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HD VMD In-Depth: We Talked to NME's Execs
HD VMD Bundle Box: a Player & 6 Movies
A recent story in trade journal Home Media Magazine was called "Consumers Ready to Embrace HD, If It's Cheaper and a Single Format". It says, "(An) NPD study...found an overwhelming reluctance to buy either a Blu-ray Disc or an HD DVD machine. When asked 'how likely are you to buy a high-definition player in the next six months,' nearly two-thirds of respondents, or 66%, said 'not at all' or 'not likely'...The hesitation, the NPD study revealed, stems from a variety of factors, most notably high player prices (cited as the major deterrent by 72% of respondents)...54% said they intend to hold off buying a player until the format war is resolved."
Does this sound like you, or someone you know?
Since then Sony has introduced a PlayStation 3 (with Spider-Man 3 Blu-ray movie) for $399.99, the lowest-priced Blu-ray Disc player on the market. At the same time, the Toshiba HD-A2 unit has been marked down by many retailers to prices under $200, making it the cheapest HD DVD player right now. AND this past weekend, a couple of retailers temporarily marked it down to $99.99 as a "pre-Black Friday" promotion.
Still, despite the lower costs on HD DVD players, there are far too many complaints from owners that the movies they want aren't in HD DVD format. Last week's release of the Spider-Man Trilogy, this week's Pixar hits Ratatouille and Cars, and next week's Spielberg classic Close Encounters highlight how many titles wanted in hi-def are being made for Blu-ray only. On the other hand, Blu-ray owners are frustrated that they have neither Transformers, Shrek 3 nor The Bourne Trilogy on THEIR format. Obviously both camps are trying to do something about the prices for consumers, but the other complaint - the format war itself - rages on.
Enter New Medium Enterprises. Last month I blogged about NME's new HD VMD system. This is a third format joining the hi-def disc wars, and last time I covered the basics about that format. Since then Gord Lacey (TVShowsOnDVD founder/webmaster) and myself have talked to NME execs Michael Jay Solomon (Chairman of the Board) and Alexandros Potter (Director of U.S. Operations). Solomon's been around the block: he was the co-founder of syndication giant Telepictures Corporation in 1978, and eight years later they bought Lorimar (Dallas, People's Court, Perfect Strangers, etc.). In 1989 Warner Brothers bought out Lorimar-Telepictures, and Solomon became WB's President of International Television for several years. This past August he came on board at NME as their Chairman.
The pair of execs describes NME as a "technology incubator," publicly traded on the OTC, and having been around since 1999. NME purchased the intellectual property that led to HD VMD back in 2004, and they are convinced they have the solution to a single format all studios will support, at prices that the consumer will support. How? The intellectual property they own has led to a process that escaped the folks at Sony and Toshiba. Both had to go to expensive blue laser technology in order to create discs with enough memory room to fit hi-def movies onto a single disc. NME's process allows the same thing, but using the less expensive red laser technology that has been around for years and hence is not only cheaper, but has many times more production lines available than the blue technologies do. "Full High-Definition experience at affordable prices, using current infrastructure" is how the NME execs put it to us.
Room for 1080P resolution using red laser technology? Yep: the secret is in the layers. DVD, HD DVD and Blu-ray Disc all do either one or two layers...and that's it. Toshiba and Sony went to blue laser because they were not able to increase the storage capacity on discs using red laser. Oh, Blu-ray and HD DVD have been able to do more than 2 layers, but only in the lab. Neither of them has found a good way to produce 3 or more layers on a mass-market basis, but NME has. They have a bonding process that allows additional layers on any type of optical disc format, to increase the storage capacity at a lower overall cost. This will let them do 3-layer HD VMD discs right now, on a mass-market basis, using any existing DVD production line with minor retrofitting. By March they will be able to do a 4-layer disc, and it is potentially capable of eventually reaching 6 layers on one side of one disc. And it can be applied to blue laser technology later on, when prices of that technology come down. And HD VMDs will always have 3 or more layers, never fewer.
For such a new technology, how many bad discs are yielded for every 100 correctly produced ones? Solomon and Potter told us there are fewer than 10 failures for each group of 100 VMD platters stamped out, and that this 90%+ yield ratio applies to both 3- and 4-layer HD VMD discs. By comparison, it was rumored that "DVD-18s" ("flipper" DVDs that are dual-layered on both sides) had yields as low as 50% at one point (half the produced discs had to simply be thrown out due to failures). Speaking of that, NME told us there are no plans to do any sort of "flipper" HD VMDs at all in North America. However, India will see the same concept as a flipper (with the film split with a breaking point/intermission), but with the film on two separate "DVD-9" (dual-layer, single-sided discs) instead of a single disc. Per NME, this is a cost-saving measure unique to India, and they do not intend this to happen anywhere else. They're conscious that most viewers don't want to get up in the middle of the film and flip/change a disc. They say that's their main motivator in finding a way to add more layers to red laser-compatible discs. And they remind us that "there are dozens, perhaps hundreds, of DVD/red laser manufacturing lines that can make VMDs right now".
