SAVE THE DATE! KMWORLD 2019 in Washington DC NOVEMBER 5 - 7, 2019

 

DVD's first year

This article appears in the issue May 1998 [Volume 7, Issue 7]


   Bookmark and Share

On March 31, 1997, digital video disc (DVD) video players were first released for sale in the United States. Rather than marking the end of DVD's early troubles, however, it was only the start for new ones. One year later, after nearly five years of the soap opera of DVD, there is still no peaceful end in sight.

On the anniversary of DVD's debut in this country, a press release from Best Buy (www.bestbuy.com) announced the sale of the millionth DVD disc, heralding that as proof that "consumers have fully embraced DVD," according to Best Buy's President Brad Anderson. The Consumer Electronics Manufacturers Association (CEMA, www.cemacity.org) issued its own release, citing the 437,000 DVD video players sold to dealers as unprecedented for a consumer product introduction. Said Gary Shapiro, president of CEMA, DVD sales were "more than twice what VCRs were during 1975 to 1977, and more than 12 times those of CD players when they hit the market in 1983."

Those reports fairly beg for some perspective. Pointing out that those earlier technologies entered the public consciousness more slowly, under different circumstances, with minimal support from content owners and manufacturers--in fact, in an entirely different world than the one which DVD is predicted to take by storm--would only spoil the fun. And the 437,000 figure is quite impressive, until it is compared to what some considered realistic estimates for first-year sales of DVD players. In 1996, InfoTech's low-ball forecast of 1.1 million drives sold worldwide in the first year was considered pessimistic, but now appears downright blue-sky.

Any good market researcher will tell you that there is no way to anticipate forecast-breaking events and their impact, but from hindsight, it's easy to see the factors that troubled DVD's first year in the market.

On the surface, it appeared that DVD's early traumas were over when the final format agreements for DVD-Recordable and DVD-RAM were reached, shortly after the first DVD video players hit the shelves in the United States. The official DVD-RAM announcement by the DVD Forum in April, however, gave no hint that unresolved issues would surface in the form of several alternative DVD and non-DVD rewritable formats by August. And the launch of DVD video players and discs last spring was untainted by any inkling of a competing format that would be announced just in time to spoil DVD video's first Christmas. At the same time, nothing seemed to stand in the way last spring of plenty of DVD-ROM PCs and upgrade kits, with accompanying software to tempt the most jaded of multimedia joystick jockeys, in time for long winter evenings before the CRT.

August angst, September shock

The first summer of DVD was proceeding as expected, with DVD video players and discs selling to high-end, videophile early adopters, an estimated 80% of whom were already owners of laser discs. Estimates from VideoScan, the leading tracker of home video sales, and EIA (Electronics Industries Association, www.eia.org) placed the number of discs sold to consumers at 200,000, and the number of players shipped to retailers at 125,035 by July 4; roughly one-quarter to one-half of the latter figure represents actual sales to users. By the end of July, the initially promising sales of hardware had tapered off, presumably in anticipation of the national rollout of Warner Home Video slated for Aug. 26.

A flurry of news stories out of Tokyo in mid-August, however, initiated speculation about the stability of the DVD Forum, prompting dire warnings of format wars and conflicting agendas that spelled doom for the future of DVD. The news was that Sony (www.sony.com), Philips (www.philips.com), and Hewlett Packard (www.hp.com) had proposed an alternative, non-Forum approved format for rewritable DVD to ECMA (European Computer Manufacturers Association, www.ecma.ch) last spring. The only truly surprising element of the news was that it was reported three months after the fact, but the damage was done because the story was picked up by dozens of mainstream publications. News of other potential high-capacity rewritable competitors to DVD-RAM surfaced--multimedia video format (MMVF) from NEC, advanced storage magneto optical (ASMO) from the 15-member Advanced Storage Technical Conference led by Fujitsu (www.fujitsu.com).

Excitement over the Sony "announcement" was only beginning to die down when an even bigger and certainly more pleasantly anticipated bombshell broke. On Sept. 4, The Walt Disney Company (www.disney.com), the leading seller of home videos worldwide, announced its entry into the DVD video market, with products planned for availability by Christmas. Disney's participation had been considered the make-or-break factor for the success of DVD video in the consumer market, and the addition of its support was widely heralded as evidence that the format was well-launched. Some analysts revised their predictions of DVD's success as a consumer format up from 30% to 60%.

Only four days later, on Sept. 8, the elation over that happy news was tempered--and in some cases, dashed--by an announcement from Divx (Digital Video Express, www.divx.com), a partnership led by U.S. retail giant Circuit City and a Hollywood law firm, of a pay-per-viewing-period, partially incompatible system for DVD players and discs. The system would be supported with hardware from Matsushita (Osaka, Japan), Thomson, JVC (www.jvcinfo.com) and Zenith (www.zenith.com), and movie titles from Disney, Dreamworks, Paramount, Fox and Universal Studios. Even though products using that system are not expected until this summer, and there are no plans as yet to extend its market outside the United States, the announcement was perfectly timed to throw hopes for a prosperous Christmas selling season for DVD into a morass of fear and doubt.

Meanwhile, the long-delayed market for DVD-ROM hardware and software was quietly deferred yet again; lack of DVD-ROM titles led to lack of demand for DVD-ROM hardware, which led to fire sale prices for stockpiled inventory of first-generation drives. The delay of Microsoft's (www.microsoft.com) Windows Whenever operating system with DVD support until mid-1998 offered little encouragement to developers, and the result of that vicious circle was the conclusion that if DVD-ROM hardware sells, it will have to be on the strength of movie title availability. Which, of course, leads us right back to the war between Hollywood studios over which format--DVD or Divx--movies will be released on.

