DVDs Next Frontier

by Dana Parker
Summer/Fall 1999

Are you a DVD have or a DVD have not? If you can no longer remember what life was like "B.D." (Before DVD), you may soon be wondering how you can possibly live without two or more players. If you have been able, so far, to resist the temptation of buying a DVD-Video player to replace or complement your VCR and CD player, resistance may soon become futile. Consumer electronics manufacturers intend to tantalize you with their version of 31 flavors of DVD.

Later this year, you can expect to see a new class of DVD players that offer much more than high-quality playback of digital video and audio. Some of these "information appliances" will extend the capabilities of DVD-Video players to include video games, edutainment titles, Internet browsing and e-mail. The Divx variation of DVD, which not only survived its first Christmas retail season but also racked up impressive sales numbers, is now more a viable choice than a risky proposition. And the ultimate replacement for your VCR, a DVD recorder, is one step closer to becoming a reality.

DVD Classic
Not that "plain vanilla" DVD is doing so badly. With over a million DVD-Video players already installed in U.S. homes, more than 2,300 available titles, and prices dropping below $300, DVD has broken out of the "early adopter" market and is making headway in the mainstream. Manufacturers continue to bring out new improved models with desirable features, and content owners and title developers have just begun to explore the possibilities in creating titles with video, computer and Web components.

"Convergence" is a word you often hear applied to DVD technology, but convergence is not just about creating applications or content that runs on more than one platform. Convergence is about making devices that combine several functions in one and sit at the center of a home digital entertainment and information experience.

For consumers, DVD convergence means not only more hardware choices, but also the advantage of many compatible software titles. For developers and content owners, it means that they can create and sell a single disc that not only works on a large installed base of devices, but allows them to include capabilities that today are only possible on a dedicated game console or on a DVD-ROM-equipped PC.

For example, Sony will offer a new game machine, which is likely to include a modem, Internet connection and a player for DVD-Video and DVD-ROMs. Dreamcast, the new video game system from Sega recently introduced in Japan, comes with an on-board modem that lets users play games on the Internet, exchange e-mail, chat electronically and browse Web pages. It also comes with a high-speed CD-ROM drive, which by the time of its North American introduction next November, could easily become a DVD drive instead. Motorola, Thomson and Toshiba are likely to offer "interactive entertainment platforms" allowing users to play games, watch movies and access interactive television services. Several manufacturers, including Toshiba, Hitachi and Philips, have indicated they plan to market WebDVD.

"Oh, great!" I hear you say. "That's all I need--a bunch of confusing new DVD gadgets to choose from!" Fortunately, consumer electronics manufacturers have learned from harsh experience that potential customers, when faced with too many choices, might just choose "none of the above." As a result, many of the new "smart" DVD players soon to debut will use a common architecture, based on a new standard in video entertainment called Nuon.

Project X Now Nuon
Nuon, the technology formerly known as Project-X, is the next-generation MPEG-2 decoder chip from VM Labs, the chip design company founded by silicon visionary Richard Miller. The Nuon chip does more than decode MPEG-2, the digital compression format that enables four hours of digital video on a 12cm DVD disc. It's smart and powerful. It's flexible enough,for example, to make a game console, a Web browser, a digital television receiver or a video phone out of a DVD player plugged into a television set. The chip itself costs about the same as an MPEG-2 decoder chip. According to Greg LeBrec, vice president of marketing for VM Labs, "Nuon technology will be in more than 50 percent of DVD players that ship by the end of the year."

Motorola and Toshiba have already thrown their support behind Nuon, and LeBrec says VM Labs is "in discussion" with many other manufacturers. Software vendors--including video game publishers Activision, Berkeley Systems, Fox Interactive, Hasbro Interactive and Psygnosis, among others--will develop titles to run on the Nuon platform. VM Labs is also reaching out to DVD movie and DVD-ROM title developers with a developer kit that makes it easy to create new titles and to port existing applications to "Nuon-enhanced" devices and discs. According to LeBrec, "We are providing a development platform that will open the door for content that appeals to a broader demographic." In other words, if the existing 2,300 DVD movie titles--many of which target young male viewers--don't appeal to you, there is hope in sight. The folks at VM Labs realize that the mainstream market includes women, children and mature males, and that software is what sells hardware.

DVD players equipped with Nuon chips will still play DVD movies and CD audio, of course. In addition, Nuon machines will play applications designed to exploit the intelligence and flexibility of the Nuon chip, whether the application is a DVD movie title, an interactive 3D game title, an edutainment title, a reference or special interest title with a Web connection. It's up to manufacturers to decide which of the Nuon's chip capabilities they will exploit. Choosing between one Nuon device and another will be more like choosing between a four-head VCR and a two-head VCR than between a VCR and DVD player. In addition, those who want DVD-Video playback plus a video game console, but who do not foresee a need for Web access, can buy a Nuon-enhanced device with just those capabilities. The device will still play DVD titles with Nuon-developed Web connections, but those connections will not be accessible. If they later decide that Web access is something they would like to have, LeBrec says that a modem "add-on" will be available for every Nuon-enhanced player made.

The Divx Variable
These future variations on a DVD theme are not the first to include a modem, or to add features only available on a proprietary disc that is viewable only on a special player. Another "enhanced" variation of DVD, Divx, plays regular DVD discs, but also plays their own specially encrypted, serialized, limited-play movies. For about $4.99, you can pick up a disc at one of over 800 Divx disc retailers in the US, or from the Divx Web site (www.divx.com), and soon, perhaps, you'll be able to acquire them from your local convenience store or supermarket.

You can take it home and keep it on the shelf until you are ready to watch it. Once you put the disc in the Divx player--which will cost about $100 more than a plain-vanilla DVD player--you have 48 hours in which to watch it as many times as you like.

After that, you can sell, store, give away, recycle or toss the disc. If you decide to keep it, it will cost about $3.50 for additional 48-hour viewing periods. The Divx player keeps track of your rental activity and reports billing information to a central office by modem, which is then added to your monthly credit card statement. Some Divx discs are upgradeable to Divx Silver status, which means you can upgrade them from your home to unlimited playback (on your Divx player only) for a one-time fee. Yet another flavor is Divx Gold, which will entail full ownership and unlimited free playback on any Divx player (not just yours).

Divx is essentially a video rental model with no rental-store visits, late fees or returns required. There are still fears that the availability of an alternative DVD format with a complex rental model will prove confusing to consumers and inhibit the sales of both types of players. Both formats, however, continue to show robust sales numbers. As mentioned earlier, the Consumer Electronics Manufacturers Association estimates that more than 1 million DVD-Video players have been sold. According to Circuit City, an owner and primary proponent of Divx, Divx players are selling quite well also, with more than 90,000 players and over 500,000 copies of some 400 titles reported sold through to consumers.

DVD-Recordable
For those whose DVD dreams will not come true until it's possible to record DVD movies from off-air television, camcorder tapes and other non-copyrighted video sources, there is more good news, but you will have to wait for it. Both Philips Consumer Electronics and Hitachi Ltd. have announced intentions to offer DVD-Video recorders in 2000. The Philips device, based on the rewritable DVD+RW format, will offer 4.7GB capacity rewritable media that will be playable on today's DVD-Video players. Hitachi's version, based on DVD-RAM technology, is expected by the end of 2000, but the discs it records will only play in the recorder itself.

The Future
Now that DVD technology is relatively stable and standard, there are many ways to make it more attractive besides just making standard DVD-Video players cheaper. One of those ways is to enhance the dedicated DVD movie player with interactivity, Web connections and sophisticated gaming capabilities, using Nuon. Another is to explore new models for delivering content, like Divx. Yet another is making DVD recordable. The future of DVD is diversification, and diversification means choice. Choice is good.