The DVD Battle: Deja Vu, Digital-style
Some industry pundits have likened the ongoing battle over digital video disc (DVD) standards to the Betamax-VHS videocassette showdown of the late seventies. There are obvious similarities, but key differences suggest that the outcome is more predictable.by R. A. Lemos
In November 1994, Sony had it all. The Sony standard (tentatively dubbed the MultiMedia, or M2, standard) for the next hot video medium, digital video discs (DVD), seemed close to winning support from an alliance of key players. In a bid to win other important corporations, Sony negotiators had promised to announce in early December the alliance backing its proposed standard, one that was expected to include Philips Electronics, Thompson Consumer Electronics, and Matsushita Electric as well as other major industry players.
Over a period of just two weeks, though, that expected alliance crumbled. By mid-December, Sony stood alone with Philips, its partner from the Netherlands, in espousing the M2 standard. Sony ó the company that lost the Betamax-VHS videocassette standards war ó is now pegged as the underdog in the coming DVD standard fight. The opposing side is led by Toshiba and Matsushita, who have banded together with Hitachi, Pioneer, Thompson, Time-Warner, and MCA to create a formidable alliance backing a different DVD format, designated the super disc (SD) standard.
Several other companies, including content providers (read "movie makers") MGM, Corolco Pictures, and Paramount have pledged support for Toshiba's SD standard. While the sale of MCA by Matsushita and of Corolco by Pioneer could leave the allegiances of these two motion-picture corporations in doubt, Toshiba's grip on the loyalties of the home electronics manufacturers remains strong. On March 30, Toshiba and Pioneer announced that they would begin mass production of SD-standard DVD players at the summer of 1996, three months earlier than even Sony's revised starting date for producing M2-standard players. Thus, the Sony-Philips position now seems even more fragile.
Unresolvable differences
Sony's determination to champion the M2 standard in the face of growing opposition may seem strange ó especially in Japan, where consensus and solidarity are ever-present watchwords in the political and corporate spheres. Considering that both Sony and Matsushita had initially agreed that the two companies should support a single standard, their current alienation into separate camps seems puzzling and, for Sony, unfortunate.Matsushita Electric has been a key player at the start. The giant consumer electronics manufacturer owned the controlling piece of the movie giant MCA, making an alliance between Sony ó which could also supply content through Sony Pictures (Columbia) ó and Matsushita an almost guaranteed win. Sony initially tried hard to woo Matsushita, but the giant corporation reportedly had misgivings and never fully committed to the new alliance. Sony was criticized for rushing the announcement of the M2 standard before supporters Matsushita and Thompson had time to adequately review the product.
The final break in the fledgling alliance reportedly came after several Hollywood companies expressed their preference for a standard espousing the highest possible quality. The final standard, they insisted, must have a large enough memory capacity and data rate to store and transmit high-resolution video at a minimum speed of 24 frames per second (equivalent to film). Taking advantage of the timing, Toshiba and Time Warner then proposed their own joint standard, the SD format, and were quickly joined by Pioneer (which abandoned its own fledgling standard) and Thompson.
Disks manufactured under the SD standard can hold 5GB of data per side, versus just 3.7GB for the M2 standard. More importantly, the SD standard supports video transfer rates of an average 3.5M bits per second (bps), which is 500K bps faster than the average rate for the Sony M2 standard. A decoding algorithm able to take advantage of the higher bandwidth will give the Toshiba SD standard better picture quality, though the resolution remains identical to the M2 statndard.
Hoping to forge an alliance between the two camps, Matsushita continued to remain neutral. When it was apparent that no agreement would be forthcoming, though, the company finally threw in with the Toshiba camp. Matsushita's sale of MCA, which was announced in mid-April, reduces the company's importance in the DVD-standard debate somewhat, but the giant consumer electronics manufacturer still adds a great deal of needed creditability to the Toshiba alliance.
