‘PS3’ CERTAIN TO HAVE BLU-RAY PLAYABILITY—COLUMBIA TRISTAR

Feingold depicted Blu-ray playability on the next-generation PlayStation as a “critical” differentiator that would make Blu- ray more successful than the rival HD-DVD format. But was the first known acknowledgment publicly by any senior Sony executive that Blu-ray would be made a PS3 feature and that the next- generation console could be commercialized within a similar time frame as Blu-ray. He and other speakers at the conference hammered home the importance of DVD playability on the current PS2 and Xbox console cycles, particularly in Japan. There, it’s reported that although household penetration of standalone DVD players stands at a relatively low 30%, over 70% of consumers watch DVD movies regularly on a videogame console, speakers at the conference said.

“Today there’s 70 million PlayStations in the market, including 15 million in Japan, that all play DVD movies,” Feingold said. “I can tell you personally I went to PlayStation in 1997 and requested that their device be enabled to play back movies. It was [done as] an accommodation by PlayStation.” Feingold said he was sure PS3s likewise “will be Blu-ray-based on some level and they will play back movies.” He said that represented “an enormous platform to play back our movies.” Combined with CE and IT industry support, the videogame presence would afford “an enormous big-bang launch” for Blu-ray, Feingold said. Asked later by Consumer Electronics Daily to react to Feingold’s contention that PS3 playability would give it a critical leg up on HD-DVD, Warren Lieberfarb, a consultant to Toshiba and Microsoft and HD-DVD’s most visible spokesman, held out the option that the next-generation Xbox would include HD-DVD playability.

With Lieberfarb speaking at the conference on HD-DVD’s behalf and Feingold and executives from HP, Panasonic and Sony arguing on behalf of Blu-ray, the dueling presentations took on the look of final summations at a criminal trial. Referring to the HD-DVD camp, Lieberfarb began by quipping to the audience that he found it easy to speak “on behalf of people who have the evidence they're on the side of right.” Two years into the lobbying effort on next-generation platforms, Lieberfarb said, “Hollywood has again asserted its independence” in that no major studio (besides Sony’s Columbia TriStar) has endorsed either Blu- ray or HD-DVD. He suggested time was beginning to grow critically short in that a next-generation carrier would be needed soon to assure the long-term growth of packaged media vs. other forms of HD-quality program delivery.

Manufacturability remains the key advantage of HD-DVD over Blu-ray, Lieberfarb said, repeating his claims from past conferences. As new evidence, he cited the recent announcement by replicator Memory-Tech in Japan that it had fashioned a hybrid DVD production line that could be “switched” for HD-DVD replication in as little as 5 min. In comparison with Blu-ray, which hasn’t yet published a ROM specification, Lieberfarb promised that full HD-DVD specs would be released this year. Final HD-DVD specs on ROM and rewritable RAM are due in July and Oct., respectively Lieberfarb said. Moreover, preliminary specs on write-once HD-DVD-R will be available in Oct. and finalized by Jan., he said. Cinram’s Dominick DallaVerde, a frequent HD-DVD advocate at many conferences who nevertheless has said he is neutral in the format battle, was introduced by Lieberfarb to testify his firm has reduced cycle times on single-layer HD-DVDs to 3.7 sec. and raised yields to 93%. On dual-layer HD-DVDs, he said cycle times were down to 4.8 sec. and yields up to 75%. Without ROM specs available on Blu-ray, he said, Cinram has been confined to testing the bonding of the 0.1-mm-thick cover layer to the 1.1-mm substrate and believes it will continue to be a problem to produce the discs within the format’s very tight tolerances.

