Format war – losing more than consumers

1 10 2007

The fight over standardized format(Blu-Ray vs HD DVD) has a far greater prize, Royalties. Gigastorage, Taiwanese CD/DVD recordable manufacturer has announced it that it has reached a preliminary settlement with Royal Philips Electronics regarding litigation on infringement of CD-R and CD-RW patents.

Never loose sight what manufactures follow as a model. Create ideas, initiate demand, sell licencing. Let the secondary market take advantage of the production process while returning to the bread an butter of R&D. We have watched over the past few years Philips impose these patents with great success. 15 years after it was developed. Sony (Blu-Ray) and Toshiba (HD DVD) want to follow this path but it just has been a difficult road because the market has a choice.

CMC Magnetics and Ritek, the top two Taiwan-based producers of optical discs, as well as Prodisc Technology, a second-tier maker, are unwilling to invest in large-scale production of either Blu-ray Disc (BD) or HD DVD discs. And who can blame them.

It reminds me of an old story. Back in the late 80’s, NEC was famous for taking out full page ads in WSJ on their new monitors. Working for a National Distributor, I would get numerous calls about ordering this new monitor. Like all Salesman wanting the Sale, pushed the issue up the chain. Turns out the product was not even in the channel yet. This was my first introduction to creating demand. Being determined, (more like arrogant) I questioned this method. When I heard this straight up answer:

“John, if only a hand full of your customers are asking for a few, that’s nice. But until the other 85 salespeople get on-board with commitments from 30 of their customers with atleast 10 each, how do we realize the actual demand.”

An demand is the key component in this equation. Paul Sweeting, Editor @ ContentAgenda posted today the one sticking issue that reflects the use of said media disc, ability to rip content. On the surface the general public is still convinced ripping is a criminal act or at the least confused over the issue of “Fair Use”.

As you can gather, it all revolves around the Studios. So much so Sony and Toshiba are taking the industry blame when in fact the Studios nature of grabbing every dollar possible is the main culprit.

To us, this just put the final nail in the coffin. Research surveys today all point to 2009 as when this issue will settle. Well if the disc manufactures are already looking to alternatives business models in generating new revenue, looks like more than just consumers have lost interest in the subject…..

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