But the main question for USA and Canadian consumers is, "where are the films?" Solomon notes that they really haven't done a "full court press" with the studios yet, to sign them up for releases on the VMD format, but expects to begin discussions in the next few weeks. Solomon's been in content distribution for 35 years; he characterizes his relationship with the studio heads as excellent, and he is planning to discuss VMD content with all North American studio heads, both the majors and independents, during the last half of November. He's aware that some studios present themselves as "exclusive" to one of the existing hi-def formats, but he believes that these studios really don't know VMD yet, and when he shows them NME's system, there is a possibility that they will realize that the number of VMD players planned for manufacture will lead to a strong revenue base much faster than with existing HD formats. NME points out that Blu-ray and HD DVD system prices started out hundreds of dollars higher than they are right now, where VMD models started life at an under-$200 consumer cost, and will go down from there. Film titles are expected to cost $19.99 for most, and maybe a few as high as $29.99...compared to a $30-$40 SRP for most HD DVDs and Blu-ray Discs. NME is going to try to get the studios to see the logic of supporting their system at a fraction of the cost of the existing two systems, and hopefully great things will happen after those meetings occur. No guarantees, they say, but they are very hopeful. If the studios agree with this logic, then they should be able to ramp up on any given VMD release faster than implementing a blue-laser technology disc for the same film.
Of course, one independent studio has already signed up for USA releases: Anthem Pictures in Hollywood has a few titles out on VMD disc format, and has worked with NME on a recently-available HD VMD Bundle Box, which includes a player (value of $189.99) with Anthem films Mother Ghost, 8th Plague, Enigma With A Stigma, Cutting Room, Naked Ape (2000) plus an extra bonus title, Refuge of the Last Resort. Cost for this set is $249.99, sold by NME through Amazon.com's marketplace system (which mostly is transparent compared to standard Amazon orders). And there are roughly a dozen other VMD titles in the US (or Canada) to add on to your library. Bollywood content is ramping up and might see some releases in North America, and NME is working on other releases around the world (on a TV-related note, LazyTown was just announced for VMD release in Scandinavian countries and Iceland, with 12 Episodes in each bundle). They have aggressive plans to pursue acquiring the rights to as many TV products as possible...not only American, but also popular Hispanic titles based on Solomon's experience living in 5 Latin American countries and putting shows on the air in that region.
NME's primary goal, though, is to bring the major blockbuster films to the HD VMD format in the USA. Hopefully, NME says, in the weeks to come there will be positive word about that.
While consumers wait to buy HD VMD-format discs, the player can upconvert existing DVDs to look great on the users' new HDTV sets, which is projected to be in half of the American households by next year. Here's an NME quote from our conversation with them: "Not everyone wants to go out and buy a $300 or $400 or $500-600 player in order to upconvert the quality of their DVDs. This is an HD player for less than $200 that gives the option to upconvert in the highest quality possible. We're talking about native upconversion, since we're using the red laser technology, making these people able to watch their DVDs in better quality. People are going out to buy upconverters these days; it's a very very popular product in the marketplace. We actually cater to this, and some upconverters are the same price as our HD player." So it sounds like NME's tactic is to convince people to buy the VMD system now, upconvert their existing DVD library, and then this will be able to play inexpensive hi-def 1080p VMDs early next year (with a few Anthem titles available right now in the USA).
The HD VMD format handles up to 8 audio tracks, plus subtitle tracks. Bonus material is up to each studio, of course, but it won't include HD DVD-style interactivity at the moment, as current models do not have an online component. NME says that interactivity is something they will work on for the future, and add to existing units with firmware updates, but they feel that the market for that is relatively small, and that most mass market consumers want to "throw in their disc and watch their movie in high quality". On the other hand, a next-gen VMD model, to be announced at next CES, will include IPTV (Internet Protocol Television)) connectivity.
The higher-end 777 model ($209.99) includes a memory card reader slot in the front, for the cards normally used in digital cameras and similar devices, plus it sports a USB port for connecting portable devices such as a hard drive or thumb drive. That means it can read PC file formats and play them back on the big screen (something not all the competition does). The formats the VMD system supports include: MPEG2 including HD profile (MPEG files), MPEG4 H.264 (AVI files), VC1 (WMV files), AC3, Dolby (Audio CD files, WAV files) and MP3 (MP3 Files).
We asked NME if they are expecting HD VMD to co-exist with Blu-ray and HD DVD as a companion format, or compete head-to-head with those formats. They responded, "We're looking at a global market; we want to be a global player, and we're for the mass. Just like DVD, we cater to the mass-market because of manufacturability, as well as from pricing. Now, we're talking about global prices, not just dropping prices here in the United States. We have the same price across the board everywhere in the world. This is an affordable solution for people who are going out to buy their new high definition television. They can afford to buy this true HD player, play back their existing DVD library and enjoy high definition at prices comparable to DVD. That is really what we are after. So I don't think we're competing head-to-head with Blu-ray or HD DVD. Their technology is very good, it's a very good technology. However it's not for the mass market today. Not today."
So my buddy Gord also asked them, "To relate it to video games, you're the Nintendo Wii taking on the XBox and the PS3. Right? The Wii has that market: it's got a lower price point, it's using existing technology, and its selling tons of units because of it."
