Toshiba's SD-W1001 DVD-RAM player and disks. © Toshiba.

Failed Formats Aren't Such A Bad Thing After All
Unless you've had a garage sale recently, you probably have some relic of abandoned standards sitting idle somewhere around your house. Got a Betamax tape player? A last-generation Mac or IBM compatible? A CD-I or 3DO player? A DAT tape machine? If you have children, you almost certainly have a disused Nintendo SNES or Sega system sitting around. (For a complete list of dead formats and their frightening consequences, see archeological chart). Surprisingly, it is those abandoned cart games that have provided the new marketing model for the consumer electronics industry.

As formats came and went, the consumer electronics industry was casting about for "economic models" that allow them to launch and develop platforms with a degree of economic comfort. They seem to have found that model in the gaming industry. As Sony PlayStation and Nintendo 64 went though the roof, consumer electronics executives began to realize that consumers would tolerate new standards if they were launched with enough sizzle. Both George Harrison of Nintendo, and Gretchen Eichinger of Sega bluntly assessed the ideal life cycle of a gaming platform at five to six years at the most recent E3 Expo in Atlanta. Sony's Phil Harrison came closest to the issue when he hinted that "this notion of life cycles is as much the industry's self-imposed issue as the consumer's own desire to buy the latest, greatest thing."

This "self-imposed issue" is even more apparent in the computer industry, where the obsolescence of products is down in the range of two to three years. "Intel aggressively funds projects that require better processing power," inventor Bing McCoy reminds us. "They think about what applications will have an appetite for performance." A new corporate ethos is growing increasingly comfortable with adopting and dumping standards in shorter and shorter cycles. The famous doubling of computing power every 18 months is not just a marvel of technology; it's a marvel of consumer swindling.

In this environment, the industry has decided to launch DVD, knowing full well that the format, as presently configured, might well have only a five or six year life span. Actually, the current DVD format may last only a year or two, thanks to the introduction of a new DVD format: DIVX.

Stage Three: Just When You Thought It Was Safe To Return To Circuit City...
DIVX is a recently announced new standard of DVD sponsored by the electronics retail chain store Circuit City, due out some time next year. It offers some distinct advantages for the large studios who have been hesitant to step into the business; it's designed to discourage piracy. The list of copy protection reads like that of the new $100 US bill: watermarking, encrypting, and analog copy protection. Indeed, the cost for this new DVD format will set you back one of those tough-to-counterfeit bills on top of the cost of the current set-top boxes.

But wait, there's more. Much, much, much more. DIVX will enable consumers to rent movies by buying a disc, which they can play for 48 hours, then it expires. Want to watch it again? The machine will modem up the company and charge a credit card account for an additional fee. Wanna buy it? Charge by modem and watch it as many times as wanted. DIVX discs will not play on current "open" DVD players.

Confused? Many industry analysts think consumers will be, but DIVX is confident they'll catch on. "Consumers are smart," waxes Mary Lou Hotsko of Bender, Goldman & Helper, the publicity firm for DIVX. "Once the product is explained, they'll get it." Actually, it's a paradigm that long-time computer users would understand immediately. "It's basically the same as shareware on a disc," says Judy Anderson, executive director of the Optical Video Disc Association. "I loved my experience with being able to buy a program over the phone that was already in my computer as without having to go back to the store or download." The studios also love all this protection and the ability to sell directly to the public; more than half of them have signed on.