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Interesting press release from Panasonic, Philips and Sony today (see post #2)

Interesting part

The fees for the new product licenses are US$9.50 for a Blu-ray Disc player and US$14.00 for a Blu-ray Disc recorder. The per disc license fees for Blu-ray Disc will be US$0.11 for a read only disc, US$0.12 for a recordable disc and US$0.15 for a rewritable disc.
meaning

the royalty rates for Blu-ray Disc products are expected to be at least 40% lower than the current cumulative royalty rates
 

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full press release

Tokyo, Feb 25, 2009 - (JCN Newswire) - Panasonic, Philips and Sony are currently working with other Blu-ray Disc patent holders to establish a one-stop-shop license for Blu-ray Disc products. This license, which covers essential patents for Blu-ray Disc, DVD and CD, will be introduced in the middle of this year. The license program will be offered by a new independent licensing company that will be based in the United States with branch offices in Asia, Europe and Latin America. The CEO of the new license company will be Mr. Gerald Rosenthal, former head of IP at IBM and more recently CEO of Open Invention Network.

"By establishing a new licensing entity that offers a single license for Blu-ray Disc products at attractive rates, I am confident that it will foster the growth of the Blu-ray Disc market and serve the interest of all companies participating in this market, be it as licensee or licensor." said Mr. Rosenthal.

The three founding companies believe that the introduction of this simplified one-stop shop product license will stimulate the growth of the market for Blu-ray Disc products. Any holder of essential patents for Blu-ray Disc, DVD and CD patents is invited to join this licensing entity as a licensor and also as shareholder.

The fees for the new product licenses are US$9.50 for a Blu-ray Disc player and US$14.00 for a Blu-ray Disc recorder. The per disc license fees for Blu-ray Disc will be US$0.11 for a read only disc, US$0.12 for a recordable disc and US$0.15 for a rewritable disc. As a result of the efficiencies obtained with the combined license offering, the royalty rates for Blu-ray Disc products are expected to be at least 40% lower than the current cumulative royalty rates for individual Blu-ray Disc, DVD and CD format licenses.

The Blu-ray Disc product licensing program aims to create a level playing field in the market for Blu-ray Disc products by introducing special measures to encourage companies selling Blu-ray Disc products to comply with their license obligations. The program also includes measures to easily identify unlicensed products in the market and a system to address those who may not have obtained proper licenses for Blu-ray Disc products.

In this one-stop-shop product license, the new license company will be a single point of contact for licensees, greatly reducing the burden on licensed companies that would otherwise have to report to multiple patent pools.

Note: "Blu-ray" and "Blu-ray Disc" are trademarks of the Blu-ray Disc Association.
 

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Those rates almost guarantee that Blu-ray products will never be as cheap as DVD products. The licensing fees alone are almost as high as the street price for some comparable DVD items. That will be quite a windfall for the license owners when Blu-ray reaches high sales levels.
 

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emphasis/bolding is mine...
Those rates almost guarantee that Blu-ray products will never be as cheap as DVD products. The licensing fees alone are almost as high as the street price for some comparable DVD items. That will be quite a windfall for the license owners when Blu-ray reaches high sales levels.
What numbers are you referring to ScaryBob? Are DVD players really out there @ $9.50 USD? Movies at 11 cents?

That said, this change probably won't translate to much of a price drop for consumers. Assuming a 40% drop, previous license costs for a "read only" BD were about 18 cents. A drop is nice and all, but a 7 cent drop isn't going to make much difference on items that usually retail over $30. Assuming I'm reading that press release correctly...
 

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The way I understand it, this announcement has nothing to do with BD movies.

It is an attempt to make BD disc the mainstream optical media, i.e. replace DVDs.
Most of the BD license fees (as a physical format) go to Sony and are probably shared with the other two members of the 3C group, just like DVDs licenses go mostly to Toshiba today.

Since the group is talking about all three optical formats, they would have to offer incentives to Toshiba to join the pool. That development would be interesting to watch, i.e. does Toshiba share 3C fears about optical disc demise...

Other licenses (three video codecs, audio codecs, DRM, etc.) needed to produce a BD movie, come on top of that and are shared between a much larger pool of patent holders, i.e. deliver less to the bottom line.

I believe the popularity of driveless players like PCH, WD HD, etc. is worrying Sony. They are set to lose the most when/if harddrive/network/flash playback is gaining ground.
 

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Perhaps you've got the right read on it, but where does "US$0.11 for a read only disc" come into play if this doesn't include movies?
 

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What numbers are you referring to ScaryBob?
US$14.00 for a Blu-ray Disc recorder
I can buy a DVD recorder for about US$20. A US$14.00 license fee will translate into a significantly more expensive BD recorder price. The BD licensing fee will likely be paid at the manufacturing level with markup at each distribution channel.

US$0.12 for a recordable disc and US$0.15 for a rewritable disc
A quick search reveals DVD-Rs selling for about US$0.20 each. If manufacturers' costs are inflated by US$0.12 each, I can't see BD discs getting anywhere close.

I also cannot see BD players reaching the current DVD player US$30-US$50 price point if manufacturers are whacked with a US$9.50 player fee. That is likely more than it costs to manufacture most DVD players. Even if the fees don't match street prices (as I stated) they certainly meet or exceed manufacturing costs and/or wholesale costs for some similar DVD items. There is no reason to expect that manufacturing costs for BD products will not fall to the level of DVD products fairly rapidly. The "Sony tax" will just as certainly keep retail costs unnecessarily high.
 

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...but where does "US$0.11 for a read only disc" come into play if this doesn't include movies?
Replication business. PS3 games. AVCHD content. New applications.

At the moment the license payment structure is not only complicated, it isn't even complete.
For example, very recently AACS license payments were not set yet (maybe still) but eventually they will and would have to be paid back (most probably). Heck, the AACS license isn't finalized and won't as long as it's broken. And that might be forever. A mess...

Sony wants to trigger an avalanche of price dropping.
A BD replication line costs in the millions and are installed a dozen a year or so. If demand e.g. doubles, the price will go down.
The same applies to drives, PC or otherwise (and that will increase royalty payments for blue laser diodes, a market Sony still essentially controls).

But the main goal is to extend BD's life as a physical format.
Just imagine what it will cost Sony to keep doing it themselves (for PS3) if it is abandoned by the industry for movies/storage.

This initiative isn't designed to make you a favor. It is offered to survive in this tough market that most likely will get tougher.
 

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Most of the 3-tier brand dvd player, they dun play the license fee at all. That's why they can sell so cheap.
 
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