A DVD combo? Don't hold your breath

Intellectual-property issues, technological pride likely to keep Blu-ray and HD DVD camps far apart.

A correction was made to this story. Read below for details.

For consumers, a device that could play both HD DVDs and Blu-ray discs would take a lot of risk out of adopting the new video players--but one may not arrive for a while.

Legal agreements, intellectual property issues and technological pride will likely keep the two camps backing incompatible next-generation technologies from coming together in the near future, executives and analysts said.

"Until everyone agrees to check their egos at the door and help the consumer, there is nothing we can do about a universal product," said Peter Weedfald, a senior vice president of marketing at Samsung North America.

HD DVD and Blu-ray are competing video and storage formats for succeeding DVDs. While some movie studios said in mid-2005 that they were open to , by late summer, such talk had fizzled out.

Meanwhile, the technological world is bitterly divided. Sony, Samsung, Philips and Dell are among the Blu-ray backers. Intel, Microsoft and Toshiba are on the HD DVD side. Hewlett-Packard has said it will support both contenders.

Pride and ill-will seem to play a significant part in the debate. As in the old Betamax-VHS debate, both sides believe they have each found the formula that more perfectly suits consumers' desires.

Steve Kovsky, an analyst at Current Analysis, recalled a meeting in Tokyo last year at a major Japanese consumer electronics manufacturer. A reporter asked about a "universal" player. The executive leading the tour blew up and called the notion "stupid."

"Japanese executives in general are very political, so this was very surprising," Kovsky said. "Technically, it is possible...but at this point, it doesn't look like it will happen, which is a shame, because it will hinder adoption."

But the conflict goes far deeper. The rules that govern the organizations touting the different technologies currently bar manufacturers from combining the two standards into a single drive, Weedfald said.

"The conundrum is that you've got two different camps. You've got licensing issues, you've got trademarks, you've got copyrights," Weedfald said. "You can't just be on the Blu-ray side and say, 'We will put HD DVD in there,' and the reverse is true."

Samsung may make a separate line of HD DVD players to complement the Blu-ray players it plans to release later this year, Weedfald said. This would allow Samsung to support both formats, although not in a single product. The company, however, does not have current plans to do so, he said.

Return on invention
Royalties also play a significant role, said Rudy Provoost, CEO of Philips Electronics. The companies behind each standard hold patents and expect to be compensated for their inventions. Philips, Sony and the others behind the CD standard eventually garnered hundreds of millions of dollars from that invention.

"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," Provoost said. "That is what makes it a challenging debate. It's like the CD days. Everybody looks for a fair reward."

Philips currently does not have HD DVD on its product road map. In the second half of 2006, the Dutch electronics giant plans to release a Blu-ray player and then follow up in the first half of 2007 with a player that can record CDs, standard DVDs and Blu-ray discs.

The negative repercussions of the war between Blu-ray and HD DVD could end up being even more expensive than the conflict between Sony's Betamax and VHS in the mid-1970s. Back then, consumers who bought Betamax players found themselves saddled with an expensive player and a dwindling supply of movies released in the Betamax format.

In the current conflict, if Blu-ray wins out, for example, consumers could find themselves being forced to upgrade computers with an integrated HD DVD drive earlier than anticipated, or to buy an external Blu-ray device. Similarly, if people buy HD DVD players, forget buying a Dell PC, which will come with Blu-ray.

"From a consumer perspective, the best thing would be one format," Provoost said. "I don't know if that will be a reality. Eventually, you will have to follow the logos." He added, however, that polarization between the two groups could narrow.

To help consumers, most studios will pop out movies in both formats. At the Consumer Electronics Show in Las Vegas last week, the laundry list of movies coming out this year on these formats is almost identical.

"It's too early too tell" which will win, Matt Lasorsa, executive vice president of marketing at New Line Home Video, said in a brief conversation after a presentation at CES. "The ideal solution would be a universal player."


Correction: This story incorrectly stated analyst Steve Kovsky's affiliation. He works at Current Analysis.
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