Daniel Eran Dilger

The arrival of DVD gave consumers far higher video quality in a new compact disc format with a variety of practical advantages over existing VHS tapes. There was no format war related to DVD because the two groups developing a new consumer video disc gave up their differences and worked together. Consumers didn't have to chose a format or worry about obsolescence. So why did the world return to a format war with HD?

[Blu-ray vs HD-DVD in Next Generation Game Consoles]

A United Forum for DVD.

Sony and Philips worked together in the late 70s to develop the audio CD. Philip's work on LaserDisc and Sony's digital error correction encoding resulted in a huge leap forward for consumer audio that delivered high quality sound on a durable medium with instant playback.

In the early 90s, the two companies began collaborating on an inexpensive new video version, called the MultiMedia Compact Disc.

At the same time, a group lead by Toshiba including Pioneer and JVC introduced the SuperDensity Disc. For a year and a half, the two formats tried without much luck to find interest among consumers. In 1995, the groups united to form the DVD Consortium, later called the DVD Forum. That cooperation helped the single new DVD format to rapidly gain adoption.

Building Industry Standards.

DVDs use ISO standard MPEG-2 video compression and digital audio, typically delivered as Dolby Digital AC-3 or DTS surround sound. Using standard, interoperable formats based on patent pools from established technical leaders meant that DVDs could be delivered by any hardware manufacturer under reasonable and non-discriminatory licensing.

In 1998, the ISO chose Apple's proven QuickTime container format over Microsoft's proposed ASF, dashing Microsoft's plans to use its desktop monopoly power to simply brush aside technical superiority and establish control of the digital media industry by fiat.

[Microsoft's Plot to Kill QuickTime]

[How Microsoft Pushed QuickTime's Final Cut]

Windows Media vs the World.

With the rest of the industry aligned behind an open container format based on QuickTime, Microsoft worked to find a different way to tie digital media to Windows.

The company had developed a proprietary implementation of the H.263 codec (also known as MPEG-4 Part 2, and similar to DivX), which it had tied to its ASF container file. This combination is generally referred to as the Windows Media 9 or WMV format. However, without broad industry support, WMV wasn't likely to make progress beyond the Windows PC.

At the same time, Apple and other companies were working with the ISO’s Motion Pictures Experts Group to develop what would become MPEG 4 Part 10 or H.264 video, standardized inside of the QuickTime-based MPEG-4 container. The combination is commonly called the Advanced Video Codec, or AVC.

[Apple TV: Using DVDs and other Video Sources: Compressing DVDs]

Microsoft's iHD Plan.

In order to accelerate interest in the idea, Microsoft announced plans with Disney CEO Michael Eisner in 2002 to deliver HD enhanced new DVD content using WMV and an interactive menu system based on Microsoft’s Windows CE called iHD.

By tying specialized new non-standard DVDs to its iHD and Windows Media file formats, Microsoft hoped to eventually earn royalty payments and licensing fees for every movie sold, just as it does for every PC. Additionally, this would also tie HD development into Windows, preventing playback on Linux, Macs, or any other platforms.

Playback of the HD content on these new DVDs outside of a Windows PC begged the arrival of new players licensing Microsoft's codecs and its WinCE based iHD. Essentially, new players would incorporate a small computer to run the iHD menus. That got the attention of Intel, which liked the idea of building an Intel-based PC into every new DVD player in order to support Microsoft's plans.

The DVD Forum Goes HD: 2003.

To deliver HD video, the DVD Forum determined that a new disc format would be required to deliver greater bandwidth and capacity over the existing DVD. The two candidates advanced both planned to use a new generation of blue-violet lasers to pack much more data into the same sized disc:

1. •Sony outlined plans for a consumer version of its high end Professional Disc for Data, adapted to use the ISO’s MPEG-4.
   

2. •Toshiba presented the idea of a DVD mechanism retooled with a blue-violet laser called Advanced Optical Disc.
   

In 2003, it was expected Sony wouldn't be able to complete its new Blu-ray before 2005, but Toshiba said it could deliver AOD by 2004. The DVD Forum selected AOD as the official successor to DVD, and subsequently renamed it to HD-DVD.

