Panasonic Joins Unification Talks on Next-Generation Format

A Panasonic spokesman said his company wouldn’t comment on any such talks. “Panasonic believes Blu-ray is the best format for next-generation optical disc,” the spokesman said, repeating a corporate position statement. “Panasonic will continue to develop products using Blu- ray-based technologies and we remain open to adopting appropriate technologies for the best interests of consumers in the marketplace.”

Panasonic’s involvement in the unification talks went unreported in the lead story of Japan’s Nihon Keizai Shimbun newspaper Thurs., which said the discussions were confined to Sony and Toshiba and that representatives of the major studios had been briefed on details. The article added little to our report 3 weeks ago breaking the news of the talks (CED March 28 p1). As we reported then, the discussions remain at a very sensitive stage, with parties refraining from any rhetoric that might torpedo a compromise.

Sony, which also has refused to acknowledge the talks publicly, believes the company’s “focus is and has always been to provide the best consumer experience,” a spokeswoman told us Thurs. “In the area of next- generation optical discs, we continue to be open to discussion with supporters of other formats consistent with this focus. We can’t comment on specifics beyond that at this time.” Meanwhile, Nikkei reports Thurs. quoted an unnamed Toshiba spokeswoman as acknowledging her company was involved in the unification talks. At our deadline, we were awaiting confirmation from Toshiba’s Tokyo hq.

What form factor a unified disc might take remains a big unknown in any compromise, as does who will walk away with most of the patent royalty chips in his pocket. If one side capitulates, another term to be negotiated would be the face-saving trade-off it receives in return.

In 1995, it was Sony and Philips that approached Warner and Toshiba seeking a compromise that later yielded the unified DVD format. Sony and Philips thought they had the superior technology in their Multimedia CD (MMCD) proposal, but virtually all CE and Hollywood support went to the rival SD format. The warring sides began talking in late Aug. and reached preliminary agreement on a unified standard about 3 weeks later. The form of the DVD largely adopted the 1.2-mm-thick bonded disc espoused by the SD camp, along with other basic SD specifications such as its track pitch and “RS-PC” error correction. Among the bones thrown to Sony and Philips was adoption of MMCD’s “EFMPlus” modulation system in the new DVD. The name “DVD” itself was a face-saving measure for both sides; among the first items on which they agreed in the spirit of cooperation was to eschew use of “MMCD” or “SD.”

Although Sony and Philips are now in the camp with most of the CE and IT industries’ support, studio endorsements seem split down the middle, as measured by DVD market share. Fox is the only major abstaining. Blu- ray has stated in no uncertain way it views its disc form factor as non-negotiable. It’s not clear whether HD DVD supporters have said the same about their disc.

A strong possibility, according to informed sources we canvassed, is that any unification likely will doom a commercial launch of the new format until next year. That would seem to throw water on speculation in the Nikkei report that the sides were aiming for a fast-track settlement, possibly as soon as May. Microsoft, which by all accounts doesn’t have a seat at the negotiating table, seems especially intent on knowing soon whether there will be a unified format and what it will look like. The company has made no secret of its ambition to launch the next-generation Xbox ahead of its rival PS3, which has committed to building in the ability to play Blu-ray. Many across the videogame industry expect a next- generation Xbox launch this year. Microsoft has said little, other than announcing plans to unveil the product shortly before next month’s E3 Expo in L.A.