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Billboard

Going Hi-Def

By Jill Kipnis - June 04, 2005

Watching a music performance in high definition does, quite simply, blow you away.

HD concerts?which can be seen on such specialty stations as HDNet and InDemand?offer astonishing visual detail and superb sound, but that's just the tip of the iceberg.

The debut of HD on DVD, scheduled for this fall, will allow for multiple viewing angles and interactive, Web-connected special features that can personalize visual music programming.

Getting involved in HD could prove to be a gold mine for the music business, which has enjoyed a significant windfall in recent years from the DVD explosion.

"HD is an unparalleled opportunity for the music business to really play offense," says Zane Vella, co-founder and president of live-concert production company MX Entertainment.

However, thus far the HD charge has been led by a small number of independents and non-label companies. Eagle Rock Entertainment, Image Entertainment and Clear Channel Entertainment Television have been investing in HD for several years, buying HD equipment to record live concerts and building substantial catalogs of programming for HD TV and HD DVD.

"With new formats, the early market leaders are small companies," says Larry Kenswil, president of Universal's eLabs division. "It's a little like the chicken and the egg. You'd have to start spending on extra production costs and then wait for the demand."

Eagle, Image and CCETV are working with HD programmers to understand their content needs, and will put out HD DVDs as soon as the hardware is set to debut.

Barry Gordon, senior VP of acquisitions for Image, says his company started shooting in HD as soon as the technology was available. "We always believed that having the HD asset would be a value. As an independent, it's inherent to be aggressive."

Kenswil says that the percentage of U.S. households that can access HD programming on TV or will be able to hook up new HD DVD players when they are available is still too small to warrant a major investment.

Currently, HD TV broadcasts are available through select digital cable, satellite and pay-per-view outlets. A handful of network programs and sporting events are available in HD, but viewers must have an HD TV to get the full benefit of the experience.

Still, Gordon embraces the fact that HD programming and products will be geared toward premium customers at first.

Ted Cohen, senior VP of digital development for EMI Music, says his company will usher in HD by working with third parties.

For example, the company partnered with HDNet on a series of HD programs featuring such acts as Yellowcard and Ben Harper. Additionally, EMI will work with Eagle to exploit HD DVD opportunities from its catalog of live performances.

"Joint ventures are more economical for both parties, and we are sharing the risk," he says. "We like to work with people that provide expertise and can get us to market quicker. I don't want to do something expedient that is financially foolhardy."

Jupiter Research reports that 14.5 million homes had HD TVs by the end of 2004. That installed base is projected to grow to 58.4 million in 2008.

The Federal Communications Commission has ruled that full-power TV stations must broadcast in digital by 2007. It has not taken a position on HD TV.

Though labels can convert existing video repertoire to HD, this will not give consumers the best HD can offer. That can only happen when programming is shot with HD cameras.

Mark Cuban, co-founder and chairman/president of HDNet, says labels that consider converting their assets to HD are not taking the consumer experience into account. "Most of this stuff was mastered on tape," he says. "If you master on tape, you can't just up convert it to high definition. It looks like crap."

The cost of shooting programming in HD is considered a huge hindrance to the labels, though many in the industry say this perception is wrong.

"The rumors that high definition is more expensive are completely unfounded," says Steve Sterling, senior VP of CCETV.

Sterling says it costs about $150,000 for an eight-camera HD shoot, including editing. He claims this is comparable to a standard-definition concert shoot.

Further, the cost of digital equipment has considerably dropped.

Andy Parsons, senior VP of advanced product development for Pioneer Electronics, a member of the Blu-ray Disc Assn., says the price of equipment will keep declining. He notes that digital camcorders cost $50,000-$75,000 just a few years ago.

"With HD, you have sub-$5,000 capturing devices out there," Parsons explains. "If you shoot in that medium, it greatly reduces the cost. It's all volume-based, and will reach parity with standard definition."

Universal's Kenswil says that mixing an HD program in surround sound?the most important HD feature for music lovers?"adds thousands."

The current financial squeeze at major labels is making any extra costs prohibitive, HD content developers say.

"Labels are taking a wait-and-see attitude," says Mike Carden, Eagle Rock North America president of operations and executive VP of Eagle Rock Entertainment. "I don't think they have the desire right now to step into this marketplace after going through terrible business climates, though broadcast is an additional stream to monetize the opportunity."

Though labels could license HD programming for broadcast to make up some of the equipment costs, they say that is not part of their business model.

"The record label would probably not originate programming," Kenswil says.

Broadcast licenses for HD programs can be worth $75,000-$200,000, Sterling says.

It's through DVD that most music companies will get really involved with HD. That's because standard-definition DVDs have proved to be big money generators.

The Digital Entertainment Group says that about 73 million U.S. households now have DVD players, and 46% of those owners have more than one player. The DEG expects that more than 80% of U.S. households will have at least one DVD player by the end of the year.