Microsoft, worried that the new HD formats would eclipse its DVD+WMV plan, hoped to get both groups to adopt its iHD for interactive menus and use its WMV video codecs. After finding resistance to using its proprietary WMV over the standard MPEG-4, Microsoft had the SMPTE publish its Windows Media 9 codec under the name VC-1.

Microsoft now humorously refers to Windows Media 9 as "an implementation of the VC-1 standard." The specification for both HD-DVD and Blu-ray require players to support both MPEG-4 and VC-1, and movies can be encoded in either. Most HD-DVDs use VC-1, and most Blu-ray movies use MPEG.

[Who Is Drawing Out The High-Def DVD Stalemate? - InternetNews]

Sony Continues Work on Blu-ray.

Unconvinced that Toshiba's HD-DVD plan would be deliverer on time, Sony continued work on Blu-ray. Despite promises that HD-DVD would be much cheaper to produce and could be delivered by the existing DVD player manufacturers with just minor adjustments to their assembly lines, by the end of 2005 no HD-DVD players had arrived.

Meanwhile, Sony continued to build up support behind its technically superior Blu-ray, which promised to store 25 GB per disc layer compared to 15 GB for HD-DVD. In addition to technical work, Sony had also assembled a coalition behind Blu-ray that included critical content producers.

In 2004, Sony had bought MGM, expanding its influence. The next year, Eisner announced his departure and Disney aligned behind Blu-ray. The majority of the DVD Forum members also announced support for Blu-ray in addition to the official recommendation of HD-DVD. Among them was HP, which joined the Blu-ray Disc Association in early 2004.

Blu-ray Says No to Microsoft, and Vice Versa: 2004.

HP in turn invited Microsoft to also support Blu-ray for playback under Windows, which HP would need for the Blu-ray equipped PCs it sold. According to an article by Peter Burrows in BusinessWeek, Microsoft demanded that the Blu-ray group adopt its WinCE-based iHD for developing interactive content (since renamed to HDi) in order to sign on.

Somewhat ironically, the Blu-ray group had already adopted BDj, an interactive authoring system developed by HP. BDj is based upon Sun's Java platform. Content developed for BDj is intended to be easily adapted for delivery not just on Blu-ray disc, but also over cable systems.

The Blu-ray Disc Association “did a three month side-by-side evaluation and concluded that iHD didn't offer enough advantages to make a switch worthwhile,” Burrows reported. “Microsoft was livid.” In September 2005, Microsoft and Intel announced their exclusive support for HD-DVD, which had already included HDi as a mandatory part of the specification.

Bill Hunt of Digital Bits explained to InternetNews that Toshiba was ready to drop HD-DVD and join Blu-ray in 2005 until an unnamed company, which Hunt believes to be Microsoft, “pressured the company to stick with HD DVD since so much time and money had been invested in it.”

“Everything I've been told,” Hunt said, “is a lot of people in the HD DVD camp were ready to throw in the towel in late 2005 and something kept them from doing it. Microsoft seems to be the company that is running around crowing the loudest about HD DVD.”

[DVD Wars: Last Hope for Peace? - BusinessWeek]

HD-DVD Troubles: 2006.

The hardware required to play HD video and WinCE-based HDi posed a big problem for Toshiba’s HD-DVD players that overshadowed the somewhat simpler disc player mechanism they use compared to Blu-ray. Toshiba's first HD-DVD player, the HD-A1, wasn't released until early 2006, two years later than promised.

In order to run Microsoft's WinCE-based HDi menus and render HD video, it incorporated a PC: a Pentium 4 processor, 1 GB of RAM, a 256 MB Flash drive, and 32 MB of additional Flash RAM. A parts breakdown revealed that the components alone cost around $674, even without manufacturing costs, bundled accessories, packaging, and other expenses.

Toshiba sold the $500 players at a large loss to encourage uptake of HD-DVD prior to the release of the first Blu-ray players, which debuted around $1000 a few weeks later. Once again, Microsoft’s answer to a technology problem is to turn it into a PC running Windows, just as:

1. •the Xbox is a repackaged PC running Windows for games.
   

