Separate consortia in Taiwan and China are pecking away at a new DVD format that would enable disk and player manufacturers to evade royalty payments to Japanese, American and European companies, which now have a lock on the technology. They hope to introduce the specification by the end of the year. More than a year ago, China said it was developing a format called Advanced Versatile Disc (AVD) that would be used only in the Greater China region, including Taiwan, Hong Kong and Macau. Some considered it bluster, a ploy by Chinese manufacturers to strike a better deal on royalty payments to the DVD Forum. But the establishment of a Taiwanese consortium now adds greater substance to the threat.

After several months of exploring the feasibility of AVD, 19 Taiwanese companies quietly came together in April to start work on a next-generation standard that would not use the format specified by the DVD Forum as a baseline technology.

The Taiwan standard is being called Enhanced Versatile Disc (EVD) and is basically compatible with China's AVD. The capacity potential is about 1 Gbyte higher than that of today's single-sided, one- and two-layer DVDs. Current red-laser technology will be implemented.

The consensus here is that with the help of Taiwan, China will attempt to repeat an earlier effort in which it developed Super Video CD (SVCD) as a foil to the Video CD format, allowing manufacturers to duck royalty payments to Philips, JVC, Sony and Matsushita. "Mainland China is hoping for a breakthrough," said Wang Shyh-Yeu,the R&D director at disk maker Ritek Corp., which is part of the newly formed EVD consortium. "We hope we can create some patents through this standard but, to be honest, it is very difficult. The compression part is dominated by U.S. and Japanese companies."

An Acer Labs spokesman said, "It is reasonable to believe the Chinese are looking for a way around the patents," but he declined to say whether Acer is working on EVD. Taiwan's largest supplier of DVD chip sets, MediaTek Inc., could not be reached for comment.

Emerging splinter formats such as EVD or AVD are keeping consumer electronics and silicon vendors on their toes. A Philips spokeswoman said, "We do not know how EVD is going to be different from DVD. We have been informed only recently about these developments."

Though details are still sketchy, many industry sources suggested that the new format will offer the Chinese domestic market high-resolution video — some say high definition (HD), others say full D1 video using red-laser technology — in time for the 2008 Olympics in China.

"For a long time now the Chinese government in Beijing has wanted to create [China's own] IP [intellectual property] to balance the flow of DVD royalties," said Didier LeGall, vice president of home media products at LSI Logic Corp. (Milpitas, Calif.). "They have been working on adding HD on a red laser. I think it is appealing because HD is the future, and the Chinese government is very keen to use consumer HD to showcase the 2008 Olympics."

But LeGall cautioned, "The key to any new format and its credibility is the content, and this is the biggest unknown on any HD-DVD format." He added, "You can expect Hollywood to be particularly concerned with the potential HD piracy."

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