The Cutting Edge: Computing / Technology / Innovation : Rival Systems for VCR ‘Replacement’ Could Spark Standards War

Now that the videocassette recorder has become a fixture in American living rooms, consumer electronics companies and movie studios are hatching plans to supplant it with a newer and allegedly better technology: the digital video disc player.

Sony Corp. and Philips Electronics are expected to announce as early as this week a jointly developed technical specification for the new discs, also known as high-density compact discs. They will be able to store an entire feature film and promise higher quality, greater flexibility and possibly lower prices than videocassettes.

But Toshiba Corp. and Time Warner Inc. are trying to rally support for a competing high-density CD technology--raising the prospect of an ugly standards battle similar to the infamous Betamax-VHS war of the 1970s. Toshiba and Time Warner say their system can hold even more data, but they face an uphill battle against the two companies that have controlled the development of compact disc technology since its inception.

Movie and electronics industry executives agree that a standards battle is not in anyone’s interest. And they are united in the belief that a new home entertainment system, which could be on the market by next year, has plenty of profit potential--even though it might not bring many benefits to consumers.

Electronics manufacturers hope the digital video disc player will eventually displace the VCR, just as audio compact disc machines have supplanted record players in nearly half of U.S. homes over the last decade.

And the movie studios, facing a declining video rental market as cable and satellite television systems begin to offer a wide menu of movies on demand, think consumers--who rejected the once-promising laser disc technology and have generally opted to rent rather than buy videocassettes--will be much more likely to purchase compact discs.

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In an unusual collaboration, a committee of representatives from nearly every major movie studio met last month to offer a list of their priorities to the hardware manufacturers developing the new medium.

“If a digital video disc solution is presented in a way that large numbers of consumers look at it and say, ‘This is better than tape and better than laser,’ then it becomes a mass product opportunity for people such as us who control libraries to sell the films all over again,” said MGM/UA Home Entertainment President Richard Cohen. “The best-case scenario is it does for movie catalogues what CD did for audio catalogues.”

Today’s standard compact discs hold about 72 minutes of music; through compression technology, film studios have been able to squeeze 74 minutes of a movie at VHS resolution onto one of the shiny platters. In contrast, the new CD--which spins twice as fast--would hold 135 minutes of video at higher resolution.

The physical format, which involves crowding the microscopic pits on the discs closer together, is also likely to become the basis for the next generation of CD-ROM discs for personal computers. It might also become a new standard for music CDs.

But many consumers might resent being asked to invest in yet another new technology--which itself might become obsolete in a few years when a recordable CD is marketed.

Dueling formats would almost certainly slow sales. Some in the industry are critical of Philips and Sony for not publishing their specifications, a step that might help establish a standard.

“Equipment vendors, movie studios and player manufacturers have pressured Philips, the de facto licensing authority, to accelerate release of their HDCD standard” said Ralph Oshiro, director of marketing communications for Santa Fe Springs-based disc equipment manufacturer Optical Disc Corp.

But Philips officials said they have been holding back on an announcement as they try to reach consensus with potential rivals.

“Anyone in the industry knows that a standards war would be a war with losers,” said Jacques Heemskerk, Philips’ project manager for writable optical technologies, who is trying to hammer out compromises with rival HDCD developers. “There is a strong realization that if there would be two proposed systems, consumers will say it’s better not to buy. It would be a real failing in our industry if we could not come to a compromise.”

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The stakes are high. Sony and Philips have had a virtual lock on the audio compact disc market over the past decade. Their practice of cross-licensing patents and charging licensing fees to other manufacturers is currently under an antitrust investigation by the Justice Department--a development that has made some competitors optimistic that the consumer electronics giants would not be able to extend their monopoly into the digital video arena.

“Ours has a higher data capacity,” said a Warner Bros. executive who declined to be named. “The higher data capacity, the longer the running time, the higher the data transfer rate, the higher the picture quality, the more audio channels and the more capacity for multiple soundtracks and multiple subtitle tracks.”

Industry sources say the Toshiba-Time Warner solution involves the creation of a double-sided CD, which could cost twice as much to manufacture as the single-sided version.

The lack of a common format might cause studios to delay putting their films into yet another new medium that may never gain widespread consumer acceptance. “We’d like to see consumers end up with better quality, more convenient delivery systems,” Walt Disney technology vice president Bob Lambert said. “But it has to happen without fractionalizing the market into too many non-compatible hardware choices.”

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But for consumers, the bigger question may not be which type to buy, but whether to buy at all. The digital video compact disc may not represent the same quantum leap as color over black-and-white or digital audio over scratchy analog tape.

“It’s new technology, it’s sexier, it’s perhaps more convenient, because you don’t have to wind and rewind,” said Bishop Cheen, an analyst at Paul Kagan & Associates. “But like so much new technology, it’s going to take getting used to. Our media-consuming habits die hard. Look how long it took the push-button phone to replace the dial phone. I don’t know about your mom, but my mom still has a dialer.”

Indeed, the ultimate in CD technology is yet to come: be a CD player that could record at home and store a full-length movie at broadcast-quality video standards. However, the exotic solution may involve holographic laser storage techniques that haven’t yet been invented.

The Next-Generation CD

Today’s standard compact disc, left, holds about 72 minutes of music or VHS-quality video. The data is encoded in microscopic pits on the surface of the disc, which is read and decoded by a red diode light beam in the player. By crowding four times as many pits onto the same five-inch disc, right, the high-density CD holds about four times as much data--the equivalent of a 135-minute movie at higher resolution than standard video.

New CD: Boom or Bust?

Electronics and movie companies hope that the high-density compact disc player will become the new VCR ...

U.S. household penetration of VCRs: 80% (101.17 million units sold to dealers 1985-93)

U.S. household penetration of laser disc players: 1% (1.33 million units sold to dealers 1985-93)

Source: Electronic Industries Assn.