Makers of DVD players in China are receiving pressure from representatives of the Movie Picture Expert Group , with industry sources in Taiwan stating China-based makers will need to start paying royalties for use of MPEG2 and MPEG4 patents starting this month. Citing Taiwanese industry sources, DigiTimes.com reports that the royalties will range from US$2.5-4 for each DVD player. The measure could force a number of China-based hardware makers to go out of business, considering that currently a DVD player unit costs as low as US$30-35 for contract manufacturing.

In addition to MPEG royalties, makers of DVD players are required to pay royalties to the 3C and 6C alliances, which means China-based makers will have to pay an average of US$15 in royalties for each DVD player they produce.

The new measure was established in a memorandum recently signed between the U.S MPEG LA and the China Audio Industry Association (CAIA) and the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME).