Let’s start with a bit about the DVD Association, just to get a little history about it and how you became involved.
The DVD Association (DVDA) was originally the Compact Disc Interactive Association (CDIA). The mission is
to help to promote the development and usage of the various different formats of this particular kind of technology.
So for many years we were the early advocates for DVD production and we had seminars and presentations on
how to wrangle the new technology, etc. And we’ve been doing the same since the advent of HD DVD and
Blu-ray a couple years ago.
I got involved with the DVDA around 2000. I was originally a member of their advisory board, because of the
number of years that I had spent as a DVD trainer. That started for me in 1999, I was one of the first DVD authoring trainers for the Sonic Solutions platform – DVD Creator and DVD Fusion – which were a couple of the first readily available, inexpensive (if you want to call them that) authoring systems priced under $250,000. I stayed with Sonic for a while and then migrated to the Astarte program, Astarte DV Director, for which I did the first training session in the US, and that eventually became DVD Studio Pro One.
What are the topics currently at the top of the list in regard to the DVD industry?
Well, DVD’s not dead. We’re still always discussing ways to more efficiently, more effectively, and more interestingly produce content using the DVD format. But many people who are publishing on optical disc have become accustomed to and quite comfortable with authoring and publishing on DVD. There’s far less mystery, these days, so there’s less of a need for us to be evangelizing and demystifying, if you will.
A lot of what our mission has been in the last couple years, then, has just been to acknowledge great use of the DVD format through our DVDA excellence awards. And we also encourage the understanding, experimenting, and publishing with what was originally the HD DVD format and the Blu-Ray format. Since HD DVD is no longer with us, we’re working on encouraging production in the Blu-ray format and trying to find solutions to the financial and licensing difficulties that currently exist for independent producers, who make up a lot of our membership.
Let’s talk about these fees. Where do these fees go and what is the reason for them?
The reason for the fees? No one is in a position to absorb the costs involved with the administrative overhead of licensing. There are two sets of fees. First, there are those involved with BDA (Blu-ray Disc Association) licenses, which are content provider and content producer licenses that allow for the use of the Blu-ray logo. The AACS (Advanced Access Content System) licenses, which are specific licenses mandated by the BDA, require that all replicated Blu-ray ROM discs carry AACS content encryption to prevent piracy. So there are two sets of licenses, and two sets of fees, which make life twice the fun.
Let’s deal with AACS, because a lot of people are very confused about why it is so expensive. Let’s look at a typical independent publisher, for example. You would first need to acquire a licensing agreement, which is the signatory relationship between the publisher and the AACS licensing authority, for which they charge a $3,000 fee. It is my understanding that the fee goes to AACS to cover their administrative overhead and their expenses.
The second licensing fee is the issuance on a per-title basis of an AACS title key, which is the actual encryption information that licenses a particular title to a specific publisher, and then allows the replicator to embed the content keys that allow the player to unlock and play the content. The way that Blu-ray players are set up, they must have an AACS key embedded on a replicated disc or they just won’t unlock the content to play, period. So to cover the costs, because the AACS license administration is outsourced from the AACSLA (Advanced Access Content System Licensing Administrator), they charge $1,300 per title certificate. Plus there’s an extra disc royalty, which I think is payable in advance, for the replication run. So for a small producer who’s looking to do a thousand discs, you’re talking about a $3,000 one-time fee, a $1,300 per-title key fee, and maybe a few hundred dollars for the royalty figure per disc. Generally $3,000 is payable to the AACS at the time of signatory of the agreement, and the additional fees are collected by the replicator, since they are a licensed authority acting on behalf of both the AACSLA and the signatory, meaning the author’s last publisher of the content. So it’s a fairly sophisticated and complicated mambo.
And it doesn’t even include the replication fees.
Oh right, that doesn’t even take into consideration whatever the charges are going to be for mastering, to take the master and turn it into actual manufacturing parts for replication of Blu-ray, plus the disc replication fee, yada yada yada.
And the other fees, the BDA fee, for the use of the logo? I hadn’t even heard about that.
