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SACD, DVD-Audio Square Off At Hi-Fi `99

Hi-Fi `99 became a staging ground for the launch of the rival Super Audio CD (SACD) and DVD-Audio formats, which are headed for near-simultaneous fall introductions in the U.S.

During the Chicago trade/consumer show, Sony announced an October U.S. debut and a $5,000 price tag for the industry’s first SACD player, a two-channel model that will be accompanied at launch by 56 titles from three Sony Music and six independent labels.

Meanwhile, as Pioneer demonstrated a prototype DVD-Audio player, Warner Music Group senior VP Jordan Rost expressed confidence during a press luncheon that the first multichannel DVD-Audio/ Video players would be available this fall in the U.S.

Separately, Panasonic announced during its dealer event in Hawaii that its first two DVD-Audio/ Video players would likely arrive in the fall at prices of roughly $1,000. One will be Panasonic-branded, the other Technics-branded. Also during the Panasonic event, Universal Music Group advanced technology president Lawrence Kenswil, said the label would support DVD-Audio’s launch with about 15-20 titles.

Even though the incompatible formats seem on track for near-simultaneous launches in the U.S., some industry executives played down the potential negative impact on sales. “It’s not VHS versus Beta,” said Telarc president Robert Woods, whose company is one of six independent labels supporting the SACD launch with software. “It’s nothing to make a universal player to play all this stuff,” he said during a Sony/Philips-hosted press conference.

Nonetheless, Sony senior VP Mike Fidler noted that SACD’s launch will be more challenging than the launch of CD almost two decades ago. “The environment is complicated by the introduction of two music formats and [comes at a time when] packaged media faces challenges from network media,” he said.

In other developments at the show:

Bose demonstrated new Lifestyle home theater systems, its first to incorporate Dolby Digital and a Bose-proprietary technology that derives five discrete channels from mono, stereo and Dolby Pro Logic sources. Three existing systems have been upgraded with the technologies at no price increase. Prices range from $2,000 to about $3,000.

Polk unveiled an integrated Dolby Digital home theater system, the $2,699-suggested-retail RMDS-1. It’s due in late July or early August and is targeted to performance-oriented consumers who seek a space-saving solution that’s easy to operate and connect.

(Additional details on these and other introductions will appear in the next issue.)

The show’s final attendance figures weren’t available at press time, but fewer trade attendees appeared to turn out for this year’s edition compared to last year’s.

At this year’s event, Philips-owned Marantz also showed an SACD player, although it didn’t demonstrate it. An SACD player of its own design and construction would probably follow Sony’s into the market later in the year, “but it’s not set in concrete,” said Marantz marketing director Mark Stein.

For its part, Philips said it hasn’t decided whether a Philips-branded component SACD player will be marketed in the U.S., given that the company isn’t a major factor here in the component business. But SACD will “eventually” appear in Philips’ audio systems, said new-business development director Paul Reynolds, and “it’s very possible to include” SACD in a DVD-Video player.

For now, both Sony and Marantz plan to market an SACD-only player, and one Sony executive said the price tag and audiophile construction of Sony’s model is intended to convince the opinion-leading audiophile community of SACD’s sonic superiority over DVD-Audio.

Sony’s player and first SACD discs will be two-channel versions, said Sony senior VP Mike Fidler, “because the market for high-quality audio is two-channel,” but he also noted that recording-industry infrastructure based on SACD’s underlying Direct Stream Digital (DSD) technology “probably won’t be available until next year, probably late next year.”

Sony executives also pointed out that the same model is being shipped in May in Japan, which is predominantly a two-channel market.

By late next year, said Telarc’s Woods, multichannel SACD discs and players will probably be available. For now, however, two-channel discs will be shipped in the fall by independent labels Audioquest, Delos, DMP, Mobile Fidelity, Telarc and Waterlily Acoustics. Sony Music’s Columbia, Epic and Sony Classical labels will join them.

“We started recording our first multichannel recordings this year,” Woods noted, but even though Telarc has multichannel masters, “we can’t edit them yet” until DSD-based editing gear is ready.

The introduction of DVD-Audio recording infrastructure is not so problematic. DVD-Audio is based on pulse-code modulation (PCM), the same technology used in CDs, and as a result, “PCM is a more natural evolution for studios to upgrade,” Warner’s Rost said.

The first SACD titles will consist largely of jazz, classical and blues titles but will include Billy Joel’s 52nd Street. Most of the 16 titles supplied by the independent labels, Sony said, will be backward-compatible hybrid discs featuring a separate CD-audio layer readable by existing CD players.

The first Sony Music discs, however, will not be hybrids. Sony’s software arm, which plans to deliver 10 to 12 discs per month after the initial launch, said it is still evaluating the use of hybrid discs, whose production costs were said by Philips to be significantly higher than the cost of making SACD-only discs.

Philips’ Reynolds said that to support SACD’s launch, his company has begun pressing hybrid discs for music labels, but he is “confident” other disc-manufacturing companies will jump in within a year as Philips learns how to bring production costs down. “We’re working like hell to get price out as an issue” and “we’re making rapid progress.”

Philips will share the expertise it learns with other disc makers, he said, stressing that “[manufacturing] price is a small percentage of street price” and that “we’re making rapid progress.”

Although Sony Music didn’t announce disc prices, Telarc’s Woods said his discs, all of them hybrids, will probably retail for about $24.95 but will drop sometime later to $19.95. That compares to the $16.95 and $17.95 retail prices of Telarc’s existing CDs.

DVD-Audio software pricing will depend on a number of factors, Warner’s Rost said during the show. But he noted that “$24.95 doesn’t seem like a crazy price” given that high-end CD software retails for about as much.

Adding a Dolby Digital 5.1 program to DVD-Audio discs for backward-compatibility with existing DVD-Video players “is an attractive idea,” he added. Although Rost said he wasn’t sure whether the first wave of discs would include Dolby Digital, a Dolby spokesman said, “It’s our belief it will happen in the first wave.”

All of the big five music companies except for Sony Music will support DVD-Audio’s launch, and even Sony has said it would eventually market DVD-Audio discs. But except for Sony Music, four of the big five are withholding support of the SACD format until Sony and Philips develop a copy-control regimen to complement its anti-counterfeiting technologies.

Through the use of physical and invisible watermarks, “[high-volume] piracy is well-covered,” Philips’ Reynolds said. SACD’s copy-control provisions “are close to finalization,” he added.

Until then, SACD machines will lack digital outputs capable of passing a digital SACD signal or SACD signals downconverted to CD-audio quality. A standard digital output, however, will pass through CD signals from a hybrid disc’s CD layer and from standard CDs playing in the machine.

Sony will market its SACD player through ES series dealers, who operate about 500 storefronts, said Sony’s Fidler. Advertising and promotion plans will be announced later this year but won’t be as broad-based as last year’s MiniDisc promotions because of the product’s focused customer base and more limited distribution. Fidler also said he expects SACD hardware dealers will stock SACD software at launch, joining select music retailers.

DVD-Audio’s launch, on the other hand, seems poised for a broader rollout, given planned price points starting at around $1,000 for models that play DVD-Audio and DVD-Video discs.

“I’m very confident the first players will be in the U.S. and probably Japan in the fall,” said Warner’s Rost, who expects an early-summer selection of one of about five watermarking technologies being tested. Sales in Europe will probably start in early 2000, he said.

Pioneer product specialist Carl Tierney said the company is still hoping for a fourth-quarter introduction. But companies such as Samsung, Toshiba and Onkyo have said their U.S. launches are more likely to occur early next year.