DVD 2.0? Toshiba is working on it.

[Sir Terrence the Terrible]

I have just received the minutes from last months meeting of the DVD forum, and found several interesting subjects that caught my eye.

1.Toshiba was re-elected as the chair of the DVD forum. This, in and of itself is not a big deal until you combine it with this little tidbit.

2.Toshiba is proposing a series of enhancements dubbed as DVD 2.0 to be used to compete with bluray, and to give new life to their gravy train DVD and to the DVD forum, which has now been relegated as second to the BDA. These enhancements are as follows

Video encoded in MPEG2 SD
HD available via Super Up conversion to 960p
HDi interactivity
Networking
Managed Copy
Fully backward compatible with existing DVD players.

To sum this up, you are looking at a HD DVD player without the HD. Now paint me as extremely skeptical about all of this, but I cannot see this flying three feet in front of the studios, and I’ll give you some background as to why.

The studios have begun to look at DVD as an interim product while they establish the bluray format. The studios are losing money on DVD not because of a perceived recession, but because fewer films are being released each year, and some studios have very little catalogue titles left to release, and some have none. It is predicted that television programs on DVD are not going to keep sales of disc from falling further year over year. So based on these two facts, there is no incentive to continue pouring money into a format that such little life left in it.

Just about every studio is looking at increasing their profit margins. You have seen Warner rein in New Line, Paramount TRYING to rein in DreamWorks (not real successful with that), and everyone else trying to cut costs. It is going to cost the studio money to implement these enhancements. I cannot see the studios wanting to foot the cost of authoring, setting up online websites that catering directly to DVD interactive content along with non compatible BD live content. I cannot see the studio spending any more money than they do on DVD.

Toshiba has within the last two weeks has contacted CSS about enhancing the encryption on DVD to fill in the holes that have been exploited by hackers, and about adding managed copy as an extension to CSS. This is never going to fly now. First two years ago Toshiba/Microsoft submitted what looks like to me the same proposal. The Studios within the DVD forum soundly rejected it. The studios submitted their own proposal; it was rejected by computer (mainly Microsoft) and CE companies of the DVD forum as too restrictive to be of any use to the consumer. This issue also cropped up during the development of bluray, which found Bill Gates up in Sir Howard Springer’s face in a very heated exchange of words at CES 2004. When Springer did not back down, Gates huffed away, and two weeks later Microsoft was supporting HD DVD. Managed copy still never got off the ground in spite of Microsoft position, and the proposal has sat on the shelf every since.

Microsoft is pushing managed copy so hard so they could corner the market with their own proprietary hardware and software, which will network with other devices that include Microsoft software. If managed copy is going to see the light of day, Microsoft cannot be in the picture. Anything that smells of Microsoft right now is totally taboo in Hollywood. In talking with my counterparts at Lionsgate, Sony, Paramount and Fox, I am left with the impression that any managed copy with a Microsoft attachment is DOA from the studios perspective.

Toshiba has not learned a dang thing from their experience with Microsoft. I am also surprised that Toshiba has not learned that anything attach to Microsoft that is presented to the DVD forum, has largely failed until they change the voting rules. It has happened time and time again. Microsoft’s name is cow plop in Hollywood right now.

Having all of this new interactivity will require a new DVD player. Not one of these new features bought into the picture is accessible with current DVD players. Not one of these features is currently on DVD disc. Toshiba will essentially be starting from scratch, with players and disc. I do not think the player issue is really an issue at all, as all Toshiba has to do is take the HD DVD design and remove the HD DVD drive in favor of a standard one. So they are going to have to sell this format based solely on interactivity, and based on the studios own surveys, only 30% of viewers look at the extras once, way less twice, and some immeasurable amount three times.

Lastly, I really do not think this proposal is going to get out of committee. Based on the temperature I took from my counterparts, they see this as Toshiba way of trying to stall bluray in the market since HD DVD could not compete with bluray. They see this as sour grapes, and a poison pill technique. I know for a fact that Sony, Disney nor Fox is going to support this, Warner may not because they stand to lose more than anyone if Bluray does not take off. Paramount/Dreamworks could possibly support it, but I doubt Universal will, Toshiba really shafted and embarrassed them with the whole HD DVD war. The bottom line is that the life of DVD is almost over as far as the studio are concerned. Without a back catalog to support new releases, they just cannot make money on DVD anymore. With new releases slowing down because of costs, that means fewer DVD releases than in the past, which means…less money. The fact that this will cost either the studio, or Toshiba will have to subsidize it; will probably stop it in its tracks. After losing a half a billion dollars on HD DVD, I do not think Toshiba has the stomach to lose any more money on another venture. I do not think the CE manufacturers are going for it, because high priced DVD players are just not selling, and the lower priced ones are not making anyone any money. IMO this is going no where fast, but I understand Toshiba feeble attempt at trying to keep the DVD forum (for which they chair) from descending to irrelevancy. The problem is, it is probably too late for that now.

[Mr Peabody]

I can't even believe some one had the nerve to propose that. If HD-DVD didn't make it at 1080i/p then how would a player at 960p which one would still have to buy a new machine do it. Who tells these companies that the public wants interactive capability or even PIP. I still don't understand what PIP would be used for when watching a movie on BR.

[bobsticks]

Thanks for the update T. Interesting.

It does sound a bit like sour grapes from Toshiba and, frankly, like a singularly unimpressive product. I felt like I was reading one of those ebay ads in which someone is hawking an amp with the left channel burnt out. BDD. Half measures will avail us nothing and all that.

While to Toshiba supporters Microsoft's stance may seem a bit like bullying in this case it just seems like smart.

[kexodusc]

This is a completely counter intuitive move by Toshiba - unless they feel they could unload a lot of the HD-DVD R&D and infrastructure on DVD 2.0. I mean, presumably DVD players will continue to sell well for 2 more years- if they can stretch that out to 3 or 4 years it makes sense for them, even though it doesn't make sense to anyone else.

This seems like Toshiba is willing to take a hit on the hardware side again in order to protect the license royalties on the software side. Can't say I blame them, but how well did work the first time?

Time to move on, Toshiba.

[GMichael]

You'd think that after getting burned so badly that they would stop putting their fingers in the fire.