Multi-sided issues
No one can judge how consumers will respond to the two standards, so the technical issues may end up being the keystone of the present debate. In the end, the content provided on each medium will likely be the deciding factor (as it was for VHS home video recorders), so luring entertainment companies to provide their products on the medium is essential for both camps. And that will depend on proving the technology is good enough.Both DVD standards are based on the ubiquitous compact disc (CD) form: 1.2 millimeters thick and 12 centimeters in diameter. The most obvious technological difference between the two is that the Toshiba SD standard originally aimed at producing a double-sided disc while the Sony M2 standard uses a single-sided, two-layer approach. This original difference may no longer be significant, however, as Matsushita has announced an alternative configuration for the SD standard that would also allow a single-sided, two-layer construction.
What Sony had counted on as a major point in the M2 DVD standard's favor was that the discs could be produced by existing production lines with minimal conversion costs. According to Sony-Philips estimates, the Toshiba-Time Warner standard would cost 20% more to produce, since many production-line machines would have to be replaced by new equipment capable of double-sided production. Judging by the boundaries that have been drawn, however, Sony may have miscalculated the importance of reducing the costs of a production changeover. The manufacturing companies seem to have placed more importance on Hollywood's reported dissatisfaction with the M2 standard and have allied on the side of the 5GB standard for its higher quality picture.
Another key consideration is undoubtedly that the Toshiba alliance has actually demonstrated a working prototype for their double-sided standard. Sony, meanwhile, has produced only a single-layer, high-density prototype; it does not yet have a working prototype of its touted dual-layer DVD. Demonstrations of a dual-layer CD-ROM lend creditability to Sony's assurances that the step to a two-layer system will take minimal development, but the fact that a full prototype has yet to be announced (as of late April) is a stumbling block for Sony's attempt to win adherents to its alliance.
Unbalancing act
The figure on page ____ indicates how the situation stands as of late April. The dark lines show business connections between corporations; until recently, for example, Matsushita owned a controlling share of MCA, and Toshiba owns an equity stake in Time Warner. Through long-reaching corporate influence, the alliance of companies supporting the Toshiba SD standard were able to tie up an impressive organization, including exclusive support by a number of content providers. The Sony side, on the other hand, has been able to rally only Sony Pictures (previously known as Columbia Pictures) to its banner. While Sony Pictures does have an extensive library of 3,000 films and 30,000 television programs, which at least gives the M2 standard a fighting chance, against the combined libraries of MCA, Time Warner, MGM, Corolco Pictures, and Paramount (as well as the audio libraries of JVC (Victor), EMI, Columbia, and Pioneer) the battle in the marketplace may be brief.Sony remains stubborn, however, and has not by any means given up hope. It continues to tout the M2 specifications' so-called "user-friendliness." According to a Sony employee, who spoke on the condition of anonymity, the company is "aggressively approaching many software, hardware, and content providers" to fill out their alliance, but "no companies have yet come forward." This is the first of three setbacks for the Sony-Philips alliance.
The second setback came at the end of March, when Toshiba and Pioneer announced at a joint press conference that mass production of DVD players using their double-sided SD standard would start in the summer of 1996. Sony had previously revised its plans and moved the production date for M2-standard players from "late 1996" to "the second half of 1996," but this is still behind the starting date announced by the SD-standard alliance for producing DVD players. Either side could easily be delayed by development or production difficulties, but for Sony's small alliance, any such delay could mean forfeiting the game. A third setback was an announcement by Matsushita that negates one of the central benefits touted for the Sony-Philips M2 specification. Matsushita reportedly has developed a method by which the SD standard can be used as a two-layer disc, making the double-sided versus single-sided debate a moot point. Matsushita's method replaces one of the reflective layers of the Toshiba SD standard with a semi-reflective layer, resulting in a specification that is similar to that of Sony-Philips M2 standard. While Matsushita's sale of MCA may have reduced the corporation's importance in the eyes of many industry watchers, this development could be the hole card that wins the game for the SD-standard alliance.
