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Philips Shops DVD Patents in Time for Product Debut

September 20, 1996|From Bloomberg Business News

NEW YORK — Philips Electronics said Thursday that it has agreed to license digital videodisc patents for several of the companies that had a hand in inventing the technology, clearing the way for DVD to debut in time for holiday shopping.

The Dutch electronics company will act as a one-stop-shop for the DVD patents it holds as well as patents held by Sony Corp., Toshiba Corp. and Matsushita Electric Industrial Co. It will split the royalties according to a preset formula.

The remaining six of the 10 inventing companies have either decided to license their patents independently or have yet to make a decision.

Philips made the announcement during a panel discussion on the future of DVD at the Interactive Multimedia Assn. Exposition in New York.

The high-capacity compact disc can store massive amounts of computer data, cinema-quality movies and video games. The consumer electronics industry, which has suffered from a lack of new products, is counting on DVD to rekindle interest in consumer electronics.

Pioneer Electronic Corp., the Japanese company that introduced the laser videodisc and a holder of patents for DVD, intends to license its patents independently, said Mike Fidler, senior vice president of new technology at Pioneer's U.S. arm.

The Japanese company intends to sell a $999 DVD player that will play both laserdisc and DVDs. It also will sell basic DVD players starting at $599. Both products are slated to go on sale in December.

Thomson Consumer Electronics has decided to license its patents independently as well.

In the last few days, two manufacturers outside the DVD consortium have announced their intention to begin manufacturing the discs.

Victor Co. of Japan will begin DVD production in April through its JVC Disc America Co. subsidiary in Sacramento and Tuscaloosa, Ala. The Japanese company expects to make 600,000 discs a month. JVC said it will start to take orders this month and ship sample discs by November.

Nimbus CD International Inc., based in Charlottesville, Va., said it is ready to begin manufacturing and has the capacity to make up to 3.5 million DVDs a year. The company has no orders yet.

"We wanted to get into the market early so we are ready for the mass-volume market when it happens," said Lyndon J. Faulkner, president and chief executive of the CD manufacturer. "DVD is technically more difficult to produce than a CD."

Manufacturers sell CDs for about $1. DVDs will cost about $2, Faulkner said.

The DVD group has yet to resolve disputes over how to protect the discs from piracy, but a solution is in sight, Fidler said. Executives met in Burbank on Thursday to hash out the remaining obstacles. Hollywood studios have hesitated to put their movies on DVD for fear of piracy. Copies of a digital recording remain true to the original, no matter how many times they are copied.

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