The music DVD category particularly took off with the labels after 2003, when Atlantic Records' "Led Zeppelin DVD" set a record for first-week music DVD sales with 120,000 units, according to Nielsen SoundScan (Billboard, June 14, 2003). The title has sold more than 254,000 units.

Total music DVD sales increased 46% between 2003 and 2004. Last year, the category accounted for sales of 35.9 million units. (This includes stand-alone music DVDs and hybrid CD/DVD packages.) Music DVDs now account for 11%-12% of the total DVD market, according to the DVD Release Report.

Clouding the HD opportunity somewhat is the existence of two competing formats.

Standards are currently being set for the Toshiba-led HD DVD format and for the Sony-led Blu-ray. Both sides have engaged in talks in recent months about coming together to release just one HD DVD format. Neither group would comment about the discussions.

Both formats offer HD picture and audio (though Blu-ray claims to have the higher bit rate at up to 36 megabits per second), advanced copy protection, Internet connectivity and interactive special features.

What distinguishes them is storage capacity, potential manufacturing cost and backward compatability.

HD DVD has 30GB of storage, while Blu-ray offers 25GB (single layer) and 50GB (double layer). HD DVDs can be produced on existing standard-definition DVD manufacturing lines with minimal switchover costs. Blu-ray will require new lines, but developers say costs will be similar to standard DVD production.

Also, HD DVDs can be played on standard DVD players (though new HD players will provide a better experience). Blu-ray discs will require the purchase of a new machine.

Among content owners, the movie studios are having a major say in determining HD standards. Music labels and independent DVD companies have been fairly format-neutral.

"The first preference would be to have one format or have an 'omni player' that plays both formats," EMI's Cohen says. EMI has been submitting recommendations to both DVD groups. Kenswil says his company is a member of both forums. "We participate mainly on the audio standards, which was an afterthought for [standard] DVD," he says. "We're hoping that does not happen to Blu-ray or HD."

For the music world, the key HD concerns are program speed, storage and connectivity.

Speed is important because HD technology will allow viewers to control how they watch concert DVDs through multi-angle features. Consumers will be able to focus on a particular band member whenever they want, allowing for unique viewing experiences.

"The speed that you can move between channels of video really matters," MX's Vella says. "When you press the button and change from the lead singer to the guitar player, that needs to be instant."

Kenswil says consumers might even start posting their own versions of a live concert DVD online.

Increased storage capacity will be a major benefit over standard DVDs, which are increasily being released as multidisc sets to accommodate all the extras that are now available.

"We thought 5GB was good enough in the '90s with DVD," Blu-ray's Parsons says. "We may not know now what kind of applications we will need in eight or 10 years. Music titles will need a lot of bandwidth."

Additionally, connectivity will be critical with music titles because it may lead to sales of other products. Both formats have the capacity to connect to the Internet, but Blu-ray may be better-suited for broadband.

"With Web interactivity," says Jodi Sally, VP of marketing for Toshiba America Consumer Products' digital audiovisual group, "a user may be able to watch a music video, then be directed to the performers' Web site to purchase souvenirs or concert tickets or even more HD DVD music videos."

HD DVD players from Toshiba, NEC, Sanyo and other brands are expected in the United States as early as the fourth quarter, while Blu-ray players are likely to debut in first-quarter 2006. This schedule may change if the single-format discussions prove fruitful.

Toshiba is expected to test the market with a hybrid disc that will have standard DVD on one side and HD DVD on the other.

"A hybrid format is a good approach," EMI's Cohen says. "It's the stealth way of building up titles and doesn't force the consumer to make a choice now. Then, the next player they buy plays the new format."

Next-generation videogame consoles from Sony and Microsoft also will play HD programs, and could be a factor in the developing market.

Studio releases on the HD DVD format from the likes of Paramount Home Entertainment, Universal Studios Home Entertainment and Warner Home Video are supposed to come by the end of the year. Key releases are expected to include Warner's "Batman Begins" and "Charlie and the Chocolate Factory" and Paramount's "Elizabethtown."

Warner and Universal have announced support of hybrid DVD, though they have not stated when they will release titles on the format.

Buena Vista Home Entertainment and Sony Pictures Home Entertainment are expected to release titles on Blu-ray next year.

The music world has been mum on exact titles targeted for HD DVD. The early leaders in HD all say that they plan to have releases available when players enter the marketplace.

Eagle has a library of 30-40 HD titles at the ready, while CCETV has 50-60. Image declined to provide a number.

Price points for the hardware and software have yet to be determined, though there is no question they will be higher than current DVD players and software.

"I'm not convinced that standard DVD households will jump that quick to HD," Image's Gordon says. "Your first level of consumers" will be those that already have HD TVs.

CCETV's Sterling expects that the history of standard DVD will repeat itself with HD DVD. "HD DVDs will take a few more years to really start, but then it will be everything that DVD has done. I think '06 will start the watershed of HD DVD in music. Then in '07, the floodgates will open."

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