Well that’s the one that most people haven’t heard of, but if you do a little research on the BDA, you’ll find that depending on the level of use, there may or may not necessarily be a fee or license obligation. If you’re looking at doing some kind of larger replication run, there may be a need for a $500 or possibly even a $3,000 content provider relationship with the BDA. The contracts and fees and license arrangements are listed on their website. They’re a little opaque in terms of their understandability, but luckily there are some folks like myself and those at E-Media who are deciphering these things and publishing them. That’s part of the confusion that we’re concerned about, because those kinds of fees and that level of uncertainty tends to get publishers to stand in one place rather than aggressively move forward with the format. This is very different than the way things were with DVD.
Is this unprecedented in terms of these fees and these different requirements and regulations?
Not really unprecedented, because there were similar kinds of content protection in the DVD form. However, the content protection schemes were different, and the licensing was not mandatory. That is the biggest difference between everything that’s gone on before and now. With DVD and HD DVD, licensing was optional, where with Blu-ray, the AACS license is absolutely mandatory on any replicated disc.
The problem is that, unlike DVD where things were brand new and there was absolutely no historical precedent for this new optical disc manufacturing technology – other than possibly CD manufacturing – we now have 10 years or more of people being familiar with the format and formulas for publishing on DVD. Now there is a different set of requirements in place to enable you to publish on Blu-ray, and people who are familiar with DVD are going, “What? A license? Money?” So the problem that it generates is either people slow down or stop their plans to publish on Blu-ray, hoping that things will change and get easier and cheaper, or they don’t bother to publish on Blu-ray at all and look around at other formats.
Currently there are three ways to get stuff out there: DVD, Blu-ray, and online. But we’ll see what happens, in terms of how much the online option gets involved in the equation.
Is there any indication that these fees are going to go away in time?
I don’t see how you can underwrite an entirely separate administrative entity with no fees. The concept of their being reduced is possible, and I would make the argument that this is a chicken and egg syndrome. Do you wait for the number of publishers to increase to the point where you can afford to charge lower fees, or are you confident that if you reduce the fees now, more people will publish and you’ll make up the difference in volume?
I am of the opinion that should the license fees be reduced, it would spur a flood of production, and they’d make their money. Our surveys generally indicate there are two reasons why people are reticent to go into Blu-ray production. One is the complexity of the licensing process, which we sincerely believe can be made far simpler, and two is the sheer expense of the licensing process. I believe if steps were taken to reduce the cost and make the licensing more streamlined and less opaque, people would sign on in greater numbers, and the number of people signing on would greatly offset whatever the potential loss of revenue would be to the AACS, the licensing authority, and the BDA.
I guess it also translates to sales of the Blu-ray players.
Exactly. The more titles we have out there, the more publishers that play, the more impetus there is to buy a Blu-ray player, because the greater odds that there’s something out there on Blu-ray that you really gotta see! At some point you combine that with the price reductions that we’re seeing little by little on Blu-ray players, and bada-bing! You get that critical mass.
From hearing you speak, it appears you see Blu-ray sticking around and that it’s going to grow. Is that how you feel?
Nobody knows. It’s here, and there are rosy predictions being made for it on the part of manufacturers and those following the Hollywood angle. Let’s not forget, Hollywood primed the pump on the DVD side of things, but it was the large number of independent producers who jumped on board and said “me too!” that got us to 93,000+ titles that are currently available on DVD. I don’t know if Hollywood on its own wants to, or can, put out enough titles to support the consumer market without help from independent producers.
I think the biggest casualty so far is Hollywood is the sole engine driving Blu-ray at this point. Many of the people that we talk to who are our members or our potential members in the DVDA are saying, “I can’t play because I’ve got to invest all my profits in to these licensing fees before I even can afford to pay for the disc.” Blu-ray could have a very significant penetration if it were easier to use and easier to publish on. And by easier I mean both cheaper and less complex in terms of licensing.
It seems like a very confusing time for both producers and consumers.