2. •The WinCE-based Handheld PC, Palm PC, and Pocket PC are all small PCs running a smaller Windows.
   

3. •WebTV, Ultimate TV and Windows XP Media Center were all PCs running Windows as a DVR.
   

4. •Windows Home Server is a PC running as a file server base station.
   

[Toshiba taking a hit on HD DVD players - Ars Technica]

[Ten Myths of the Apple TV: Xbox and Hardware]

[The Spectacular Failure of WinCE and Windows Mobile]

[Windows XP Media Center Edition vs Apple TV]

[Windows Home Server vs AirPort Extreme]

HD War Games.

In November 2006, Microsoft began offering an optional USB HD-DVD player designed for the Xbox 360 for $200, just as Sony released its PlayStation 3, which includes a Blu-ray player. The integrated PS3 cost the same as an Xbox 360 with Microsoft's optional HD-DVD player. 

Eight months later, Microsoft reported sales of 155,000 HD-DVD players, while Sony had shipped 6.2 million PS3s. In comparison, Apple sold 270,000 iPhones in its first two days, a figure scoffed at by Windows Enthusiasts, who at the same time seem to think a large number of Xboxes can play HD-DVDs. They also maintain that the PS3 is very expensive.

Apart from the HD-DVD players sold by Microsoft, roughly another 150,000 stand alone players have sold, despite models now being priced as low as $300. Microsoft also dropped the price of its own Xbox 360 HD-DVD player to $180 and offers five movies as an incentive to buy one.

Fewer than 2% of 360 users have opted to buy the optional HD-DVD drive, which is only useful for playing movies. Microsoft announced that 360 games will not be issued on HD-DVD. In contrast, Blu-ray is the native format for PS3 games.

Even considering NPD's report that stated 40% of PS3 users don't know that their game console can play Blu-ray movies, that's still 3.7 million PS3 users who are aware of Blu-ray for movie playback, compared to less than 0.2 million 360 users, presumable all of whom are aware of their ability to watch HD-DVD movies after buying the drive.

[Nintendo Wii vs Sony PlayStation 3 vs Microsoft Xbox 360: Q2 2007]

Microsoft's HD Misinformation War.

Faced with those long odds, Microsoft has been forced to publish a misinformation campaign to spin things more positively. Among the problems HD-DVD supporters have tried to publish about Blu-ray are the ideas that that:

1. •Many early Blu-ray titles used MPEG-2 encoding rather than MPEG-4 H.264. In reality, the codec used doesn't make much of a difference, as MPEG-2 can be used to deliver high bandwidth video. The primary advantage to H.264 over MPEG-2 is more efficient compression, which hasn't been an issue for Blu-ray discs with a minimum capacity of 25 GB. That's enough for over 2 hours of HD content, even when using MPEG-2, as well as an additional 2 hours of SD bonus material.
   
   

2. •Since the first Blu-ray titles used single layer 25 GB discs, it became popular to speculate that Blu-ray couldn't support dual layer discs. That wasn’t true. The first dual layer Blu-ray movies weren't released until late 2006, but over half of the releases this year have been on dual layer, 50 GB Blu-ray discs. In comparison, a dual layer DVD only holds 8.5 GB, and a dual layer HD-DVD is 30 GB. Both formats can support multiple layers on dual sided discs.
   
   

3. •Windows Enthusiasts feared Blu-ray discs would be far more expensive to manufacture. A study by Home Media Magazine reported a difference of only five to ten cents.
   

Is Porn a Problem?

Echoing the idea that pornography sales drove the adoption of VHS over Betamax back in the early 80s, it is commonly suggested that porn will turn the tide for HD-DVD. However, in addition the the dubious benefit of HD in the realm of porn, Dan Ackman reported in Forbes back in 2001 that the size of the porn industry is overblown.

While figures of a "$10-11 billion porn industry" are commonly thrown around, there is no basis ever given for this number, which Ackman noted was first casually thrown without substantiation by the often scandalous Forrester Research.

