll come down to $500 or so when the PlayStation 3 comes out," Martin said.

The next-generation movie disks are expected to sell for more than $20 each, but it's unclear how much more, said Gerry Kaufhold, an analyst at research firm In-Stat in Scottsdale, Ariz.

The arguments over the competing formats mostly involve storage capacity and start-up production costs. Sony's Blu-ray requires more start-up investment to produce the disks in bulk than Toshiba's HD-DVD does, Martin said. But Blu-ray holds out the promise of greater storage capacity, which means the movie studios might not have to change disk formats again for several years.

Piracy an Issue
But Toshiba's HD-DVD has another, less apparent advantage for movie studios that are worried about film piracy. The first HD-DVD units will support only playback, not recording, which means in the short term that movie disks will be impossible to copy, Kaufhold said. Blu-ray, on the other hand, will record blank disks the day it is introduced.

The Sony and Toshiba obsession with DVD storage capacity is understandable. High-definition video requires a lot more storage space on a DVD disk than today's lesser-quality digital images, and both companies have solved this problem with blue-light lasers that can store 6 to 10 times more data on a standard-sized DVD disk than today's red lasers can.

While a typical DVD today stores 4.7 gigabytes (less common dual-layer DVD disks store about 8.6 gigabytes), Toshiba would increase that to 30 gigabytes and Sony would boost it to 50 gigabytes. By some estimates, a high-definition version of a Hollywood movie will require up to 13 gigabytes of storage space, 5 gigabytes more for a high-quality soundtrack and additional capacity for DVD extras such as "behind the scenes" video and star interviews.