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China to develop its own DVD format

China has announced plans to develop its own next-generation DVD standard to avoid paying heavy foreign licensing fees.
/ Source: The Associated Press

For the second time in two years, China has announced plans to develop its own next-generation DVD standard to break the monopoly of foreign companies and avoid paying heavy licensing fees.

If successful, the move could add a new wrinkle to the battle between HD DVD and the competing Blu-ray Disc formats over which will become the dominant new DVD standard.

The official Xinhua News Agency said the new standard will be based on but incompatible with HD DVD, which is being promoted by Toshiba Corp. and Universal Studios, as well as Intel Corp. and Microsoft Corp., the leading suppliers of chips and software for most of the world's personal computers.

The Chinese standard, not expected to reach markets until at least 2008, would provide higher definition, better sound and better anti-piracy measures, Xinhua quoted Lu Da, deputy director of the government-affiliated National Disc Engineering Center, as saying earlier this week.

"With such format and related standards," Lu said, "We could have our own voice in the DVD industry."

The announcement marks China's latest attempt to leverage its manufacturing muscle to play by its own terms in the home video market.  Up to 80 percent of DVD players are made in China, but makers have to cough up around 40 percent of the cost of each player to license holders, according to Chinese reports.

China began developing its own DVD standard in 1999, rolling out EVD, or enhanced versatile disc, in November 2003 with a vow to shake off dependence on foreign standards.  Despite strong government backing, the initiative fizzled amid a legal battle between the technology's developer and a consortium of Chinese player manufacturers.  Protoype EVD players were introduced in 2004 but never established a presence in the market.

Xinhua didn't give a name for the new HD DVD-based standard, and it wasn't clear whether it had borrowed technology from the EVD standard.  No directory listing could be obtained for the National Disc Engineering Center on Friday, which was a holiday in China.

HD DVD's backers say they have made inroads with Chinese manufacturers, whose support is vital to quickly deploying the technology at a low price.

Blu-ray is backed by Sony Corp., Apple Computer Inc., Hewlett-Packard Co. and Dell Inc., along with a variety of other tech companies and studios.