The Future of HD video.

Here's an interesting article on the hidden costs of using Blu Ray DVD. I think the future for small producers and their clients lies a mix of good old vanilla DVD and HD of the Internet. Boxes like AppleTV will be much more important in the years to come:

"Notes on Blu-Ray DVD Costs and Competition

In January, the battle between HD-DVD and Blu-Ray was finally decided in favor of Blu-Ray. We've been covering this in detail for the last couple of months on the BuZZ with regular reports from both Philip Hodgetts and Bruce Nazarian.

However, from the point of view of smaller producers, the best format may not have won. Well, more specifically, the least expensive format did not win.

I recently published a article on my website that's relevant to this point, and then after that you'll find an update.

In a recent conversation with Bruce Nazarian, president of the DVD Association, during The BuZZ podcast (www.digitalproductionbuzz.com), we were discussing the sudden shift toward Blu-Ray DVDs. While Blu-Ray may be good for Hollywood, it won't be good for small independent producers. This is due to all the hidden fees tacked on to replicating a Blu-Ray DVD.

For example, producers of industrial and non-broadcast content are required to pay a $2,500 licensing fee to author and distribute Blu-Ray. [This is updated, see below.]

Then, each producer is required to pay a $3,000 one-time AACS license fee, plus a per-title fee for EACH replicated Blu-Ray disc. Currently, Sony DADC is quoting that fee at $1,585 per title (per complete Blu-ray disc project).

Then there's the per disc replication cost, which varies by quantity, and finally, there's a $0.04 per disc fee for AACS and $0.01 per disc if you want SONY DADC to administer the payments to AACS on your behalf.

As Bruce indicates, we may be standardizing on Blu-Ray, but the prices won't be cheap.

That article sparked a lot of discussion, especially regarding licensing fees for Blu-Ray. I received several emails from readers pointing out that Blu-Ray has a lower-cost licensing program. So, I did some more homework and discovered that while that is true, it's only a part of the story.

Here's the update.

Several people have pointed out Blu-Ray's logo licensing program (http://www.blu-raydisc.info/faq.php) has a reduced fee of either $3,000 or $500, paid annually.

However, Blu-Ray duplication or replication requires using AACS (http://www.aacsla.com/support/). So, while Blu-Ray costs can be reduced for small runs, AACS fees still apply.

Further complicating this issue is a recent research report (http://www.macworld.com/article/132232/2008/02/bluray.html) from Gartner and iSuppli which indicates that Blu-Ray may not be successful in the market place, because consumers may choose to download high-definition content from the web.

Additionally, recent conversations with Apple, covered in either the BuZZ or Edit Well, have indicated that Apple views digital downloads with much more interest than the creation of optical media.

So, while the format wars between HD-DVD and Blu-Ray are over, Blu-Ray is not yet priced attractively for the independent producer. As well, the entire issue may be moot if a viable financial mechanism appears that allows the independent producer to make money on downloads. For example, currently iTunes is more accessible for the larger studios, not in providing distribution opportunities for independents.

Depending how this plays out over the next year, Blu-Ray DVDs may yet become a non-issue."