Bob Stuart: The Prime Meridian Page 3

Now there are hundreds of DualDisc titles. But while this was all happening, the popular thing to do was to download the music, and something almost like the commoditization of music was going on.

Harris: And it took somebody outside the music industry, Apple, to pull that together.

Stuart: Yes. Masterstroke, fantastic. It's improved the sales of music, which is great, but it's done nothing to bring to people's attention the fact that it can sound a lot better than it does. And it sort of turns music into something that you consume on the fly instead of listen to.

Now, I'm not a snob—you can listen to music anywhere you like—but the fact is that what you download from iTunes doesn't sound so great. It doesn't come close to a CD, so it doesn't come close to a high-resolution disc. And it did show something else that I think was a bit disappointing, which is that there is obviously a level which the average consumer is prepared to accept for quality.

The CD specification was laid down by Philips and Sony, and like I said, it wasn't quite good enough. If we'd had the chance, it would have been a lot better at 48kHz than 44.1kHz. If it could have been 20 bits at a 55kHz sampling rate, it would actually have been good enough for ever, in my opinion. In that window, you can fit the things that people can hear. (It doesn't have to be 96kHz/24-bit, but that was a logical choice, given where things were with DVD.) But anyway, the point is that when it came out, CD provided a level of quality that, for the man in the street, was a huge improvement over his LP.

That's where the consumer experience is completely divergent from the readers of hi-fi magazines. The man in the street's idea of an LP is something that's scratched, and ticks and pops and wows and all that stuff, and it's fragile, and it doesn't have random access. The random-access feature of CD and the consistency of what you got off it was good enough. "Why do I want something better than that?"

And then we had pretty much the same thing with DVD—and this has a bearing on the next question. DVD was a radical step up from VCRs—menus, features, skip through the chapters, sound quality was better, picture quality was better. But to expect the bulk of the market to want to take it to the next level is where the challenge was. Because a format can exist only if there are millions and millions of people who want to buy the titles. If you try to limit your market to people who are interested in high resolution only, this is really not a lot of people. You have to turn it into a mainstream format by providing features and benefits that the main public can relate to, like the menu stuff, the pictures and surround sound—everyone can hear that it's better in surround sound, or at least it has that potential—but improving sound quality alone is not going to fly. If DVD-Audio had just been no pictures, two-channel, higher resolution—it's even harder to sell that. And that's where SACD started. You know, better-sounding CD.

So yes, we wanted better audio quality, the music industry wanted a higher-margin product that couldn't be copied, Sony and Philips wanted to replace their royalty stream [from the CD patents]. These are all objectives which don't necessarily line up with what consumers want.

If there hadn't been a war, I think we'd have got a lot further. You'd think the industry would have learned that from Beta and VHS. You'd think they'd have learned it from Elcaset, DCC—there's a long list of things that Philips and Sony were involved in where they got this wrong. They got it right with Compact Cassette. DCC flopped, Elcaset flopped, Beta flopped. But CD was brilliant because it was one standard, at a time when the consumer could adopt it and could see real benefits.

Anyway, now here we go again with HD DVD and Blu-ray. Here we have formats which have been developed partly because the movie houses want to sell the content all over again, and partly because the manufacturers who developed the DVD standard got their lunch taken away by the Chinese, and they want to develop something else that could be profitable for six or eight months before that gets taken away.

But there are all these different objectives being brought to the table. And in just the same way as the music industry said, "Well, in order to make SACD or DVD-Audio sell, we want still pictures and we want menus, we want this, we want that," the [film] studios are saying of these two formats—and the specifications are very similar between HD DVD and Blu-ray—that we have to have all these bells and whistles. Things like, the players have to run Java so we can have animation and games working on the player, multiple streams so it's possible to play a disc and bring in the Icelandic soundtrack across the Internet and have it mixed in the player, or to play a disc back and be able to have alternate endings brought in off the Internet.

All these are kinds of features which, as a player manufacturer, make us think that it's impossible to test it! In fact, at one of the standards meetings I said, "Excuse me, do you think it's possible to have a specification that we can charge more for that has fewer features?" Because most of the consumers are not going to be interested in this. But it's all part of constructing something as a justification for its existence.

Now, high-definition video is better. You can't deny that. But we've shown you today how good standard-definition could be when it's rendered in a high-definition way. And a lot of high-definition content is lower quality than what we can achieve from standard. Plus the fact that although people have display devices that show high definition, they don't always show it very well.

