Consumers Face Confusing Range Of Dvd Audio Formats

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Technology Analysis Consumers Face Confusing Range of DVD Audio Formats Abstract: As DVD players replace CD players in the living room, new audio formats are emerging. But confusion over whether content is compatible or portable will limit acceptance. We assess five DVD audio formats. By Jon Erensen and Paul O'Donovan Strategic Planning Assumptions Three-quarters of DVD players will be able to play both Windows Media Audio (WMA) and MP3 files by 2006 (0.7 probability). DVD-Audio (DVD-A) or Super Audio CD (SACD) playback capability will be mainly found in highend stand-alone DVD players by 2007 (0.8 probability). In the living room, DVD players will overtake CD players as the most popular consumer electronics platform for playing digital audio content by 2007 (0.9 probability). Recommendations ■ Manufacturers of DVD players should consider making new high-end models compatible with both new DVD-A and SACD formats to penetrate the audiophile market. ■ Manufacturers of DVD chipsets must support the widening range of audio formats for DVD players as soon and as cost-effectively as possible. ■ Supporters of high-resolution DVD audio formats need to be aware that portability of audio content is a key driver in the consumer market. Publication Date:5 September 2003 2 Consumers Face Confusing Range of DVD Audio Formats New Formats Try to Replace the CD It has been over 20 years since Sony and Philips introduced the compact disc (CD). The technology has been widely adopted and is the standard audio format for the recording industry and consumers. This format is also compatible with a large installed base of hardware. The CD format has benefited from the popularity of the DVD player. Many consumers, prompted by the rapid acceptance of home theaters in the United States, have replaced stand-alone CD players in their living rooms with DVD players that can play DVD video and CD audio. In addition to CD audio, DVD players are beginning to incorporate other audio playback capabilities to increase consumer appeal. As the digital audio format war escalates, several audio formats have increased in popularity. These formats fall into two categories: ■ High-resolution, multichannel audio — DVD-Audio (DVD-A) and Super Audio Compact Disc (SACD). ■ High-compression audio — MP3 and Windows Media Audio (WMA). Both familiar vendors and new players are involved in the fray. Some of the technologies, like MP3, are virtually standard on DVD players, while others (DVDA and SACD) that were exclusive to high-end devices are becoming more affordable. One thing remains constant — features continue to be added to DVD players as prices decrease. DVD Audio Playback Formats Compact Disc The CD is the most widely used audio format. All DVD players can play CD audio and it is the standard recording format for all major record labels. But the lack of standard copy protection has brought the CD under increasing scrutiny in the last few years, as sales have begun to decline. Many believe this is linked to physical and online music piracy. CDs typically hold 650MB of data, which is equivalent to 74 minutes of audio. The audio coding method is Pulse Code Modulation (PCM) and supports: a sampling rate of 44.1kHz; a sample size of 16 bits; a dynamic range of 96db; a maximum data rate of 1.4Mbps; and a maximum of two audio channels. In the short term, the CD will remain the dominant audio format because its content is highly portable. Not only can CDs be played on home, car and portable players, but their content can also be "ripped" and stored on a PC, then transferred to portable digital audio players. This practice, which is quite common, also allows people to create CD mixes easily on CD-Recordable (CD-R) or CD-Rewritable (CDRW) media. MP3 MP3 (or MPEG Audio Layer-3) is one format an audio CD can be ripped into. MP3 CDs are compatible with over 90 percent of DVD players on the market. This format was developed by the Fraunhofer Institut Integrierte Schaltungen as the audio subsystem for the Moving Pictures Experts Group (MPEG) video compression system. It can compress an ordinary audio CD by a factor of 12, with minimal loss in sound quality. At a bit rate of 128Kbps, over 12 hours of music can be stored on a single ©2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 5 September 2003 3 CD. The compression relies on a technique called perceptual noise shaping (also known as a "lossy" compression technology). This eliminates sounds that the human ear cannot hear. The format was originally adopted by enthusiasts who wanted to listen to music on their PCs. It has gained in popularity with the take off of file-sharing services like Napster and Kazaa. The MP3 format is not supported by the music industry because of the lack of copy protection and consequent risk of music piracy. But it maintains a strong following because of its compatibility with many multimedia software programs on the PC and consumer electronics devices. Though multimedia programs have made it easier to create MP3 files from standard CDs and manage large collections of MP3 music, it is still a complex process that has not been adopted by the mass market. Consumers use the multimedia programs with a CD-R/RW drive to create standard audio CDs and MP3 CDs on CD-R and CD-RW media. Most CD and DVD players are compatible with CD-R media, and compatibility with CD-RW media is becoming more common. There are also hard drive and flash memory-based digital audio players that support MP3 files. And more and more car audio systems (both new ones and those for the after market) can play MP3 files. The main driver for the MP3 format is portability, while the main inhibitor is lack of support from the record industry. Windows Media Audio WMA is Microsoft's answer to the MP3 format. After MP3, it is the second most popular high-compression format for ripping audio CDs onto PCs. The format is compatible with over 20 percent of DVD players on the market. And this percentage is growing. WMA is closely linked with Windows Media Player and is also compatible with numerous consumer electronics devices and PC multimedia software programs. Because Windows Media Player is a standard part of Microsoft Windows, this format can be played on all Windows-based PCs. The compression technology used to create WMA files is particularly good at encoding music at low bit rates. As with MP3, this is a type of perceptual noise shaping technology. Microsoft claims the technology provides the same quality as MP3, but at half the file size. One main difference to the MP3 format is that WMA has an integrated digital rights management system. This has won it the favor of several subscription-based online music services, which are supported by the recording industry. WMA needs to become compatible with a wider variety of consumer electronics devices to improve format portability. Similar to MP3, WMA files can be burned to a CD and played on compatible CD and DVD players. Many hard drive and flash memory-based digital audio players also support WMA along with MP3. DVD-Audio DVD-A is a high-resolution, multichannel digital audio format endorsed by the DVD Forum, particularly Matsushita Electric Industrial and Toshiba. DVD-A discs are the same size and have the same capacity as standard DVDs. They are compatible with almost a quarter of DVD players on the market, but cannot be played on CD players. Most DVD-A discs have a lower-resolution Dolby Digital or digital theater system (DTS) surround track in the portion of the disc reserved for video. This makes them compatible with DVD-Video players and home theater systems. Though this track is ©2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 5 September 2003 4 Consumers Face Confusing Range of DVD Audio Formats of lower quality than DVD-A, it is higher than that of a standard CD. Dolby Digital and DTS Audio-only discs have been made, but this format is mostly used for DVDVideo discs. To hear the full effect of high-resolution DVD-A you need a DVD-A player and an audio/video receiver with 5.1 channel analog inputs. The sound quality will only be as good as the weakest link in the audio system. Most DVD-A players can also act as DVD-Video players. DVD-A also has TV-based multimedia capabilities that can be stored on the video portion of the disc. These include photo galleries, lyrics, music videos and commentaries by the artist. The DVD-A format has strong copy protection in the form of a Content Protection for Pre-Recorded Media (CPPM) and watermarking technology. Though this cryptography is an important weapon for the recording industry in its battle against piracy, it is a major inhibitor for consumer adoption. This is because the watermark makes it very difficult to take content and render it usable — content cannot be ripped and stored on a PC and so cannot be used to create audio mixes. To get the content onto a PC, users would need a CD version or a downloadable version of the disc in addition to the DVD-A disc, making the process uneconomical and impractical. Similar to the CD, DVD-A is coded using PCM. For two-channel audio it supports a maximum sampling rate of 192kHz and a sample size of 24 bits. For 5.1-channel audio it supports a maximum sampling rate of 96kHz and a sample size of 24 bits. DVD-A discs are capable of storing 4.7GB of data on a single-layer disc, 8.5GB on dual-layer disc and 17GB on a double-sided, dual-layer disc. Storage capacity is enhanced by the Meridian Lossless Packing compression system, which recovers the original signal bit for bit. New markets for DVD-A are opening up. Car audio systems compatible with DVDA will be an option in new, luxurycars in 2003. Whether consumers will value having the benefits of DVD-A format in a car remains to be seen. The format is also beginning to gain support for use on PCs. Though content cannot be stored on the PC, Creative's Audigy2 sound card is compatible with DVD-A and allows content to be played on PCs with a compatible DVD drive. To gain mass-market acceptance, the DVD-A format must increase its compatibility with a wider range of consumer electronic devices, including car audio systems. The format needs stronger support from the major record labels and better consumer awareness about the technology's benefits. Widespread adoption by the recording industry and the ability to place a high-compression/lower-resolution version on the PC for archiving and creating audio mixes would boost acceptance of DVD-A. If these issues are not addressed, DVD-A will have little appeal to anyone other than audiophiles. Super Audio CD SACD is an alternative high-resolution, multichannel audio format to DVD-A developed by Sony and Philips, which is compatible with only 8 percent of DVD players on the market. While there are stand-alone SACD players, most players are combination SACD/DVD-Video players. The market opportunity for stand-alone SACD players will remain limited to audiophiles. SACDs can be standard or hybrid. Standard SACDs are the same size and have the same capacity as standard DVDs. They often contain a high-resolution multichannel and a high-resolution stereo track. Hybrid SACDs (unlike DVD-A) are compatible ©2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 5 September 2003 5 with standard CD players. Standard and hybrid SACDs can be either stereo or multichannel. Because the different types of disc are compatible with different types of hardware, consumers are confused. SACD has strong copy protection in the form of a physical watermark, Pit Signal Processing (PSP). But this, like the effect of CPPM on DVD-A, makes the format difficult to rip or edit on the PC. But CD-compatible content on hybrid SACDs can be ripped into MP3 or WMA formats like a standard CD. Similar to DVD-A, you need a SACD-capable player to hear high-resolution content and, if you want to hear high-resolution multichannel audio, you need a receiver equipped with 5.1 channel analog inputs. As with DVDA, SACD quality will only be as good as the weakest link in the audio system. Sony and Philips developed a different audio