THE NEW YORK TIMES
Sony
Set to Exert Influence on Discs
By KEN BELSON and ANDREW ROSS SORKIN
The
transition to the new discs, which are not expected to be widely available
until next year at the earliest, could generate billions of dollars in
royalties to the developers of the technology that runs them. Sony, as part
of the Blu-ray Disc Association, a consortium of major electronics makers, is
at the forefront of efforts to develop the new technological standard. As a
major consumer electronics company, Sony could also reap the benefits of
selling the new generation of disc players the new format would require.
Sony's success in the standards battle is far from certain, because the rival
HD DVD group, led by Toshiba
and NEC, is championing its own format. By
buying MGM's studio and its library of movies, industry experts say, Sony is
trying to tilt the long fight over the new DVD format in its direction. Both
consortiums say their new discs will hold four to five times more digital
video and audio data than the DVD currently on the market, enough to store
the high-definition programs and films that are slowly making their way to
the consumer market. The HD
DVD group, which is showing off its technology to The key
to resolving the tug of war between the two groups, experts say, will depend
on the But
with the exception of Sony's movie division, which includes the "It
further tips scales that were already tipped toward Blu-ray," said Ross
Rubin, a consumer electronics analyst at the NPD Group. Executives
close to Sony said that bolstering its position in the battle of DVD formats
was one of several important factors in its decision to pursue MGM. Indeed,
the management of Sony of America helped sell the idea of bidding for MGM to
its Japanese parent in some early internal meetings by promoting "the
Blu-ray angle," the executives said. Still,
the executives noted that the Blu-ray format was "only one reason"
for pursuing a bid for MGM. The executives cited a litany of other financial
and strategic reasons for the deal, including being able to exploit MGM's
films on Sony's other platforms like its PlayStation game consoles and even
its cellphones, which it makes through a joint venture with Ericsson. A
spokeswoman for Sony declined to comment. Sony,
though, faces several risks in buying MGM. By building a large film library,
which makes up an estimated 17 percent of available film titles, Sony could
end up threatening the same studios it is trying to win over to the Blu-ray
group. Sony, intentionally or not, may give the appearance that it is willing
to start producing Blu-ray discs on its own, regardless of what the HD DVD
group does, or what the studios want. The
studios and retailers do not want two formats because that would confuse
consumers, and may mean having to produce two sets of DVD's for each film
release. Sony
"can pose a more credible threat to launch on their own," said Tom
Adams, the president of Adams Media Research in Carmel, Calif. "On the
other hand, Sony of all companies has been badly burned by having new
technologies launched in two formats." Sony was the big loser in the
battle over the video cassette format, with VHS becoming the dominant format
over Sony's Betamax. Indeed,
if the studios sense that Sony and the Blu-ray group is pushing its format
too hard, it may benefit the HD DVD group. The other studios could try to
counter what they see as Sony's growing influence by backing the opposing
format, industry analysts say. A Toshiba spokesman, Keisuke Oomori, said Sony's
acquisition of MGM would not affect the plans of the HD DVD group. The HD DVD
group, he said, has made "substantial progress standardizing our
formats" and is "gaining positive understanding for our format from
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