Blu-ray victory means royalties, royalties, royalties
Forget about customer satisfaction or superiority of image quality. The real issue in the war between Blu-ray and HD DVD was about royalties.
With the competition gone, the Blu-ray consortium now has the opportunity to persuade PC makers and consumer electronics makers to adopt Blu-ray drives as their optical drives of choice. It will also get studios and disc makers to deliver Blu-ray discs to consumers. And every time one of those drives or discs leaves a factory, the Blu-ray Disc Association will get a royalty.
The numbers add up quickly. Look at DVD, for example. To make a DVD player legally, manufacturers recently had to pay around $4 per player or drive, according to some estimates. A few years ago, those fees were around $15 to $20. Fees get paid every time a DVD drive gets included in a PC. Nearly every PC in the world has a DVD drive these days and roughly 250 million PCs get shipped every year. Companies that legally make DVD discs also pay fees. The DVD6C licensing group dropped the per disc fee in January to 4 cents per disc. Years ago, it was 7.5 cents per disc. Then there are verification fees.
The royalties, in fact, led to what Chinese leaders call the "DVD mistake," said Zhisheng Niu, vice dean of the school of information sciences at Tsinghua University, in an interview with CNET News.com last year. Because of intense competition, many Chinese companies have lost money, or just broke even, on selling DVD players. The people that have made money, he added, were the patent holders. Chinese manufacturers often got around the licensing issues problem by making illegal players. (The DVD Forum eliminated the royalty for DVD players made and sold in China for a few years, but a lot of those systems ended up overseas.)
The royalties are one of the prime reasons China has pushed for its own optical standard.
"We have to develop our own standards so that we can have our own industry," said Niu. "We have a big DVD industry, but we are probably losing money. The market is big enough so that we can have our own industry."
Now, remember. Niu isn't some pirate off the street. He's one of the chief academics at China's leading university. That gives you a gauge on the feelings there.
The same went for CDs. Philips got about 1.8 cents per CD disc while Sony got about 1.2 cents per disc, according to analysts estimates. When some of the patents expired in 2001, Philips said its royalty revenue would drop by about $42 million. Collecting royalties is a great business.
The Blu-ray camp will likely move more cautiously than the DVD Forum in granting licenses to player and disc manufacturers, said Richard Doherty, principal analyst at the Envisioneering Group, adding that one of the reasons that the studios liked Blu-ray over HD DVD was it is probably easier to set up a pirate HD DVD shop.
Gartner analyst Van Baker, however, said he doesn't believe that Blu-ray will be as lucrative as DVD. For one thing, Blu-ray will have to compete against digital download services, which could prove popular with consumers. Second, the studios have been knocking down the royalty rates.
"This is what a lot of the negotiations were about," Baker said. "My suspicion is that this is not going to be as good as it was for DVD."
We don't know the royalty standards from Blu-ray. The consortium hasn't been aggressive about collecting them yet, but it will likely move into action once the industry gets moving.
The royalties will be split among several players, said Doherty.
Blu-ray has a lot of grandfathers. A lot of people call it a Sony standard but by our estimates Sony doesn't even have 30 percent of the IP," Doherty said. The top four intellectual property holders are likely Sony, Panasonic, Pioneer, and Warner.
Royalties were one of the primary reasons that it took so long to get manufacturers to come out with players that could handle both HD DVD and Blu-ray discs. Manufacturers with dual-format players have to license technology from both camps, which boosts costs.
"There are so many players. There is a lot of intellectual that went into this, and companies like Philips and Toshiba and Sony will all look for a return on investment," Rudy Provoost, the then-CEO of Philips Electronics told News.com in 2006. "That is what makes it a challenging debate. It's like the CD days. Everybody looks for a fair reward."
When a combo player did come out, it ended up being more expensive than buying separate Blu-ray and HD DVD players.
Let me know when I can expect the specifications so that I can start producing players and discs without paying you.
If you don't like it, don't buy it. If you want to dictate what should happen to inventions then invent something yourself. You can help the Chinese make their own Disc technology, I'm sure it'll be as almost as good as the Chinese made CPU's (http://en.wikipedia.org/wiki/Loongson).
So in any event, go out and create something, then put in the public domain. Don't tell others what to do until then.
...any way it has to happen.
Although these days I mostly just boycott evil companies. Magnatune and Jamendo for my music, and public domain books for my movies, using my brain's internal renderer. I may consider buying a copy of peach however... just not on a non-free medium.
player. You can go without. Or design a player yourself and give it
away like you want Sony et al. to do! Cool stuff doesn't come out of
the air, you know.
If we listened to people like you we'd still be stuck with papyrus
scrolls.
A. how to make for a good adaption over to larger Densities in the market.
B. An Encouragement program to convince More Movie Makers to consider making some more longer movies like Lord of the Rings.
Or has the consumer already spoken and will force prices to remain at current levels?
hmmm.
The minor skirmish over which format the HD disks will take is now over but the real war is just getting started.
And then I can buy all the cheap HD-DVD's I want from the number one knock-off experts in the world!
