Chapter 645 – The era of two formats
All the companies had agreed to Feng Yu’s demands, and Feng Yu would naturally give them some benefits. If not, no other companies would want to cooperate with Feng Yu in the future. If all these companies were to withdraw from the DVD Forum together, then each of them only has to compensate 40 million USD. If these companies go all out for revenge against Wind and Rain Electronics, Toshiba and Sony will benefit from it.
“From next month onwards, the authorization fees for the VCD will be lowered by 50%, and in the future, the fees will be lowered by 5 USD every year.” Feng Yu announced.
Even if the authorization fees were lowered by half, it was still 25 USD per unit, and the companies had to pay Feng Yu for the next 5 years. Actually, these companies will not need to pay Feng Yu for the next 5 years, DVD will replace VCD players within the next 3 years.
This condition seems beneficial to these companies, but it was useless. Feng Yu had announced the reduction of the authorization fees by half and every year onwards, it will reduce further, what else could these companies say? Reduce further? Why not ask for the authorization fees to be waived? But which idiot would agree to this?
If these companies made this demand, that shows they lack sincerity to cooperate.
These companies could only accept this announcement, but some Japanese companies were not happy. They made another demand. The VCD player prices cannot be lowered anymore this year. If it was reduced further, then all of them will have not profits and might even lose money.
Now, their profits for every VCD players after the reduction of authorization fees was about 20 USD. It was considered very low.
Feng Yu agreed. He was also not willing to let the VCD player prices drop further as it will affect his profits too. He also needs these people to help him introduce his DVD standards. Also, he only agrees to maintain the prices for this year. He could reduce the rates after this year if he wants.
Also, Feng Yu’s current primary focus was Super VCD players. The profits from Super VCD players were several times of VCD players, and it was selling well. The second-generation of Super VCD players should be out next year, and VCD players will be obsolete soon.
If Feng Yu wanted to teach these companies a lesson, he could lower the prices of Super VCD players. These companies will surely vomit blood!
But now was not the time. Sony and the other companies were still going strong.
When the DVD Forum managed to attract, more than 30 world’s biggest consumer electronics to join and set up their headquarters in China, Sony, and the rest panic.
Why didn’t they receive the invitation for this DVD Forum? They were some of the biggest consumer electronics companies in the world. Which company was the organizer of this Forum?
The headquarters was set in China’s Hefei? That means it was Wind and Rain Electronics that started this organization. This small company thinks they can be the leader with those two patented technologies? Are those companies stupid? Why would they join this organization?
When Sony and the rest of the companies saw the list of members that joined this forum, they realized Microsoft and Tata were also included. What has the DVD got to do with software companies? Why were they getting involved?
Although Sony and the rest of the companies do not want to admit, after these companies formed the DVD Forum, they were isolated.
There were 3 types of DVD encoding formats and 5 specifications. DVD+R/RW was from Wind and Rain Electronics. DVD-R/RW was introduced by Pioneer and Toshiba’s format was DVD-RAM. RW was still in the theory stage, and it was still being developed, while RAM will be replaced by ROM in the future.
Actually, AIWA company was still developing DVD-Audio. After DVD audio optic drive, Wind and Rain Electronics had been researching on DVD-video. These technologies were still in the development stage and could not be introduced to the market yet.
So, DVD+R, DVD-R, and DVD-RAM were the formats in the industry, and it was a race for the companies to make their format the industry standard. At first, DVD+R was the weakest, and it had the least companies supporting this format. Toshiba’s RAM format had the most supporters.
But now, everything was changed. DVD+R will become the mainstream format, and the other two formats will slowly lose their support.
These opposing companies were already in an alliance against Wind and Rain Electronics. They were leading at first, but suddenly, the tides had changed.
The only solution was for the two companies to cooperate and introduce only one type of format. If not, they will be beaten by Wind and Rain Electronics.
But here’s the problem. Which format should they use as the industry standards?
Both parties had to work together, but for this cooperation to work out, it must be fair. Both companies were big companies and had good technologies. There was no reason to give up their own format to support another company.
So, Toshiba, Sony, Pioneer, HP, and the rest of the companies met up for a discussion. All of them had only one aim. They want the other parties to give in and support their format.
These companies understood that if they were to go on their own ways, they would fail. If they cooperate, they will be able to resist against Wind and Rain Electronics. The party who give in will fail.
Toshiba and Sony were working together, and Sony had a large disc production facility. Also, Toshiba was one of the shareholders of Warner Bros., and Sony owns Columbia Pictures.
Pioneer also has a large disc production facility and had HP’s support. HP was the best in Laser technology. Also, HP was one of the world’s top PC company and needed the DVD drive.
Both parties started negotiating. This cooperation must be finalized fast as both parties need to decide on the format and standard to rival those companies in the DVD Forum.
In the end, HP gave in under the condition that the DVD drive technology must be authorized to them for free. Pioneer had no other choice.
To prevent being kick out of the game, Pioneer could only agree to introduce DVD-RAM format and give up on introducing DVD-R. But Pioneer will carry on its R&D on DVD-R.
These companies had come to a conclusion and decided to follow the DVD Forum. They will also set up an alliance of companies and name this alliance as DVD Alliance. These few companies used their connections to invite the rest of the consumer electronics companies to join this alliance. They will work together to develop this technology and fight against DVD Forum.
But the majority of the big companies had joined the DVD Forum. They could only invite some second-rate companies. However, they still managed to set up this alliance.
After the DVD Alliance was set up, they immediately announced that they will continue to research and introduce DVD-RAM format. They also claimed that DVD-RAM was the best format in the industry, and the DVD+R format was not as good as theirs.
DVD Forum immediately retorted. There was a comparison between both formats. DVD+R storage was 2.8G, and DVD-RAM’s storage was only 2.58G. It was clear, which was a better format!
But these figures were derived from theories and experimental labs. It still could not be mass produced. Both parties’ technologies were still not completed. The format that was more popular with the consumers will be the leading the pack and will be the most profitable in the future.
So, the DVD industry had entered a two formats era.