NME's reply? "If you want to make that comparison, yeah. Well...we should be as lucky as to do as well as Nintendo."
James A. Garfield, a U.S. President in the 1800's, was quoted as saying, "a pound of pluck is worth a ton of luck." It sounds like the guys at NME have a ton of pluck. If they have their way, Blu-ray and HD DVD and format wars will soon be a thing of the past, and consumers like you will have the opportunity to get low DVD-style pricing on both players and films, but at 1080p hi-def quality. What's going to happen with those plucky plans? It's up to you, the lucky consumer, of course.
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Nov 7, 2007 7:37 AM
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What decade are we in again? There's a writers' strike going on. Leg warmers are back on the market. The Police and Van Halen are touring. And we've got a format battle going on--only this time it's not VHS and Betamax. Ah to have Marty McFly's DeLorean to go into the future to see which one will win out!
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Nov 7, 2007 8:41 AM
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How is region coding with VMD and old DVDs? Can they convert PAL to NTSC?
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Nov 7, 2007 10:43 AM
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Like HD DVD, there is no region coding on the HD VMD format. And the NTSC/PAL/SECAM video formats don't come into play for high-def. So VMD discs bought in a store overseas will always work in your unit. This may not hold true for DVDs used on the players, though.
On another technical note for HD VMDs, the encryption used for copy protection is based on AES (Advanced Encryption Standard), the same as the AACS copy protection system on DVD is based on. The multi-layer disc structure is also a form of copy protection. A future consideration being worked on is called Optikey, which the NME execs told us uses "embedded sub-micron patches on the disc".
Also, some of our readers have wondered if the HD VMD system will include a built-in method to allow films bought on the format to be "transcoded" (transported) to portable devices like a laptop computer, a video iPod or an Archon, using some form of managed copying so that the feature paid for on VMD won't have to be re-bought through a service like iTunes. NME's response is that they don't have a built-in method to do that, but then neither does DVD, HD DVD or Blu-ray. Similar to those formats, anything along those lines is on a title-by-title basis, and it's up to the studios to decide when and where to use it.
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Nov 7, 2007 10:47 AM
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They make some pretty good points. I mean, no way I'm spending money to buy either hd-dvd or bluray when I won't even be able to get all my shows/movies in whichever one I buy. It's just crazy that studios think people will do that.
Plus, I'm not going to re-purchase all my dvds in hi-def, it's be a complete waste of money.
If these guys can get the studios to go their way, I'll buy this.
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Nov 7, 2007 11:09 AM
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Like HD DVD, there is no region coding on the HD VMD format. And the NTSC/PAL/SECAM video formats don't come into play for high-def. So VMD discs bought in a store overseas will always work in your unit. This may not hold true for DVDs used on the players, though.
WOW. I had no idea. That alone could make it worthwhile to invest in this format. Thanks for asking BradfordCurse and thanks for responding Dave!
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Nov 7, 2007 12:04 PM
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Not interested in HD-DVD, Blu Ray or HD VMD.
No more HD for me. I have an HD cable box, an HD tv and I see everything perfectly clear and fine. There's too much product I'm still waiting for that have been abandoned by studios for regular dvd and tv on dvd because of 'unmet sales expectations.' and that's with a dvd player in nearly every home in the country.
With even less HD players in people's homes, I can't imagine studios coming out with the product people want to support it outside of the big blockbusters and top selling items. And I don't need to replace product I already have just to see things any better than I see them now.
With the economy in such a state of crisis where people are struggling to pay their mortgages so banks don't forclose, companies not raising salaries to meet the rising cost of living, buying an HD player right now is unnecessary excess. And its easy for the studios to push these items -- they make nice comfortable 6 figure salaries and residuals off everything sold. These are the same greedy studios who don't want to share with the writers creating the programs to begin with, hence the current writers strike. Why then should anyone buy into product to put more money into the studios hands when they clearly couldn't care less about anyone but themselves.
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Nov 7, 2007 3:43 PM
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 Right now HD are blu-ray isjust not worth the money. it is very simple, one disc format and one player that will play it all. Just like the DVD's do now!
If you get that, people will buy it. Until then I will keep what I have......It looks good, and works fine....
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Nov 7, 2007 4:56 PM
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I've been waiting to here what the NME folks had to say since Mr. Lamberts first article on the new HD VMD format and I like what they are saying.
I can't see how the studios will be able to say no to supporting this since it gives them a way to sell to more consumers who at the moment don't have the dime to drop on the two higher priced formats we have at this time.
Surely they will see the benefit of having the software pricing at current regular DVD prices.
Not to mention that the VMD player upgrades a persons current DVD library.
I'm in.
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Nov 8, 2007 11:32 PM
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Thanks for the additional info. From the first article, it sounded like a cool technology, but there are lots of cool technologies that never make it. What has raised my hopes is that the people running the company actually have experience -- and more importantly, powerful contacts -- in the content side of the business. A new format is useless if you can't get the studios to release content in that format, but it sounds like they've actually got a shot at convincing the studios.
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Nov 11, 2007 2:10 PM
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