1. they spend lots of money developing the technology
2. then china steals it and makes knock-offs
3. we buy the cheap knock-off then get pissed it doesn't work just right
1) avoiding royalties tied to patents (DVD and the HD variants)
2) control what was published - Chinese media censorship is officially quite prudish, ref. the recent ban on horror movies
even matter?
Who watches movies more than once anyway?
HD-DVD vs. Blu-Ray?
irrelevant.
And $4.00 for a rental is WAY to high, considering you can BUY a DVD (a decent movie, to boot) for $5.00. I pay $1.50 for new release DVD's at my rental shop, and that is as high as I will go.
you pay $4 for every hidef rental???? you should try netflix with a bluray player. you'll know what i am talking about.
I think we'll find there's still a reason that Blu-Ray movies require a 50-or-so GB disc and yet you can stream "hi-def" movies to the Apple TV over a regular broadband internet connection in real time.
At your $4.00 per rental, that would've been $40 per movie.
I know quite a few people that watch movies in their collections more than once.
You really are a Gomer eh?
I'm surprised that the entire HD-DVD ecosystem collapsed so quickly and easily. Just two months ago it looked fine, at least from a distance. But after one key card fell over, the whole house-of-cards came tumbling down very quickly.
Lastly, I'm surprised that I haven't read much-if-any ******** from people that invested in this movie/player platform that is now dead and mostly worthless.
Toshiba seems like the captain of a ship that they designed, then convinced passengers to ride on. Now they see it headed for the rocks, so they're just ignoring their passengers and diving for the lifeboats. I'm kind of expecting a class action lawsuit.
This is why a lot of people did not purchase either yet, one set of people are getting screwed. It had to be.
The lawsuit would be thrown out.
clear to me who was going to win. I bought my Blu-ray player
last June and am enjoying the win even more now.
Not that I don't feel for HD-DVD supporters. I supported OS/2
when it competed with WIndows. I know what it's like to back a
losing proposition. This time it was obvious to me and anyone
else who wasn't already committed to HD-DVD and skewing the
facts to fit the way they bet.
There is no way HD-DVD had a chance. Warner was the last nail
in the coffin. Not the first slip as you seem to think.
Not that there weren't reasons to think HD-DVD might pull it off
if things really got strange. But they didn't.
much identical in quality per bitrate. It was HD DVD that
encouraged VC-1. Although both formats supported both codecs
(as well as MPEG2), Microsoft's backing of HD DVD made VC-1
unpopular on Blu-ray.
Toshiba could've lowered its license fees and convienced the drive, hd-dvd, and disc manufacturers to make stuff cheap, flooding the market with an obvious choice to replace dvd-r with hd-dvd-rs. But instead they got greedy, want big license fees for anything made for hd-dvd-rs.
Wouldn't it be nice to walk into Walmart and buy a movie on a USB (or simular) drive and go home and plug it right into the TV? No DVD or Blueray player required at all.
We just need to get them down in price far enough. And you could have different sizes for different extras. Charge more for additional content.
I love the part about no dvd player required....
CDs are physically GIGANTIC compared to an SD card. Personally, I'd much rather carry around small SD-sized devices than either USB drives or CDs. The slim design makes them very portable and, based on the super-tiny size of the Micro SD card, I suspect there is room in the plastic casing to increase the storage capacities. What are the physical limits? Anybody?
Anyway, I definite agree that CDs ought to disappear "real soon now." It really is about time that they get replaced with more modern technology. I've seen the 8" Disk cone and go, then the 5 1/4", then the 3 1/2" disk. Amazingly, the CD has hung in there, but only because they serve extremely well in the delivery of physical media that has the property of being read-only.
If the industry can work together to create an SD-type of device that can accept small cards that are either read/write or read-only, they would definitely be a challenger to those giant 12cm CDs.
300 DVDs (90 minutes average?) 10 times is 4500 hours. Assuming that you count 10 years, this is 450 hours per year, or 9 hours per week. You're watching them quite a lot, do you?
HD-DVD however was always Toshiba's baby.
If you invent a tool, it gets patented and copyrighted, and people buy it from your company, you can lease the technology to other companies if you want, and get a royalty for each one they make.
Same thing with Blu-Ray, VHS or DVD technology. If you invent it, it is damn fine to have other companies pay you to use the thing YOU invented!
Your 'Atlas Shrugged' mentality is old and tired.
But I'd give Sony a break - they just recently decided to drop their horrible DRM system and sell non-DRM MP3s. And their recent portable MP3 players also now play non-DRM.
If you REALLY want to hate someone, how about Apple? They now control nearly 45% of all online music sales in the marketplace and they have a proprietary DRM that they will license to NOBODY. That really sucks and seems very anti-competive.
/P
That makes Sony the ultimate winner if they get revenue from every Xbox with HD capability.
2) And Windows Vista includes HD-DVD support.
Now Bluray wins = consumer lost all.
No thanks to Hollywood studios.
And I bet Sony pays them to support bluray,
since Sony can collect more royalties.
- Only with music videos
- by dcarlos02 February 22, 2008 11:26 PM PST
- musiktag.eu
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(77 Comments)Royalties come when DVDs are worth seeing. Which are more popular - musical comedies or horror movies?