Certainly Panasonic wouldn’t be dumping Blu-Ray for HDi, I think they’re just looking to add value to their DVD fleet.

Has Panasonic made some statement relative to HDi?

I use it at Gizmo Lovers, and I know TiVo Blog and Zatz Not Funny both use it too. These are the plug-ins I’m currently using: http://www.gizmolovers.com/plugins/

The problem with HD content streaming is, as I said, quality. VUDU effectively streams it. They use P2P-style transfers to download the data once you start watching the movie. Their trick for instant access is they cache the first X minutes of all the movies on the local disc, so you start watching the local cache while it scrambles to backfill the movie. They use H.264 and require 4Mbps download speeds for real-time access, otherwise it fails over to a download-and-then-watch system. But side-by-side comparisons shows that VUDU’s quality suffers compared to other options, and can’t hold a candle to HD DVD or BD. In some cases it is hard to see an advantage over an upscaled DVD.

So you really have to consider 4Mbps bitrates as the bare minimum, and really you need higher bitrates for better quality. Apple and MS save some space by using 720p instead of 1080p encoded content, which is one sacrifice right there. And even though they user a download then watch model, and generally higher bitrates, they still compress their content several times more than HD DVD or BD with the corresponding loss of quality.

For the HDi download system to catch on it will need to offer a sufficient advantage over DVD, or people are just going to stick with the DVD. So you can’t compromise too much, or an upscaling DVD player becomes a decent option instead. Conversely you’re not going to match HD DVD, let along BD, on bitrate. Definitely not on streaming, not for many years, and even on a download-then-watch model it would result in downloads that could take upwards of 10 hours per each hour of content for most broadband users. That’s not viable either, clearly.

So you’d have to find some balance between having enough of a quality improvement to make it worth while while not taking so long to download as to be impractical.

On the studio side, you have to give the studios some incentive to adopt the new standard. They’re already making DVD and BD. So their option is to add a third spec, this DVD 2.0, or to replace DVD with DVD 2.0.

Adding DVD 2.0 as a third spec brings a lot of costs with it – another production line, another SKU to handle, another standard to author to (even if it can reuse some of the DVD work), etc. The benefit would be being able to continue selling DVD cheaply without raising the price to cover for the additional work of DVD 2.0.

If they replace DVD with DVD 2.0 then they stick with two lines and two SKUs, but then they have the choice of raising DVD prices in an already depressed and competitive market, or sucking up the costs and hoping that the ‘value-add’ increases sales organically to help offset them

The latter option would be better for the format because it would Trojan Horse the DVD 2.0 tech into the market. If users have the option of buying DVD or a slightly more expensive DVD 2.0 (or a still more expensive BD) then you have a chicken and egg problem. Most users will balk at buying the higher priced disc without having a player to use the features, but they’d also balk at buying a new DVD 2.0 player if there isn’t enough content to use in it. If by buying a ‘DVD’ they just so happen to be buying DVD 2.0 as well, then eventually more people will opt to get a player to take advantage of their collection.

Though a disc-based download solution does sound a lot like DIVX (the disc, not the codec). With DIVX you bought the disc but paid for access to the content on the disc, and it had to check with the mothership each time. With DVD 2.0 you’d buy the disc which would give you access to the content on the mothership which it would have to check with each time.

And you lose the convenience of a pure-play download service. I use Amazon Unbox on my TiVo semi-regularly, even though it is SD, because it is convenient. Point and click and I have a download that I can watch in a short time. I don’t have to wait for the disc to come in the mail, or pay retail pricing to buy it locally. (I do buy Blu-ray discs too, but that’s a different kind of purchase, not an impulse buy like Unbox.)

So if this HDi download system were setup, I would foresee it *very* quickly fracturing just like DIVX did. DIVX ended up with ‘Silver’ and ‘Gold’ levels, on top of the basic DIVX. Where you could buy permanent access to a title, etc.

Once you have the downloadable content anyway, why not offer it as a pure-play pay-to-download service without the need to buy the disc in the first place? It’d certainly increase your potential sales.

Maybe THAT is what MS is looking at – such a system could be a two-pronged attack on BD. First you come out with ‘Advanced’ versions of DVD to slow BD adoption, then you use it as a way to train users to download content to help kickstart the industry and kill off media entirely in the long run.

I like seeing Chris’s ideas about where the formats can go, and while I have a different opinion I don’t think attacking Chris is the best way to convey that. :-) I know, that’s pretty shocking on the Internet these days, especially if you frequent the comments on the likes of Engadget or Gizmodo. (Don’t get me wrong, I enjoy both sites, but a lot of the commentors seem to lack… finesse, to put it politely.)

When things are in working groups, they can change at a moment’s notice… that means we have to bring up just about every hypothetical situation to get a full view. It’s really a matter of what hypotheticals you think are more likely than the others.

For example, I think it’s very likely that DVD will emerge as an HD format of its own when HDi gets added onto it. I can’t speak for others, but I can certainly see why many think it’s a long shot for the format. However, DVD doesn’t really have much to lose, and it would win over buyers like me that demand backwards compatibility, alongside HD quality video.

The real problem though aren’t these formats… it’s the DMCA. Everyone in Congress agrees that I should be able to take my HD DVD and put it on my iPhone, or burn it to Blu-Ray, or make a copy that will work in my older DVD player. Legally however, nobody is allowed to make the tools to do that right now… despite fair use rights clearly saying I should be able to.

Congress must pass the 2007 Fair Use Act and amend it to allow for clearly defined personal placeshifting protections.

Chris – have you hired Megazone yet? If not, why not?