In a surprise move, Paramount and DreamWorks Animation announced this week that they would align themselves exclusively with the HD DVD high-definition format. The controversial decision has attracted a lot of attention, and not just because it comes at a time when market indicators have been pointing to competitor Blu-ray Disc as having the lead (disc sales have been running 2-1 in Blu-ray's favor).
Rumors have swirled since the news broke, suggesting that Paramount and DreamWorks are being heavily compensated for their exclusivity pact--to the tune of $50 million and $100 million, respectively. A Paramount spokesperson says only: " ... whenever we conduct co-marketing, production deals, or other agreements, we never discuss business terms."
If this exclusivity arrangement holds for the long-haul--Paramount executive Alan Bell (see below) says it's "indefinite" at this time--it represents a setback to consumers trying to move up to high-definition content. Now, the available pool of studio content will be more split between Blu-ray (backed by Sony, Fox, Disney, MGM, Lionsgate, and Warner) and HD DVD (backed by Universal, Warner, and now Paramount).
And it means that when you're investing in hardware, you'll need to think hard about what format to buy: DreamWorks' "Shrek" movies, for example, will be available only HD DVD, while Disney's "Cars" and "Sleeping Beauty" will be available only on Blu-ray.
I don't doubt that some level of financial incentive made the HD DVD a good business decision for Paramount and DreamWorks. But according to Alan Bell, executive vice president and chief technology officer for Paramount Pictures, there's more to the change in allegiance than either a mere abandonment of Blu-ray's higher-capacity advantage or pure business dealings.
Here's some background from Bell about the recent news.
PCW: Presumably, making this move wasn't something you did lightly. What led up to the decision to shift your production exclusively to HD DVD?
Bell: Paramount has been getting experience with publishing titles in both formats for the last year. We've had a hands-on ability to see how these formats work in practice. And after some hands-on analysis, we decided that HD DVD was the format we wanted to support.
PCW: Why was that?
Bell: For one thing, the lower prices of the players: It's good for consumers, it's good for our customer base.
For another thing, HD DVD came out of the DVD Forum. The DVD Forum is very experienced at developing and managing specs. [HD DVD] was launched in a very stable way, with stable specifications, and they had specified a reference player model, so all players had to be compatible with the HDi interactivity layer, and all players had to be capable of the interactivity. So when we publish titles in the future that have interactivity, we can be assured that every HD DVD player will be able to handle this content.
PCW: So, as a studio, you believe that the underlying stability of HD DVD's specs is a benefit?
Bell: When you look at what the DVD Forum has specified as required, it's a good set of advanced technologies. You can be assured that that benefit will be available to all consumers, no matter what [player] model they purchased. That speaks to the DVD Forum, that it published specs that were complete and market-ready, and that it didn't need to publish up [and change the specs], as Blu-ray has. To some degree, [such changes are] going to create some legacy issues.
For example, HD DVD players have [ethernet] connectivity built-in. If the player doesn't have that, or it's optional, you can't rely on that [as a feature].
PCW: Didn't we see the same thing with DVD players, though, where some features were mandatory and others weren't?
Bell: When you have a format, you generally have mandatory requirements on players, and you sometimes have optional features. On DVD, Dolby Digital 5.1 was mandatory, but DTS 5.1 was optional. But that meant that when you published a title, you never really knew how many customers had players that supported the feature you were adding to the disc at some cost. On HD DVD, the mandatory audio technologies are Dolby Digital, Dolby Digital Plus, and Dolby TrueHD. [For more details, see an explanation of the differences among the various Dolby technologies.]
PCW: Over time, though, DTS became a de facto standard on DVD players. Don't you expect to see the same thing happen over time with Blu-ray's specs, such as the requirements for storage and interactivity via an ethernet connection? [Paramount's decision comes ahead of Blu-ray's new minimum specs, which go into effect for players sold after October 31.]
Bell: Eventually, that's true, but right now we have early adopters and enthusiasts [buying players]. If you do migrate the spec and your options are not included on the early players, these are the very people you leave behind. They're our most valuable customers in launching a new format, and you want to make sure that what they buy continues to represent the best of the format.
