The DVD Forum's decision, made at a meeting Tuesday (Feb. 26) in Tokyo, to stick with a red-laser-based scheme but switch to low-bit-rate compression, came only a week after nine of the world's biggest electronics companies agreed to promote a blue-laser-based format for next-generation video and computer optical disks. That format, the Blu-ray Disc, was developed outside the forum, but all nine of the initial backers are forum members.

Looking to avoid what they say would be a costly shift to blue-laser technology, steering committee member Warner Bros. and other content-production companies are behind the new DVD Forum proposal, which uses low-bit-rate encoding technology such as MPEG-4 to cram 9 Gbytes of high-definition video content onto a two-layer DVD. Blu-ray uses MPEG-2 compression, as does the current DVD standard. A single-sided 12-cm Blu-ray Disc would store 27 Gbytes of computer data, record 13 hours of broadcast TV or hold two hours' worth of high-definition video.

Of the 17 companies that sit on the DVD Forum steering committee, 11 approved the low-bit-rate encoding approach. The remaining six — including Matsushita, JVC and Philips — reportedly abstained.

The nine steering committee members backing the Blu-ray Disc are Hitachi, LG Electronics, Matsushita Electric Industrial, Pioneer, Royal Philips Electronics, Samsung Electronics, Sharp, Sony and Thomson Multimedia. Aside from Warner Bros., the other committee members are IBM, Intel, Taiwan's Industrial Technology Research Institute (ITRI), JVC, Mitsubishi, NEC and Toshiba.

It is clear that the DVD Forum did not arrive at its decision this past week without some pain. Sources disagreed not only on what the vote meant but even on what had been decided.

Some sources involved in the developments insisted that they saw no contradictions in pursuing both blue-laser and low-bit-rate approaches. "I don't think it's confusing. It's only natural" to pursue both paths, since both encoding and blue-laser technologies continue to evolve, said Jan Oosterveld, a member of the Philips group management committee responsible for corporate strategy.

Blu-ray is a recording format for real-time interlaced TV programs, including HDTV programming, while low-bit-rate encoding is positioned as a prerecorded HD-DVD playback format for movies, said Chris Buma, program manager for A/V disk recording at Philips. "We don't see Blu-ray as replacing DVD; rather, it complements the next-generation DVD format."

Buma added that the steering committee's decision to go with low-bit-rate encoding — as low as 7 Mbits/second — would not necessarily preclude the use of blue lasers in the future.

Difficult distinctions

But an industry observer who spoke on the condition of anonymity warned that industry efforts to draw distinctions between playback and recording formats, while helping some companies rationalize their technology decisions, might confound consumers seeking to make sense of the new standards. "It all depends on the timing," the source said. If Blu-ray-based recorders come to market sometime next year, consumers will likely expect those recorders to be able to play back a prerecorded Warner Bros. HD-DVD movie disk based on MPEG-4."

The industry thus walks a fine line between advancing DVD performance and fragmenting what to date has been an aggressively robust market for DVD disks and equipment.

The use of blue-laser technology is a natural fit for the many consumer electronics companies worldwide that have already invested heavily in its development. Further, some companies would like to see the use of MPEG-2 compression continue in the new-generation disks to provide continuity with the current DVD standard.

But the world is also full of new ideas for lower-bit-rate encoding, including wavelet, MPEG-4 and such proprietary codecs as Microsoft Corp.'s Corona. The DVD Forum's technical working group has already proved that encoding rates as low as 7 Mbits/s will yield HD video of acceptable quality. And one movie studio executive argued that while MPEG-2 continuity would be desirable, switching to blue-laser technology to achieve it would involve a "very costly" overhaul of disk-manufacturing operations that would jack up the price of DVD disks and equipment to levels unlikely to be accepted in the marketplace.

Philips' Oosterveld declined to discuss blue-laser costs but did acknowledge that the technique "would be far more costly than the current red laser."

Conclusions vary

To complicate matters, while Warner Bros.' low-bit-rate proposal got the nod this week, those who attended the Tuesday meeting apparently came away with varying conclusions about what would be the forum's chosen technology for low-bit-rate encoding.

Some said the steering committee had moved to back MPEG-4. Others asserted that no clear decision had emerged about whether to use MPEG-4 or an improved version of MPEG-2 — MPEG-2 Main Profile @ High Level for HD Encoding — integrated with pre- and post-processing capabilities. Philips demonstrated the latter approach in December at the forum's technical working group meeting.

"We are still in the starting phase," Philips' Buma said about the codec discussions. "We are far from coming to a decision" on a definitive compression scheme.

"We are not interested in a low-bit-rate encoding shootout," said a Japanese senior executive who asked not to be identified. The executive said forum members have seen demos of a number of encoding technologies, including a wavelet-compressed HD-DVD movie. "We want to test further how either MPEG-4 or an improved version of MPEG-2 would eventually fare at 7 Mbits or lower," the source said.

Given the strong representation of consumer electronics companies on the steering committee roster, the door is likely closed to proprietary schemes like Microsoft's Windows Media codec, code-named Corona. The decision will likely boil down to MPEG-4 vs. the souped-up MPEG-2 variant.

Progress continues

Several DVD Forum members said they have been pleasantly surprised, every time the two MPEG standards have been reviewed and compared, to find that both approaches have continued to make marked progress.

"It's remarkable what an increased computational processing power can do to pre- and post-processing of video images," the Japanese executive said of the MPEG-2 version tweaked for high-definition video. "Once you clean up images by filtering before encoding, you can really squeeze a lot onto a disk without changing the fundamental encoding algorithm."

On the other hand, MPEG-4's object-based coding capabilities open the door to the interactive applications for DVD. Object-based coding can also be used to allocate more bits for certain objects — such as a fast-moving object within a frame — thereby improving coding efficiency.

"One can use advanced motion-detection filters for that," said another executive who works for a Japanese consumer electronics company.

Although the first Japanese source said the forum intends to decide on a low-bit-rate scheme within three months, the DVD Forum's tendency to require "further study" before every crucial decision could open the door to the Blu-ray Disc.

Blu-ray prototypes have been demonstrated by Philips, Sony and Panasonic. Licensing for manufacture is expected to start in a couple of months. Although Blu-ray promoters have refused to say when they plan to ship Blu-ray based systems, the first recorders could hit the market next year, some observers said.

Oosterveld, reach this past week, called the recent unveiling of the Blu-ray Disc agreement in Tokyo a "technology announcement."

"Everyone knows that blue-laser technology exists," he said. "We've decided that it's best to announce our technology agreement early on, in order to avoid confusion and speculation." In the meantime, he said, Philips will "continue to focus on promoting our DVD+RW."

The low-bit-rate camp believes its approach will benefit nearly everyone involved in the DVD industry. "Hollywood studios can repurpose their content one more time for HD-DVD, without making a costly investment in brand-new replication equipment based on a blue laser," said a U.S. executive who spoke on the condition of anonymity.

Further, as Chinese companies make strides in DVD players at the expense of Japanese and European companies, the inventors of the DVD standard are seeking ways to protect their margins and differentiate their products from Chinese imports.

The U.S. executive claimed a switch to blue-laser equipment would make advanced players prohibitively costly, whereas a red-laser-based player that could handle both MPEG-4 and MPEG-2 decoding would carry a palatable retail premium of $25 to $50.