Lieberfarb then took off the gloves, posing the rhetorical question: “Is Blu-ray vaporware?” He challenged the Blu-ray camp to disclose technical specifics of its mastering process on the ground that the technology on which it’s based is 3 years old and unproven. “If you can’t master the product, you can’t replicate the product.” Lieberfarb also alleged that the prototype 3-wavelength optical lens pickup announced May 17 by Sony was too thick to be incorporated into laptop PCs, which proved critical in driving the mass adoption of DVD. Finally, Lieberfarb said Blu-ray has never proven that its dual-layer 50- GB disc can be mass-produced. Without the 50-GB version, he said, Blu-ray would be left to its 25-GB single-layer media. Compared with HD-DVD’s 30-GB media, he said, Blu-ray claims of capacity superiority vs. HD-DVD are “specious.”

The Blu-ray representatives followed Lieberfarb to the stage and answered his challenge. “I can tell you Blu-ray is not vaporware,” Sony Senior Vp Mike Fidler said bluntly. Fidler acknowledged Blu-ray media replication and mastering had been more difficult to perfect, but said most of the challenges had been overcome and the payoffs would be worth the struggle. Richard Doherty of Panasonic Hollywood Labs said if anyone believed Lieberfarb’s claim that the 50-GB Blu-ray disc was vaporware, it would be disproved July 14 when his company introduces a 50-GB recordable disc in time for the Olympics. Doherty, echoing similar presentations by others in the past, said Blu-ray replication costs could be brought down eventually to rival those of regular DVDs in production runs exceeding 15 million discs per month. Of the still-elusive Blu-ray ROM specs, Doherty said “it’s going to happen soon, but it’s not going to happen today.” Feingold said the latest delays were owing to last-min. requests from some of the major studios to evaluate advanced compression codecs. Feingold, too, expressed the belief the ROM specs would be released soon.

HP’s Maureen Weber said “attach rates” of PCs with Blu-ray drives built in would rival the 100% rate at which DVD drives are built into today’s PCs. Weber said the leading reason her company decided not to support HD-DVD is because “we found it to be an interim solution that would last approximately 3 years.” She said HP believes any future solution should be designed to last “a decade or more.” HD-DVD is “built on archaic technology,” and “we need to move our industry forward for additional revolutionary features that will be enabled in Blu- ray.” Finally, she said, “we have the product, and that would be my question to the content owners.” Weber said if she were sitting on the content side, she would need the “assurance that there were going to be products built to play back my content.” The diversity of CE and IT companies in the Blu-ray camp provides that assurance, she said.

‘DVD Lucky 7’ Conference Notebook…

Commercialization is seen within 3-5 years of a Blu-ray disc fashioned from a 1.1-mm-thick substrate composed largely of recyclable paper, Sony’s Fidler told the conference. The technology, which was announced recently in Japan, was developed jointly by Sony and Toppan, and samples are being produced at Sony’s optical media plant in Shizuoka. Fidler showed the audience one such sample he said was composed of 51% paper. Advantages of the paper disc abound, Fidler said, including lower material costs and environmental friendliness. He said the paper disc also would permit the printing of more sophisticated labels. ----

The U.S. DVD industry sold 332.2 million discs in the first quarter, compared with 231.7 million sold in the same year- earlier period, New Line Home Entertainment Pres. Stephen Einhorn told the conference. Einhorn, citing Digital Entertainment Group statistics, said the total sold in 2004’s first quarter exceeded all the discs sold in the first 4 years of the format. Over 2.7 billion discs have been sold since DVD was launched in 1997, he said. As for hardware, over 97 million DVD players have been shipped in the U.S. in the 7-year life of the format, including the 6.9 million decks sold in this year’s first quarter, Einhorn said. Only 4.9 million were shipped in the same 2003 quarter, he said. ----

HD-capable DVD players are projected to be installed in 37 million U.S. homes by 2008, growing from one million in 2005, Alison Casey of the research firm Understanding & Solutions told the conference. Casey estimated there will be 54 million U.S. digital TV households by the end of 2004, of which 9 million will be capable of receiving some form of HDTV signal over the air or via cable or satellite. DTV households are expected to grow to 130 million by 2008, of which 58 million will be HDTV-capable, Casey said.