HD DVD, Blu-ray Disc and the future of home entertainment: A strategic analysis

Table of Contents

Management summary

Digital video, SD and HDTV

• From analogue to digital
• Developments in digital video
• Interlace vs progressive scan
• From SDTV to HDTV
• HDTV broadcasting around the world
• Video compression technology
• HDTV and digital cinema
• In the beginning, VHS

Home video markets

• Introduction of DVD
• Growth in the home video market
• The future of home video
• Consumer reaction to new formats
• Threats and opportunities
• Conclusions: success or failure?

A tale of two formats

• The essential technologies
• Competing formats
• Requirements for a new format
• From red to blue lasers
• Introducing Blu-ray and HD DVD
• Blu-ray and HD DVD compared
• Common features
• HD DVD - the evolutionary solution
  • Physical specification
  • Data modulation, error correction and file system
  • Video and content protection
  • Blu-ray-the revolutionary solution
  • Modulation, error correction and file system
  • Video and content protection
• Other formats
• Technical status of the formats
• Licensing
• Is a single, merged format possible?

Protecting video content

• Background
• The analogue hole
• Digital copy protection on DVDs
• Content protection requirements
• Making content protection stronger
• Licensing
• Revocation vs renewability
• Content protection for BD-ROM and HD DVD-ROM
• Advanced Access Content System (AACS)
• Criticism of AACS
• Interim AACS license
• Self-Protecting Digital Content (SPDC)
• End to end protection and HDCP
• Forensic watermarking
• BD-ROM mark and HD media mark
• Implementing content protection
• Conclusions: the impact of using content protection

Supporting Blu-ray and HD DVD

• Licensing
• Which format will win?
• Blu-ray Disc Association
• DVD Forum and HD DVD Promotion

• Group
  • Content owners
  • Sony Pictures
  • Twentieth Century Fox
  • Lionsgate Home Entertainment
  • MGM
  • Paramount
  • Universal Pictures
  • Warner Home Video
  • Disney/Buena Vista
  • The Weinstein Company (TWC)
  • Studio Canal
  • Other video content owners

• The software balance of power
• Pricing strategies
• Genre breakdown
• Games companies

• Computer companies
  • Apple
  • Dell
  • Hewlett Packard (HP)
  • Intel
  • Microsoft
  • NEC

• Consumer electronics companies
• The hardware balance of power
• Conclusions

Compression and authoring

• Interactive multimedia
• CD-interactive
• Digital Video Interactive (DVI)
• Macromedia Director
• Video compression
• Audio compression
• Authoring and programming requirements
• Authoring HD DVD-Video
• Programming with iHD
• Authoring BDAV
• HD Movie mode (HDMV)
• BD-Java mode (BD-J)
• Status of compression and authoring tools
• Video compression
• Sonic's High Definition Authoring Alliance
• Other authoring tools
• Testing and emulation
• Authoring studios
• Title testing
• Conclusions
• Disc manufacturing requirements and equipment

Manufacturing next generation discs

• HD DVD-ROM disc manufacture
• BD-ROM disc manufacture
• Manufacturing costs
• Equipment suppliers
• Replicators
• The future for the replication industry
• The future for suppliers
• Semiconductor components

Hardware for next generation formats

• Laser diodes and optics
• Players and recorders
• Blu-ray Disc hardware
• HD DVD hardware
• Games consoles
• Computers, drives and writers
• HD compatible displays
• DVI, HDMI and HDCP
• Digital Visual Interface (DVI)
• High-Definition Multimedia Interface (HDMI)
• High bandwidth Digital Content
• Protection (HDCP)
• HD-ready
• Display devices technologies and capabilities
• Compatibility

The future

• The future for Blu-ray and HD DVD
• Fourth generation optical discs: myth or reality?
• Holographic storage
• Near field discs
• Will there be a fourth generation?

High definition DVD market overview

• Hardware sales to get off to slow start
• High definition disc market outlook
• Consumer confusion will dampen enthusiasm
• Lower buy rates, higher prices
• Hi-def discs will boost consumer spending
• Impact of implementing ICT

List of tables and charts

Management summary

Digital video, SD and HDTV

• Interlaced and progressive scan
• SDTV vs HDTV
• PAL and NTSC vs HD frame resolutions
• MPEG-2, H264 and VC-1 codec comparison
• SD, HD and digital cinema image sizes

Home video markets

• VCD retail sales 1996-2005
• VHS retail sales 1992-2005
• Worldwide video spending v. BO revenues 1985-2005
• DVD Retail sales 1997-2005
• Worldwide retail video sales by volume and value
• Worldwide retail video sales by value 1992-2005
• Worldwide Retail video sales by volume 1992-2005

A tale of two formats

• Diagram of disc cross-sections (CD and DVD discs)
• Comparing HD DVD with BD
• Difference in size between pits and tracks (all formats)
• HD DVD disc formats and capacities
• Diagram of hybrid twin format DVD/HD DVD disc
• Diagram of HD DVD disc
• Blu-ray Disc and media formats
• Single and dual layer Blu-ray Disc construction

Protecting video content

• AACS for next generation formats
• AACS system overview
• Annual AACS fees for prerecorded media
• Layer with virtual machine running SPDC

Supporting Blu-ray and HD DVD

• Hi-def disc titles by format
• Number of titles announced by format by July 2006
• Hybrid HD DVD/DVD discs
• Number of titles available by US hardware launch
• Average DVD sales per title in hi-def release slates
• Number of titles announced by format
• Number of exclusive titles announced by format
• Pricing strategies by content provider
• Blu-ray Disc slate split by genre
• HD DVD slate split by genre
• Hi-def feature film slate by type
• CE manufacturer shares of DVD hardware market ranked by (USA)
• CE manufacturer shares of DVD hardware market ranked by (Europe)
• Worldwide PC market shares based on shipments
• Worldwide current-generation games console (128-bit) installed base market shares

Compression and authoring

• Audio codecs for HD DVD and BD
• Bit rates for SD and HD video
• HD and SD resolutions
• HD DVD-Video video and graphic planes
• HD DVD-Video features
• BD-AV movie and graphic planes

Manufacturing next generation discs

• Diagram of CD, DVD, HD DVD and
• BD discs
• Mastering processes for optical discs
• Replicating single and dual layer HD
• DVD-ROM discs
• Replicating single and dual layer BD
• ROM discs
• Optical disc equipment suppliers

Hardware for next generation formats

• Comparison of optical parameters of optical discs
• Illustration of lasers for all four formats
• Worldwide DVD player/recorder penetration
• HD-ready label

The future

• Annual BD/HD DVD hardware sales in key markets
• High definition disc market outlook

High definition DVD market overview

• Potential for BD/HD DVD hardware in key markets
• Potential for hi-def disc sales by volume
• USA: Consumer spending on video 2004-2010
• Potential for hi-def disc sales by value
• Japan: Consumer spending on video 2004-2010
• Europe: Consumer spending on video 2004-2010
• Video market potential 2010
• Video market potential 2010 (continued)
• Consumer spending on retail DVD + hi sdef discs 2010
• Potential losses from ICT: USA +
• Europe + Japan