There are differences in the compression technologies used in both the formats but the consumers may not experience significantly different viewing pleasure between the two.

Pradip K. Bhaumik
Arindam Banik

The war for the next generation removable digital storage medium, unfolding in all its viciousness, has all the ingredients of a high drama. Both Toshiba and Sony are aware of the dangerous consequences of losing the war as well as the benefits of winning it. It is a high stake war.

Consumers need to store more and more digital information in a single medium and this has spawned the development of floppy diskettes, compact discs (CDs)and digital versatile discs (DVDs). A DVD can store 4.7 GB (giga byte) of data whereas a CD can store about 700 MB (mega byte) and so you have a whole three-hour movie stored in a single DVD which otherwise may require three or four CDs. Customers' expectations have gone up where they would want to store a movie in a single disc.

Simultaneously, technologies have also grown where a single multi-layer disc can store up to 100 GB of data enabling storage of high definition movies. The only problem is that we have not one but two technologies vying for a single slot.

Two competing techs

Announced in 2002 by nine companies including Sony, Hitachi and Philips, the Blu-ray technology promises 25 GB on a single layer of a BD disc while the High Definition DVD (HD-DVD), with a storage capacity of 15 GB per layer, was sanctioned by the DVD Forum in 2003. A distinct advantage of HD-DVD for the disc manufacturer is that the stamping machines for regular DVDs require only minor modifications to make HD-DVD discs.

BD is perhaps technologically superior to HD-DVD but there is an even chance that HD-DVD will turn out to be the eventual winner. Both of these use the low frequency blue laser, unlike the red laser used in CDs and DVDs, allowing discs to store data at higher densities required for high definition video storage. Both formats have multiple layer capability and so, technically, BD can have up to 100 GB capacity in a dual side, dual layer disc, while Toshiba has already developed a prototype three-layer 45 GB HD-DVD disc.

No significant differences

There are differences in the compression technologies used but both formats would offer vastly improved picture quality and consumers may not experience significantly different viewing pleasure between the two. As neither format is likely to offer loss-less recording, it is possible that a later generation of technology will make these discs also obsolete just as CDs and DVDs may become obsolete after the high definition discs are released in the market.

The ultimate success of either format will not depend only on the storage capacity of the discs. Thanks to a special hard coating developed for BD discs, they can reportedly withstand even screwdriver swipes unlike other optical media such as CDs and DVDs which can be damaged even by tissue wipes. HD-DVD is cheaper and easier to manufacture and has product familiarity on its side as it conveys a high definition version of DVD. The lower price of players, recorders and discs would be a significant advantage as would being the first-mover when Toshiba launches its HD-DVD any time now.

Evenly poised

But Sony's strength in the content market with its ownership of Hollywood studios, media companies and dominant position in the games market with Playstation cannot be wished away. It thus appears to be an evenly poised war with formidable armies lined up on both sides.

HD-DVD has the backing of the DVD forum, which is an international membership-based organisation created to enable the DVD platform grow through technical improvement and innovation.

Ironically, Sony Corporation is one of the founding members of the DVD forum but it sponsored the Blu-ray Disc Association (BDA) as an alternate forum for BD thus implying that BD incorporates a technology distinctly different from that of DVD. Almost all the global bigwigs among the hardware, software, media and content companies are covered between the two, with many even joining both.

Both sides seem confident about winning in the market where besides the consumers, other stakeholders such as the manufacturers, content providers, games console producers and computer manufacturers will also have significant roles.

There are reports of Toshiba encouraging low-cost Chinese producers to start making HD-DVD players and recorders. If true, such early commoditisation of the product will hurt all.

Attempts of mediation and negotiation to avoid such a high-cost war have failed as each side asserts the superiority of its technology and strategy. The absence of a regulator leaves the market as the only arbiter.

From the sidelines, the whole episode may appear as wholly avoidable and costly for the two camps and particularly for the consumers when seen from an Indian perspective still used to notions of guiding hands of the government but for both the warring sides any government role is conspicuous by its absence. The only Indian company in the middle is Moser Baer and it has hedged its position by joining both the DVD forum and the BDA.

(The authors are the professors at the International Management Institute, New Delhi.)

(This article was published in the Business Line print edition dated April 25, 2006)
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