Part of the complexity that consumers are faced with is right now there are currently three different profiles of Blu-ray players out there, at various price points. If you say to a typical consumer, “You should buy a Blu-ray player!” then probably the question that you’re going to get back is, “Which one” or “How can I afford it? They’re all still too expensive.” The problem is that the ones that have come down in price, for the most part, are the earlier profiles – Profile 1.0 and Profile 1.1 – which are not necessarily upgradeable to the full BD Live experience, which is Profile 2.0.
So the consumer is now uncertain about which version player they need to buy. Does anyone want an earlier version Blu-ray player that can’t deliver everything the format promises? But all the profile 2.0 players out there are more expensive, and in some cases significantly more expensive, than the earlier players that retailers are trying to stimulate sales with.
So, consumers have to find out what player to buy and balance that against what they can afford. And then there are the other peripherals that are required. You need to have a widescreen TV that looks really good, otherwise what’s the point of having a Blu-ray player? Plus if you haven’t upgraded your sound system, you probably need to be at least in a 5.1 system, if not in a 7.1 system, and all that adds to the cost of having a Blu-ray environment. It’s not as simple as just buying a DVD player.
Then producers have to decide “How are we going to put this content out?” With more and more possibilities come more and more complexities on the side of the producer.
You mentioned online as the third model. Is that a distant third at this point?
It depends. I think that there are some things for which online makes a lot of sense, and there are some things for which online doesn’t. Content that is easy to download, meaning shorter content, is clearly right for online distribution because it doesn’t take very long for you to connect, download, and consume. There’s also the question of the methods that we have now for downloading – I think the Apple TV and whatever PC corollary devices there are are sort of the bridge technology between putting a full sized high quality movie out online versus on optical disc.
Unless you’re trapped in an airplane at 35,000 feet, I don’t see a lot of people who are going to want to whip out their iPhone and watch a feature film sideways, you know? So again, what publishing method gets used is not only a question of just the absolute value of who you can reach and how easily you can reach them, but it’s also what are you publishing? Clearly for a feature film, and for high quality television or film entertainment, having the bandwidth and quality on an optical disc is generally preferable to trying to do it online.
There’s plenty in the news about the effect piracy is having on sales. Do you think it’s that big a problem that it needs to be addressed with this mandatory licensing?
With the advent of the peer to peer sharing, the issue has become great. And also the issue has become great in terms of the piracy of optical discs as well. DVD piracy is a serious issue and they are still busting optical disc pirates all around the world. So there is no question that revenue is being siphoned away from the rightful owners of the rights. As long as there is a way to create copies of something that somebody owns and make money selling it, there will be incentive for pirates. The trick is to make the pricing of the product so incredibly incentivized that it’s easy to own that you discourage consumers from buying pirated goods as opposed to legitimate goods. That’s a tricky equation that everyone has been struggling with.
The licensing and the content protection schemes which were made mandatory in Blu-ray were made mandatory because they – I’m guessing, but I’m pretty sure that this is accurate – did not feel that the content protection would be sufficient if the players were disengaged from the content protection scheme. I believe the Blu-ray Association felt, and perhaps the studios that make up the Blu-ray Association felt, that it would be easier to police and enforce the content protection if the players were an active part of the solution by always looking for AACS. Now the replicators can be brought into it, because they are not allowed to replicate unless they have a valid AACS signatory who is requesting a valid AACS title key certificate, so now replicators are part of the enforcement. It’s like the more people you involve in the process, the more secure the content is.
Interested in learning more about the DVDA? Check them out online at http://www.dvda.org/
Bruce Nazarian is an award-winning DVD Producer and Author, a globe-trotting DVD consultant, and the Webmaster of the DVDAssociation. He specializes in digital media production and consulting for video, audio, DVD and the Web. Formerly President of Gnome Digital Media, he is currently CEO of Digital Media Consulting Group, Inc., his DVD and media production company in Las Vegas, and webmaster of his personal DVD info site, www.Recipe4DVD.com.
Let’s start with a bit about the DVD Association, just to get a little history about it and how you became involved.