So yes, there is a part of the market in America and Japan that will want high-definition sources. But I'm rather afraid that a large part of Europe will say, "Why do I want this? DVD is so good when I play it on my TV or my plasma, the picture's amazing, so why do I want one of these?" They are particularly not going to want one if there's a format war. Some studios are issuing on Blu-ray, others on HD DVD.

The time this was got right was when DVD came out. Because there was a format war. Do you remember MMCD and SD? They combined because Warren Lieberfarb, who was at that time with Warner, went to the two groups and said, We're terribly sorry, but as a Hollywood group we've decided—and this is something they couldn't do these days, because of anti-trust—that we're not going to make any discs until there is only one standard. And that's really what's needed to happen. At this point somebody should have stood up and said, "Guys. How many times are we going to make the same mistake?" Instead, it's like, "How much money are you going to give my studio to support your format?" I'll probably get hung for that comment, but this is what we suspect happens.

I see this whole process as being highly risky, because in the background, China is developing a high-definition format all its own, and Microsoft has got a format. And by the time these guys have all done fighting, we'll be downloading the movie directly from a satellite or cable or whatever. There will be other methods for obtaining the material.

There's a really interesting survey that was done by one of the studios about why people buy DVDs. It was really trying to find out how important picture quality was and how important sound quality was, on this whole question of "Is there a market for a higher definition than what Joe Public thinks is fabulous? (Which is what he thinks of CD.)" And the answer was that, overridingly, the most important reason to buy a DVD was the movie. It was a film you wanted to watch. Second most important factor: price. Third most important factor: "How many times will I want to watch it? I won't buy if I'm only going to watch it once." Then there's the actors, the producer, and all these things, and then, right down at the bottom, like number 50, is picture quality or sound quality! Is it Dolby or DTS? They couldn't care less.

That doesn't augur well, really. And talking among contemporaries, this is the view that most people are taking. This thing's going to happen, we're all going to wait and see.

And unlike with DVD-Audio and SACD, it's not only the consumers that are going to wait and see, it's the manufacturers and the dealers. We're not coming out with either player on the day the formats launch, and that's very un-Meridian. We were first with [audiophile] CD, we were almost the first with DVD, we had a DVD player within three months of Toshiba, we had a DVD-Audio player well ahead of the pack. Our SACD player remains an issue!

[laughter]

Harris: But there must be some enthusiasts who are still waiting for it.

Stuart: Not really. You know, we just don't get asked for it. The only markets in which SACD really is buoyant are Hong Kong and Holland.

Yes, in HD DVD and Blu-ray, we did our bit. We've attended all these meetings. We've made major improvements in the spec, things like arguing hard for what we call the visually impaired, which is really a way of getting past Hollywood all the navigation features you need to make sure that people who are visually impaired can use the disc, and that you can play back music in any way you want, with or without a screen.

By the way, the 808, our CD player, plays back DVD-Audio discs. You put a DVD-Audio disc in, it will play it back in two channels, no picture. The navigator understands that and goes straight for the content and just plays it back.

But coming back to HD DVD and Blu-ray, we also pushed for having a specification that was a perfect match to music. So they've both got at least 96kHz/24-bit—in the case of HD-DVD, eight channels, and Blu-ray will do the same thing at 192kHz. So you've got really-high-resolution audio. Because I felt that, okay, maybe one of these will succeed, and if it does it's going to eclipse the whole SACD/DVD-Audio thing anyway, because what we're going to end up with is the CD and this new disc. And this new disc will be a carrier for music and a carrier for movies, and it's a unified format.

We really pushed for that—and we managed to get MLP into both specifications. Because my view was that it should be in, but also I hoped—and I still hope—that they might merge, and I wanted to be in both formats so that, when they merged, we would still be in. The specification's there, and that's what we contributed: we've done the encoders. We'll see.

The big thing we've got to work out is how to tell all the people who are loving music and downloading that there's more enjoyment to be had from that music when you listen to it on a good system. That's the audio industry's fundamental problem, because people believe that the download is CD quality. I love the fact that music is so popular; that's a great start. But then to sort of come down to the common denominator, that hi-fi is a speaker that you plug your iPod into...

Everybody can hear good sound, if only they'll stop long enough to listen. They can hear the difference. And once they've heard it, there should be no going back. That's the message that we have to get across. Because the biggest message is that iPod isn't good enough.

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