PCW: What about the additional capacity of Blu-ray, which has 50GB dual-layer discs, as opposed to HD DVD's 30GB dual-layer discs? Some studios have cited the additional capacity as necessary. Are you going to miss having the extra headroom?
Bell: This is a little bit overrated. Making a choice like the one Paramount has made is a multifaceted choice: It depends upon manufacturability, the reliability of players, the cost, the infrastructure that's developed to support our creation of titles. Many different factors came into play--including capacity. When Paramount made this decision, we considered the broad spectrum.
If everything else were equal, more capacity would be better. Why not?
But if you convert the playing time, a 30GB disc gives you somewhere between 3 and 4 hours of capacity. It depends upon the nature of the movie and how you compress it. There's no compromise on the quality. We've found that 95 percent of movies are less than 2.25 hours long. With a disc whose capacity is 3 or 4 hours, you can put a fair amount of bonus material on that disc as well. So 30GB with the option to add another disc is fine, from our point of view.
PCW: What if the multiple soundtracks and high-definition bonus materials won't fit on a single disc?
Bell: If there's an overflow of bonus material, we'll just go to another disc. That's not an issue for consumers. In some cases, they consider that it has more value. It's done routinely in DVD. Why put every single title on a high-capacity disc if it doesn't need it?
PCW: Do you expect capacity needs to change in the future?
Bell: A 45GB disc is under development. [Editors' note: This disc has been in development for two years; at this time, its unclear whether current players will be able to read this disc once it becomes part of the HD DVD spec.] Secondly, compression will become more effective. The number of minutes you get on a disc depends upon how much you can compress a movie. As we gain experience with the new codecs, the ability to compress at high quality will be improved.
Capacity is a factor, but it's not an overriding factor. In the grand scheme of things, the better proposition for consumers in our view, and for our business needs, is HD DVD.
PCW: From your first-hand experiences, what can you tell us about the difference in programming languages between HD DVD, which uses Microsoft's HDi technology, and Blu-ray, which uses BD-Java?
Bell: BD-Java is a programming language. The benefit is that it's very flexible. The drawback is that you may need 100 lines of BD-Java code. HDi is a relatively compact piece of code; one command can cover quite a bit of interactivity.
BD-Java is also more complex, so the possibility of errors is greater. And when BD players are put out, [there's the question of whether] they all support the scenarios as coded up from the low level. [Some of the early problems with BD-Java discs] were in part due to the complexity that BD-Java brings. From our point of view, HDi offers all of the flexibility we need, in practice, and it does so in a more simplified way and in a way that we feel leads to better compatibility, better reliability, and lower costs.
PCW: Up until now, how have you approached coding your discs for HDi and BD-Java?
Bell: At this particular point in time, we've been able to supply more features with HDi and HD DVD than with BD-Java and Blu-ray Disc. What we have typically done in practice is that we've created the interactive scenarios in HD DVD and then tried to pull them into Blu-ray. But that has not been entirely possible: Some things we can do in HDi are not supported in BD-Java. If you're going to do BD-Java, you need someone who's capable of programming at a low level. With HDi, you don't need somebody with that additional level of training. We don't need programmers to code our discs.
PCW: Do you think users are interested in the interactivity on these discs?
Bell: Interactivity is an important part of why you would move up from DVD. Yes, [high-def] has a great picture, but is that enough? Connectivity is something that studios will grow into, and it's something that we believe studios will grow into.
We're thinking about [having media servers to provide extra content via the Internet], but those kinds of investments cost money. The motivation to do them grows as the installed base grows. If we see there's a sufficiently large installed base to justify the cost of the server, we'll do it. Right now we're concentrating on getting a great picture out, and great interactivity.
PCW: Will this exclusive period extend for a limited time, or is this an indefinite arrangement?
Bell: At this moment in time, it's an indefinite commitment. The core of this announcement comes from our experience, and what our consumers are looking for. We hope this will influence consumers' choices.
This story, "Paramount's CTO on Why His Studio Is Dumping Blu-ray" was originally published by PCWorld.