Competing DVD Formats at Impasse as Deadline Nears

A fight over the next generation of DVDs appears inevitable as manufacturers of rival technologies near a self-imposed deadline without agreeing on how to merge their designs into a single standard.

Although some executives hold out hope that a last-minute compromise can be reached, many analysts are skeptical that the two camps -- led by Sony Corp. and Toshiba Corp. -- can reach a deal that would allow them to jointly roll out new, high-definition DVD players and movies by Christmas.

The impasse recalls the battle 20 years ago between VHS and Betamax for dominance in the fledgling home video market.

Toshiba backs a format called HD DVD, while Sony is behind the Blu-ray format. Both promise ultra-crisp pictures and crystal-clear sound using high-capacity discs the size of current DVDs. Sony and Toshiba want to avoid a format war because consumers are likely to hold off on buying either technology until a winner is established.

“Late August is the practical time limit” to reach an accord, Yoshihide Fujii, Toshiba corporate senior vice president, told the Yomiuri newspaper in Tokyo on Tuesday.

Executives from Sony and the Blu-ray Disc Assn. acknowledged Tuesday that time was running out, but that a deal was still possible.

“We are still optimistic that we can still craft an 11th-hour solution,” said Andy Parsons, a spokesman for the Blu-ray association.

Toshiba and Sony plan to launch devices in the coming months. Toshiba has said it will ship an HD DVD player for about $1,000 by Christmas. Sony plans to incorporate a Blu-ray player in its PlayStation 3 game console, set for release in spring 2006; the company also will sell stand-alone Blu-ray DVD players.

Because the underlying technologies are so different, it would take six to nine months for the companies to modify the design and manufacturing of their products to accommodate a unified format once executives agree to a deal, said P.J. McNealy, an analyst at American Technology Research.

“If there’s a compromise this fall, it will likely push out the PS3 launch to the second half of 2006,” McNealy said. “Even if you have a resolution at the top level, you still have three to four months of negotiations on the details, plus two to three months of testing on the chips, and another two to three months to manufacture.”

But there’s nothing magical about an August deadline, either, because products released this holiday are unlikely to sell in high volumes, McNealy said.

Other analysts agree that this Christmas will not make or break either format. Although Toshiba hopes to get a head start by being the first to release a device in the U.S., many say it will be a while before consumers adopt the new technology.

“For the vast majority of consumers, DVD is still very good,” said Wolfgang Schlichting, an analyst at IDC. “The image is superior, and the audio is superb. They see no reason to buy an expensive new player.”

Movie studios also are backing off plans for a big debut this holiday. Paramount Pictures, which said in January that it would release 20 films on HD DVD, recently said it would not release any this year. And NBC Universal, which had pledged to release 16 titles on HD DVD, said Tuesday that it was unclear whether those movies would be out by the end of this year.

“A lot of the wind came out of the HD DVD launch because these studios ratcheted back,” said Gartner Inc. analyst Van Baker. “The cutback means there will be minimal content for the fall selling season. So who’s going to buy these expensive devices this year? Nobody.”

Reuters was used in compiling this report.

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Comparing formats

*--* Current DVD HD DVD Blu-ray Data capacity per layer 4.7 gigabytes 15 gigabytes 25 gigabytes Maximum image resolution (in pixels) 640 x 480 1,920 x 1,080 1,920 x 1,080 Thickness of recorded layer 0.6 mm 0.6 mm 0.1 mm Key patent holders 10 electronics Toshiba, NEC, Sony, Philips, companies and Time Warner Matsushita, Time Warner Pioneer Studio backers All Warner Bros., Sony, Disney Universal, Paramount Retail launch 1997 Winter 2005 Spring 2006

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Source: Times research

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