What’s the format, Kenneth?

Memory Lane

When the first wave of DVD players was introduced in 1997, the machines cost close to $1,000, and there were only 36 movies released by Hollywood studios in the new format. Until August of that year, you could buy them only in seven big cities.
Ten years later, when members of the international DVD Forum gathered in Tokyo for the group’s annual meeting, they had much to cheer about. More than 5 billion DVD discs were shipped in 2006 alone (1.7 billion of them in the U.S.), and manufacturers had sold another 110 million DVD players last year.

Today in the U.S., as broadband media distributors introduce inventive new approaches for getting commercial-free movies in front of movie fans – on-demand cable TV and Internet-delivered downloads come to mind – the sturdy DVD continues to get in the way of seemingly more agile technologies. The DVD-by-mail provider Netflix Inc. improved its revenue by 46 percent in its last fiscal year, to nearly $1 billion, and ended 2006 with 6.3 million subscribers – up 51 percent over 2005. Those are not exactly the sorts of numbers that signal the decline of a technology.

Credit for the remarkable run of the DVD goes to an unusually collegial – or at least unusually conciliatory – effort among consumer electronics companies to define key specifications. In the early 1990s, there were two rival approaches being developed for high-density optical storage: the Multimedia Compact Disc supported by Philips and Sony, and an alternative Super Density disc format championed by Toshiba, Pioneer, Thomson and others. Avoiding the brutalizing format wars between the Betamax and VHS videotape formats that occurred in the 1980s would require a consensus on a single standard, which is precisely what occurred in 1995 when Philips and Sony retreated on their favored format and agreed to rally around the Super Density alternative, with a few modifications. Some strong-arming and cajoling by former IBM chief Louis Gerstner helped inch the accord along.

The DVD format for storing and playing movies, video games and other entertainment content became astonishingly popular very quickly, with DVD players outselling VCRs by 2001. The willingness of a broad spectrum of consumer electronics rivals to support a common format is a big reason for the rapid uptake.

The same can’t be said, unfortunately, for the latest incarnation of DVD technology, which has left buyers in a techno-quandary over warring and incompatible formats associated with high-definition optical disc formats. The Blu-ray vs. HD-DVD battle, however, is hardly alone in the annals of media history. Format wars have been plentiful along the media technology continuum, tracing back to the Thomas Edison era. It was Edison who insisted on mass-marketing a tin cylinder as a vessel to store recorded music beginning in 1877. Yet within 10 years an alternative emerged – a disk that slightly compromised sound quality, but took up less space and was cheaper. Edison finally bowed to reality in the early 1900s after it became clear disks had established clear market supremacy.
Decades later, a format war erupted in the audio tape category, as the now-laughable 8-track vied for consumer favor over slimmer, more agile cassettes. Here again, the two approaches were altogether incompatible: 8-track cartridges wouldn’t play in cassette players, and cassettes wouldn’t play in 8-track machines.

Probably the most notorious of the format wars – the one that left the deepest economic scars on the consumer electronics industry – was the VHS vs. Betamax rivalry of the 1970s and early 1980s. Few argued that Sony’s Betamax was inferior in quality to the VHS format adopted by a cross-section of rival manufacturers. Yet scale manufacturing and superior availability of content in the VHS format ultimately doomed Sony’s sleek machine.

It’s tempting to think costly lessons of the past have diminished the possibility of new format wars erupting, but the current incompatibility between the high-definition DVD formats suggests otherwise. So do a handful of other notable format rivalries, including the brouhaha over ultra-wideband networking platforms. Heated arguments surrounded each of the contenders for a standard to succeed Wi-Fi, and an IEEE working group gave up in 2006 after its members failed to adopt a unified approach.

DVD backers early in the 1990s offered up a handy formula for getting to consensus on format standards: consider alternative viewpoints, understand that rising-tides really do lift most boats, and keep in focus the interests of consumers. Those are principles today’s technology strategists might want to remember. Especially since hiring Lou Gerstner out of retirement is probably out of the question.


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