Jan '09 - Where we stand on Blu-ray Disc
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Bruce Nazarian
Comment by Bruce Nazarian, IDMA/DVDA President 

Back in October, 2008, eMedia online posted an article by freelance writer Mark Fritz entitled “Is AACS killing the Blue-ray Disc industry”, in which officers of the DVD Association were quoted offering certain opinions about AACS and how it might be impacting the growth of the BD format. I'd like to take a moment to prevent any misunderstandings before they occur:  we are not pessimistic about AACS or Blu-ray Disc.  Rather, we’re expressing the hope that the format can open itself up for faster adoption and faster growth. There's more to this issue, though, so read on...

For over 10 years, The DVDA has been a strong supporter of DVD. In recent years, we eagerly looked forward to introduction of a high definition optical disc format that we could get behind wholeheartedly.  When they finally arrived, we got two of them! The nearly 2 years spent in the war between HD DVD and BD had a number of consequences, including, frankly, uncertain initial consumer acceptance of both formats. One of the other unexpected consequences of the format war was the splitting of research and development energies between two formats, instead of them being concentrated on a single format. This split also contributed to delays in establishing a single standard for authoring and programming protocols – an important key to energizing content publishers and producers to adopt the new format.

With the demise of HD DVD in early 2008, the path was clear for Blu-ray to thrive.   However, it takes more than having just one format to create a successful format.   We sincerely believe the DVD was a major success due to a number of factors:  it was a revolutionary shift for video delivering, and after the first few years of R&D, authoring tools started to become available that were affordable, and could be embraced by a large number of authors and publishers worldwide. In addition, the DVD format did not have licensing agreements that prevented publishing on the format by anyone who chose to pay the cost of entry for the hardware or software required to author.  If you wanted content protection, you were free to elect to use CSS for virtually no additional charge, or MacroVision for a fee commensurate with the quantity of discs created.

The end result was major adoption of the DVD format by publishers worldwide, a flood of titles coming to market from both Hollywood and non-Hollywood content owners alike, and, for many years, a healthy market for authoring service providers.

Our current concern is that, unlike DVD, the “path to Blu-ray” is a lot more complex, and far costlier than DVD.   We have heard from a number of independent producers that the costs of licensing are preventing them from adopting the blue ray format for publication at this time, and that’s a problem. As we stated in the article, if the goal of licensing is to inhibit or eliminate the pirates, the unexpected spinoff shouldn’t be to inhibit the adoption of the format by the very independent producers who we believe contributed to making DVD the overwhelming success that it had become.

With DVD, an independent producer was free to create a title and bring it to market with very little or no additional cost other than encoding, premastering and replication. Publishing a blue ray title at this point is far more complex, not only in encoding and premastering, but also in replication.

A certain amount of this complexity is due to the mandatory licensing requirements that exist in the BD format. Now don’t get us wrong, we’re not suggesting that BD licensing be eliminated entirely, because we certainly understand why the licenses were included in the first place.

Our goal was merely to bring focus to this issue, and to strongly suggest a tiered approach to licensing fees that will enable everybody to participate according to their means.

Doing so will unleash the pent-up creativity of thousands of independent producers who are waiting to participate profitably in growing the blue ray format. Anecdotally, there are over 93,000 DVD titles in the marketplace, and easily 50% of these were created by non-Hollywood entitles.  Those entities can be enlisted to help build a far more robust market for Blu-ray disc, if fees are lowered, and license complexity reduced.

Let’s assume for a moment that reducing licensing fees would bring perhaps 1000 new independent producers to the BD marketplace:

• Even if each producer only does one BD title, that’s one million new BD-ROMs, generating perhaps $2 million for replicators.
• If AACS content participant or provider agreement fees were reduced from $3000 (a high hurdle for most independents to cross) and restructured to begin at $500 for a simple license, then those 1000 producers would bring in an additional $500,000 in licensing agreement fees for AACS, and potentially the same for BDA, assuming they all signed up for a $500 BDA CPA-light agreement.
• Those 1000 new titles would create 1000 new AACS title key certificates generating $1.3 million
• Those 1000 new titles would provide more impetus for people to purchase a blue ray player, to be able to play that content. 

This translates into increased retail sales for players, and increase retail sales for the BD-ROM media as well.
One million new Blu-ray Discs at $20 retail = $20 million in new retail sales!

*** UPDATE - EARLY 2009 -
In early 2009 we gathered some market data that indicates that of the 95,000+ DVD titles currently in print, over 50% were created and published by non-Hollywood producers. So looking at the number above, it appears that perhaps 1,000 new producers might be a conservatively low estimate of possible new blu-ray producers. Nobody will know for sure, until affordable Blu-ray publishing it made available to non-Hollywood producers.

In summary: in the same way that reducing taxes frequently generates greater overall revenue for the taxing authority, we sincerely believe that reducing the financial and licensing complexity barriers to entry for new BD producers will generate more money for everyone in the entire BD ecosystem. In order for this to happen, a groundswell of support needs to be shown for the proposed lowered fees. and that's where YOU come in: to support our efforts, please do two things, right now:

Sign our Blu-ray stimulus petition: http://www.dvda.org/petition/
and take our Blu-ray Disc survey http://www.dvda.org/survey/


and please spread the word to others, so they will sign the petition as well. Post this URL everywhere you can
http://www.idmadvda.org/wherewestand

Thanks in advance for your help! – Bruce Nazarian, President, IDMA/DVDA

P.S. If you would like to assist us in our efforts to make publishing easier in all formats,
please consider joining the IDMA/DVDA.  

 

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