While all those developments, taken at face value, could easily lead one to conclude that the DVD industry is degenerating into short-term chaos, more is going on than meets the eye, and not all of it is necessarily bad in the long term.

DVD-RAM discord

The first perceived sign of DVD discord, the furor over DVD-RAM vs. DVD+RW, generated a lot more heat than light. In spite of dire predictions of a format war on the scale of Beta vs. VHS, the emergence of an alternative to DVD-RAM affects the consumer video delivery platform of DVD video only tangentially. DVD-RAM and DVD+RW drives will both be able to play pressed DVD discs, but neither format's media will be readable on first-generation players. Future DVD video players may be modified to accept rewritable media, but because both formats are targeted at the computer market, perhaps not anytime soon.

Although the role of the digital video replacement for the VCR looks like a star-maker, the assumption that the position will be filled by technology based on DVD is not well-founded. DVD may or may not achieve primacy as the standard digital video delivery medium, but its recordable and rewritable versions are not necessarily appropriate for that application. The biggest and most obvious drawback is its (comparatively) low capacity; but even more restrictive is the nature of the DVD video format, which is far more complex than a MPEG encoded stream. Another looming factor is pending U.S. copyright legislation that could render the whole issue moot by reversing the landmark U.S. Supreme Court decision that made devices for time-shifting of broadcast video legal.

ASMO, as the name implies, is a rewritable magneto optical system capable of recording up to 6 GB of data. MMVF is a rewritable phase-change system capable of recording 5.2 GB of data on a single side of a double-sided disc. Neither ASMO or MMVF is a DVD-based technology, but the drives will be able to read DVD formats. Like DVD-RAM and DVD+RW, the media they rewrite will not be readable in first-generation DVD video players; unlike DVD-RAM and DVD+RW, future versions of DVD players are not likely to include the ability to read ASMO and MMVF media. That incompatibility is not necessarily unplanned or undesirable; however, both MMVF and ASMO, by not being forced to conform to many of the specifications for the DVD family, can offer capacities of more than 5 GB per side.

Even if the goal of VCR replacement is within the reach of technology in the next 12 to 24 months, it might not be inexpensive enough to make a dent in the VHS hegemony for some time. Meanwhile, DVD-RAM and DVD+RW are seen as computer peripherals, while NEC's MMVF and ASMO already have set their sights on time shift consumer video recording.

DVD-ROM dichotomy

In the early days of DVD's history, consensus among market researchers was that DVD video could expect to gain some followers on its own merits, but the DVD-ROM version of the format was the sure thing. DVD-ROM-equipped PCs were predicted to appear first and achieve higher market penetration, allowing the DVD video format the time and economies of scale necessary to stick it out in the fickle and overcrowded home video delivery market. That was more than two years ago.

Since that time, copy protection and regional encoding requirements for DVD-ROM hardware and systems have held back DVD-ROM drive availability. Major PC manufacturers wishing to offer DVD-ROM drives in new computers subsequently decided that the ability to play movies on DVD PCs was absolutely required. At a DVD conference in San Jose in June 1997, a panel of DVD drive manufacturers, when asked why they allowed the movie playback requirements to delay the arrival of DVD-ROM instead of making systems available for non-movie titles, replied that while they were not happy about having to include copy protection and regional code support in hardware, it was necessary in order to "get content." A DVD Forum representative at the same conference said that consumers are not sophisticated enough to understand that DVD-ROM is not the same as DVD video, and that selling a DVD-PC that doesn't play DVD video would lead to hardware returns and technical support headaches.

The makers of DVD-ROM drives, despite their costly concessions to encourage the release of movie content, are discovering that consumers may be more sophisticated than they thought. Those manufacturers now find themselves unloading first-generation DVD-ROM drives for as little as one-half to one-third of anticipated OEM pricing. Retailers report that DVD-ROM upgrade kits and DVD-ROM PCs are selling slowly, largely due to the lack of available software other than DVD video movies.

The "DVD is for movies" message has not been lost on potential DVD-ROM content developers, either. Only an estimated 24 to 50 DVD-ROM titles were expected to be released in 1997, and most of those would only be available bundled in DVD-ROM upgrade kits. In a repeat of the classic--and dreaded--chicken and egg scenario, potential title publishers are finding that DVD-ROM development is plagued by higher expense, limited playback platforms and a lack of established technical standards and equipment to test how DVD discs will perform under real-world conditions. Some PC manufacturers are reluctant to increase the price of low-end systems by adding expensive MPEG 2 decoder cards and copy protection licenses required for DVD video. The only remaining hooks with which DVD-PC makers can tempt buyers are movie playback and backward compatibility with CD-ROM--not very compelling reasons for content developers to venture into DVD-ROM.

Now a new factor must be considered for DVD "convergence" on the PC platform: If a DVD PC must play DVD video, does it automatically follow that a DVD PC must play Divx DVD video? Divx's supporters say that there are no plans at this time to include Divx support in DVD PCs; some analysts regard with horror the implication that someday the Divx model used on a PC could mean that users would be billed for 48-hour usage periods of popular applications. Others say that Divx could be the final outrage that persuades PC manufacturers to let the studios settle their format differences, while DVD-ROM forsakes its Hollywood aspirations and gets a real job as a computer peripheral.

Although DVD's creation and birth have been protracted and traumatic, they have also been subjected to far more public scrutiny than the early years of its progenitors. Surely the growth of compact disc was subject to its own format battles and incompatible variations over the years. It appears, however, that when it comes to launching formats, the old axiom does not hold true--even those who do remember the past are condemned to repeat it.


Search KMWorld

Connect