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Toshiba Reaffirms Its HD-DVD Strategy

Despite saying that the company continues to discuss a possible unification of rival high-definition optical disc formats, Toshiba’s U.S. marketing executives speaking at the company’s annual line show, here, held to earlier announcements that they will launch the first U.S. HD-DVD player in the fourth quarter.

Jodi Sally, Toshiba’s digital A/V group marketing VP, unveiled to dealers and press an as yet unnamed HD-DVD player, which is slated to retail for “under $1,000” late this year.

The exact feature set of the player have not be finalized, but Sally said the player will playback HD DVDs, DVDs and CDs. High-definition resolution output will include both the 720p and 1,080i formats. Outputs will include HDMI and IEEE-1394, and the first player will support interactivity and Internet connectivity.

For audio, the player will include decoders for both Dolby Digital Plus and DTS HD, she added.

Sally said Toshiba will support the player launch with “an extensive marketing campaign,” involving advertising on television, radio and in print. Additionally, the company will work with key retailers to deliver in-store displays using high-definition monitors.

“Starting in the third quarter we want to start doing some consumer demonstrations at retailers across the country to increase awareness as a prelaunch campaign,” Sally said.

Company executives said Toshiba would like to settle on a unified standard, but it is also critical to launch HD DVD now should an agreement prove impossible.

“In order to avoid the difficulty of having a drop-dead date [for unification], these processes are going on in parallel,” said Mark Knox, a technical consultant on HD DVD to Toshiba. “We are going to continue to develop and deliver HD DVD on time this year. Only at such time as there is a clearly defined, established agreement are we going to change that plan.”

Knox acknowledged that a decision for unification could have a significant impact on Toshiba’s planned investments in its HD-DVD marketing campaign this year, but “even now is the time that we need to be finalizing details. We just returned from the Media Tech show where we affirmed affordability and viability of [disc] production, and we are very excited about bringing HD DVD to market this year.”

Sally identified several factors that are encouraging Toshiba to market its player this year. These include increased penetration of high-definition television sets, the absence of packaged high-definition media in a disc format, and the peaking of the existing DVD market.

In establishing the next disc format, Toshiba felt it critical to keep a disc structure that is compatible with existing DVD discs, enabling today’s DVDs to play on new HD-DVD players.

The HD-DVD player will feature a single objective lens capable of reading both red and blue laser discs, while discs will include intuitive navigation menus for interactivity.

As for disc capacity, a single-layer HD DVD disc will hold 15GB of data, a dual-layer disc will hold 30GB, and a just-announced triple-layer HD-DVD disc will hold 45GB capable of up to 12 hours of HDTV content, Sally said. A new hybrid “flipper” disc will enable storing HD content on one side and SD-DVD content on the other.

Contrary to recent industry rumors, Knox said development of a digital rights management (DRM) system — called AACS — planned for the player “is on track and won’t delay the planned launch.”

The DRM system, Knox said, is based on device identification keys and watermarks, which Hollywood Studios will be able to use to prevent future software releases from playing back on machines that have been used to hack copyrighted HD-DVD discs. The device revocation capability has proven very popular with content rights holders, Knox said.

Also on track are previously announced plans for HD-DVD movies to support the player’s launch. Present at the line show was Steve Nickerson, former Toshiba executive who is now Warner Home Video’s (WHV) market management senior VP.

Nickerson said his company will have a sampling of titles ready to support various HD-DVD disc versions, including HD movies only, hybrid discs containing both HD and SD versions of a movie on one disc, and discs with HD and/or SD movies with interactive extras, such as video games. However, WHV has not determined which titles will be used for the hybrid or interactive discs. Pricing has not been determined, but a premium for HD discs versus current DVDs should be expected, he said.