Don't judge a disc by its format
In the end, what matters to the consumer is what is on the disc. Unfortunately for Sony and Philips, the Toshiba SD alliance seems to hold the upper hand there also. With several prominent content providers pledging to publish exclusively on the Toshiba format, the SD format will have a large, exclusive library of movies, ensuring greater sales of SD-standard players among consumers.From the content provider's point of view, however, the stand-offish attitude of Disney and 20th Century Fox is probably the most practical business approach. These movie companies have the proven content that already has an audience no matter which standard they select, and they will not be hurt by the few months' delay to market needed to determine which horse to back. Hedging bets by developing content for both standards is also a viable option for content providers (movie makers and multimedia companies alike). Joining either alliance at this point does not make sense for as-yet uncommitted players.
The advantage of the Sony M2 specification that eventually may be a key consideration for manufacturers and content providers alike is its relatively inexpensive production costs. Both single-layer and double-layer discs that use the 3M process are less expensive than the estimated cost of the annealing procedure of the Toshiba SD standard. A better comparison than the cost of disc production, though, might be between the relative cost per gigabyte of the various discs. Most expensive is the single-sided Toshiba SD disc, with a comparative cost index of 1.04 units per gigabyte, followed by the single-layer Sony-Philips M2 disc at 0.81/GB and the double-layer M2 disc at 0.63/GB. The 10GB double-sided Toshiba SD disc, at 0.54/GB, has the cheapest per-gigabyte cost.
The differences in relative cost may even lead to the two specifications becoming standard in different markets. The Sony-Philips M2 disc could well win in the home video market; since movies rarely run more than 135 minutes, the cheapest and most convenient disc that can do the job has the best chance of popularization in the general market. The Toshiba SD disc, on the other hand, should do well in the data storage market, where maximum disc capacity and the per-gigabyte cost for large storage capacities are most important.
Not a replay of the VHS-Betamax fight
According to Mika Ishida, assistant manager of Sony PR, "since machines of neither specification have been released, it is too early to determine if this standards dispute will evolve into a battle [similar to the VHS-Betamax fight]." While several factors point to a clear win for the Toshiba SD standard, making a prolonged dispute over the standard very unlikely, not everything is rosy for the Toshiba alliance. One problem for the Toshiba alliance is that it must sell enough discs to make a profit for its larger membership of DVD player manufacturers. Compared to the Sony alliance of just two manufacturers, the Toshiba alliance has already has five companies that will end up producing DVD players. Satisfying the sales goals of all members of such a large alliance may be difficult, and dissatisfaction may result in switches of allegiances in search of potential profit if the process drags on.Until the machines are actually manufactured and each alliance's marketing department has had a chance to play its pipes, the attraction to the consumer will center on a single benefit of each specification: the lower cost of the Sony-Philips M2 format versus the greater potential picture quality of the Toshiba SD format. (Any usefulness in the debate over the merits of single-sided and double-sided discs has been nullified by the Matsushita announcement.) Though Sony and Philips made a statement of resolve to pursue their own standard in late February, their interests may best be served by negotiating with the Toshiba alliance while their position is still leveragable. The ultimate result of the standards dispute may well fall to the old axiom: in the end, the side with the most money wins.
The M2 standard: much beneath the surface
Sony touts its single-sided DVD technology as being easier for the consumer and cheaper for the manufacturers. Both assertions are justified: the need to flip a disc (or alternatively, the extra expense for a player with two lasers and pickups) is a major drawback for the proposed Toshiba standard, and expensive modifications will be necessary to switch current production lines to the new standard. Whether these benefits can offset the M2's reduced playback quality, in comparison to the Toshiba SD standard, is the question that both sides are waiting for the consumer to answer.Both the M2 and SD standards use a 635-nm (red) laser for reading data from the optical disc. The improvements over conventional CD-ROMs, which provide approximately 650MB of data per disc, are had by reducing both the distance between the tracks and the size of the pits as well as by better error-correction and modulation techniques. The diameter, thickness, and initial steps in manufacturing the Sony high-density M2 standard are identical to those of CD-ROMs, and conversion of production lines to the new standard would require only a fraction of the expense that an overhaul to the Toshiba SD standard will necessitate.
