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Apple Computer enters DVD war
The maker of iPod and personal computers comes out in support of Blu-ray DVD format.
March 10, 2005: 2:54 PM EST
By Krysten Crawford, CNN/Money staff writer

NEW YORK (CNN/Money) - The battle over high-definition DVDs heated up Thursday with the announcement that Apple Computer has joined a leading group backing a disc format known as Blu-ray.

The announcement by the Blu-ray Disc Association that Apple (Research) has become a board member is significant. The developers of Blu-ray, which include Sony Corporation (Research) and Panasonic, are locked in a fierce tug-of-war with the creators of a rival format that Toshiba (Research) and NEC (Research) are developing called HD DVD.

The new DVDs will be used to store not just movies, but also music, video games, digital photos and other data.

Apple, the maker of the popular iPod portable music player as well as personal computers, is a potent player in the entertainment and technology industries.

Neither of the competing DVD formats is available yet in the U.S. But the battle to become the high-definition standard is unnerving the entertainment industry, which has seen DVD sales skyrocket in recent years and fears a repeat of the epic war between Betamax and VHS two decades ago. That fight divided the budding market for home videos and is widely believed to have slowed the industry's growth.

With the U.S. market for DVD sales and rentals approaching $25 billion, the last thing Hollywood or any entertainment company wants is to confuse consumers and force them to make a choice between two formats.

The odds of a format war are rising fast. Toshiba plans to release its first HD DVD player in December and the Blu-ray crowd is scheduled to roll out its system in early 2006. Entertainment companies are expected to begin selling DVDs in either format at the same time.

Analysts don't expect consumers to start buying high-def DVD players and discs en masse until 2007.

The main reason for the slow start: cost. For consumers to watch a movie in high-def will require both a high-def television set as well as new DVD player and disc. That's because today's DVD players will not be able to play the new high-def discs (although the new players will be able to play today's DVDs and CDs.).

Toshiba claims its initial HD DVD player will be priced at less than $1,000 and Blu-ray creators plan to compete on price. It's not yet known what movie studios will charge for a high-def DVDs, although a decline in existing DVD prices and the prospect of charging more for the next generation is one reason Hollywood is eager for a new format.

Opinions as to which DVD version is better vary among analysts and within the entertainment and technology industries. Both promise better safeguards against piracy, which is a top priority now for movie studios. And both offer significantly more storage capacity than today's DVDs, with Blu-ray offering up to 50 gigabytes and HD DVD promising as much as 25 gigabytes. By way of comparison, current DVDs contain about 5 gigabytes of storage.

Analysts, however, say that HD DVD is an easier and cheaper technology to make, but that Blu-ray's ability to hold more memory is more promising in the long run.

Both camps have lined up powerful supporters. The Blu-ray team, which has spent years and an estimated $1.2 billion developing the technology, has won the backing of Hewlett-Packard (Research), Samsung, Electronic Arts (Research) and now Apple. The major movie studios behind Blu-ray include Walt Disney and Sony Pictures.

The HD DVD side has fewer technology companies behind it, but more Hollywood studios. Among its top supporters are Paramount, Universal, Warner Bros. and New Line. Warner Bros. and New Line, along with CNN/Money, are owned by Time Warner (Research).  Top of page


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