 

Ackman noted that in 2000, adult videos really only accounted for at most $1.8 billion, compared to $32 billion of broadcast television, $45.5 billion in cable TV, and the $31 billion movie business. Content available over the Internet has helped to keep the porn disc industry from growing. Besides all that, Blu-ray offers no barriers to porn distributors anyway.

[How Big Is Porn? - Forbes.com]

[Format Wars in Home Theater]

Banking on Chinese Importers.

With Dell and HP--the largest American PC makers--supporting Blu-ray, Microsoft was left hoping that Chinese manufacturers would crank out cheap HD-DVD players and undercut all the US, European, Japanese, and Korean manufacturers lined up behind Blu-ray.

However, of all the companies in the DVD Forum with the ability to build blue-violet laser disc players, only Toshiba has released any HD-DVD standalone players. Even worse, when LG shipped its hybrid player supporting both formats in January, it arrived without support for Microsoft's HDi.

Engadget reported good news for Microsoft Enthusiasts when it announced in April that Wal-Mart had lined up a Chinese manufacturer ready to dump HD-DVD players on the US market for $299. It later turned out that those players--which weren't expected until 2008--were actually Blu-ray devices, a detail that had been lost in translation. Engaget later announced in another correction that Wal-Mart had only been inquiring about orders and hadn't placed any.

[Low-price Chinese HD DVD players still absent - 8/24/2007 - Video Business]

China Not Big in Japan.

China--weary of paying licensing fees for DVD players to outside companies--planned to develop its own DVD-like format called EVD to allow its manufacturers to serve the country's huge domestic market with discs and players that didn't need to pay royalties to the DVD Forum members. That effort failed, but now China is hoping to deliver another local version based on HD-DVD with Toshiba's support.

The catch is that it won't be compatible with standard HD-DVD players, so it won't help Toshiba or Microsoft at all in the US market. Meanwhile, Windows Enthusiasts keep talking about an impending flood of cheap Chinese HD-DVD players that haven't materialized, hoping to bend reality to support China as the last best hope for Microsoft.

Apart from the rather desperate Toshiba, other Japanese companies are wary of sharing their technology with the Chinese, worried that those companies would price them out of the market and--purposely or accidently--open up the DRM protections that protect movie duplication on HD discs.

[HD DVD Bets On Chinese Support - CDRInfo]

Microsoft's Supernova in WMA, WinCE.

While Microsoft has ineffectually worked to push HDi as its last ditch effort to find a niche for its WinCE--and tried valiantly to push Windows Media as an alternative to the industry standard H.264--it looks like neither effort will amount to much in the long run.

In the same ten year period, Apple has contributed toward the open, collaborative development of MPEG-4, and almost singlehandedly pushed the open new MPEG-4 AAC into the mainstream with the iPod and iTunes. In contrast, Microsoft hoped to use its Windows monopoly to push PC users from MP3 audio to the exclusive use of its proprietary WMA, using cheap Chinese designed “portable Media Players” built around its Windows Media DRM.

Today, WMA players amount to nothing. Microsoft worked with Toshiba to deliver the Zune so it could push an alternative to the DRM-optional iPod, but that effort has made little progress. Universal, another HD-DVD partner, has also tried to breathe life into Microsoft’s Wal-Mart Windows Media store by offering cheap MP3 downloads, but the move is unlikely to help.

[Universal vs Apple in the iTunes Store Contracts]

The Video Challenge.

Apple has similarly established support behind the ISO's MPEG-4 AVC for video, employing H.264 as the common video codec between iTunes' TV, movies, and freee podcasts, as well as the common format among video iPods, iPhones, Apple TV, and in iTunes and QuickTime on the Mac and Windows.

That effort has left WMV high and dry among personal media players, and promises to further marginalize WinCE just as the Apple's new mobile is hanging up the phone on Microsoft's Windows Mobile already. By refusing to license Windows Media codecs and sticking with open standards, Apple is calling Microsoft's bluff with a stiff raise.

Thanks to reader Urian for contributing to this article.

What do you think? I really like to hear from readers. Comment in the Forum or email me with your ideas.

 

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