The Sony-Philips M2 standard produces a 3.7GB-capacity disc and allows for upgrading to a single-sided dual-layer disc that will hold 7.4GB. When applied to digital-video applications, this supports the MPEG-2 standard of motion-picture compression )with a picture size of 720x480) using a variable transfer rate of 1M to 10M bps (averaging 3M bps). Under these specifications, 135 minutes of digital video can be stored on a disc, and the picture quality produced by the standard will be superior to current commercial systems (such as laser discs). Under the dual-layer format, the disc can store either 270 minutes of full-motion video at the standard resolution or 135 minutes of high-definition video (i.e., an MPEG-2 average transfer rate of 6M bps). The dual-layer technique that the Sony-Philips standard will use was developed by 3M. As the flow chart shows, adding the second layer requires just a brief detour from the standard procedure used to make a single-sided disc ó an important factor in reducing manufacturing costs. The key material in the new disc is a semi-reflecting film that has a wide range of useful thickness, a characteristic that improves production yields. The Sony-Philips M2 standard requires that the first reflective layer have a reflectivity in the range of 20% to 40%. If an aluminum layer were used, the thickness would have to be between 4 and 5 nanometers (nm). With the new semi-reflective film, the thickness can be anywhere from 30 nm to 75 nm, a more acceptable level of tolerance. According to a 3M spokesperson, using this new material will provide yields comparable to laser disc production, around 90%.
The SD standard: high density, high quality
Toshiba is promoting the advantages of its specification to the content providers: movie studios, music companies, and multimedia software producers. The main benefit of the SD standard is its high data density: 5GB per side. While the initial specification had the disadvantage of focusing on a double-sided standard, a Sony PR campaign criticizing this as an inconvenience to the user required an answer. The answer came from Matsushita in the form of an alternative process that uses the same two-platter annealed structure originally selected by the Toshiba alliance, but enabling both platters to be read from a single side.The original specification called for a disc with the same measurements as the Sony disk: 12 cm in diameter, 1.2 mm thick, and using either a 650- or 635-nm laser. The SD specification supports frame rates equivalent to film (24 frames/second), NTSC television (25 frames/second), and video (equivalent 30 frames/second). In addition, multiple language tracks and modes of sound quality are available. The supported MPEG-2 resolution is 480-by-720 pixels.
Considering that a two-sided disc would have required manual flipping (a frequent complaint of laser disc users), or else a complex lens arrangement or multiple pickups, the Sony criticism was well-founded. Toshiba was listening, though, and use of Matsushita's suggested single-sided, two-layer implementation would answer Sony's requirements for "user-friendliness." The drawback is that it remains more expensive than the Sony method. Matsushita has remarked that the new implementation may be used only in computer applications as a substitute for CD-ROMs, which raises concerns about having two separate, yet related, DVD specifications: one for movies and one for data storage.
Using one format for both DVD entertainment applications and data storage applications would be the most sensible route, but the development may have come too late. Toshiba most likely realizes that the new implementation could not be brought to production by the already announced summer 1996 date. Rather than possibly jeopardize the profitable DVD market by a late release, the SD-standard alliance will probably release DVD applications on the original format and use the suggested Matsushita format for computer-oriented applications. Small changes in the production machinery could allow discs of either format to be created.
The MPEG standard
The worldwide standard for digital video decided upon by the Motion Pictures Expert Group (MPEG) has three current tiers of compression: MPEG-1, MPEG-2 (which absorbed MPEG-3), and MPEG-4. Each level of compression has its own purview of applications.MPEG-1 was created to provide VHS-like full-screen video in a CD-ROM format; it requires transfer rates of 1.4M to 1.8M bps. MPEG-4 is an object-oriented compression technique to create low-bit-rate applications, like wireless video conferencing; when released in 1998, it is expected to require a 1.5M-bps transfer rate (the upper end of the wireless/cellular spectrum). MPEG-2 was designed to handle laser-disc-quality video. It has been combined with MPEG-3 (which was designed for higher transfer speeds and definition) so that several resolutions are now supported, depending on the bandwidth available.