coding technology to PCM called Direct Stream Digital. SACD uses 1-bit delta-sigma modulation (where the signal is recorded as a single-bit variation from the previous sample) and a sampling rate of 2.82MHz — 64 times the sampling rate of a CD. SACDs can play at full quality for all channels and will default to the highest level of playback. Manufacturers of SACD plan to move into the car audio market, but DVD-A will have a head start. At present, the SACD format is not supported on the PC. Like DVD-A, SACD needs to become compatible with more DVD players, available content needs to increase and more people need to know of the technology's benefits for it to succeed. Hybrid SACD compatibility with standard CD players is a strong selling point for this format, but as these discs account for only a portion of the SACD market, confusion between different types of SACD will inhibit adoption. Until these issues are resolved, the high-end audiophile market will be the only segment to adopt SACD. Table 1 compares the five DVD audio playback formats. Table 2 shows how compatible these formats are depending on DVD player type. ©2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 5 September 2003 6 Consumers Face Confusing Range of DVD Audio Formats Table 1 DVD Audio Playback Technology Comparison Technology Advantages Disadvantages Comments Compact Disc (CD) CD-Recordable (CD-R) CD-Rewritable (CD-RW) The most widely used audio format. No standard copy protection. The CD will continue to dominate the audio format market in the near future. Large installed base of compatible players. Large audio file sizes limit portability. Supported by all major record labels. MP3 Most PCs can "rip" standard CDs into MP3 format. High compression allows for large amounts of music on a single MP3 CD. Compatible with many consumer electronics devices and PC multimedia software. "Lossy" compression technology.* Lack of support by the music industry. Creating an MP3 is still a complex process for the most users. MP3 will remain the dominant high-compression audio format until the recording industry can gather support for an acceptable alternative. Quality varies with the genre of the music. Compatible with most DVD players. Open standard compression technology. Windows Media Audio (WMA) Near CD quality of sound at low bit rates. Less popular than MP3 for highcompression digital audio. Digital rights management system has gained some acceptance in the recording industry. Digital rights management can limit content portability. Close integration with Windows Media Player and strong support on the PC. Proprietary compression technology. Limited playback on DVD players. WMA will continue to make inroads into the consumer electronics industry. The key for this format is to increase acceptance in the recording industry and with consumer electronics manufacturers. Compatibility with consumer electronics devices is increasing. Most PCs can "rip" standard CDs into WMA format. DVD-Audio (DVD-A) High-resolution digital audio. Lossless compression technology. Multichannel playback. TV-based multimedia content. Most discs have Dolby Digital or DTS versions compatible with standard DVD-Video players. Large amount of content storage on single disc. Not compatible with standard CD players. Cannot be "ripped" and managed on the PC. Needs a DVD-A or compatible video player for high-resolution sound. Limited content available. Sound is only as good as the audio system's weakest link. DVD-A has a slight advantage over SACD in terms of the number of compatible DVD players available, but it lacks content. A strong marketing push is needed to teach consumers the benefits of the format. Content needs to increase dramatically. TV-based multimedia is a key differentiator with SACD. Limited playback on PC. Super Audio CD (SACD) High-resolution digital audio. Lossless compression technology. Multichannel playback at highest quality. Hybrid SACDs compatible with standard CD players, though at lower audio resolution than SACD. Large amount of content storage on single disc. Many discs have surround and stereo mixes. Sound is only as good as the audio system's weakest link. High-resolution playback not available without a SACDcompatible player. Limited content available. SACD format cannot be "ripped" and managed on the PC. SACD has the backing of two big consumer electronics vendors, Sony and Philips, but people are mostly unaware of the format and its benefits. There is still limited content available. The compatibility of hybrid SACDs with standard CD players is an advantage over DVD-A. No support on the PC. Different types of disc confuse consumers. DTS = Digital theater system * Lossy compression technology eliminates the data containing sounds beyond the range of human hearing. It carries the risk of affecting the audible sound quality of the content. Source: Gartner Dataquest (August 2003) ©2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 5 September 2003 7 Table 2 Audio Format Playback Compatibility by Type of DVD Player Format DVD Players DVD Portable DVD Recorders Home Theater in a Box DVD Combo MP3-Capable 90.6% 76.9% 73.3% 89.1% 92.6% Windows Media Audio-Capable 20.8% 23.1% 0.0% 20.0% 18.5% DVD-Audio 24.5% 23.1% 0.0% 20.0% 7.4% 7.6% 0.0% 0.0% 7.3% 0.0% 0.0% 1.8% 0.0% Super Audio CD DVD-Audio/Super Audio CD Combo 4.7% 0.0% DVD Combo = DVD players/recorders combined with hard disc drive or VCR decks. Source: Gartner Dataquest (August 2003) Multiple Audio Formats for Multiple Market Needs Content availability and portability will decide which audio formats gain acceptance. But it remains to be seen if there is a mass market for high-resolution, multichannel audio formats. Another question is whether high-compression technologies such as MP3 and WMA can develop to a point where file sizes remain small and portable yet are still of comparable sound quality to CDs. Many believe that they have already reached this point. The high-compression audio market will evolve as new audio technologies, including MPEG-4 AAC (Moving Pictures Expert Group-4 Advanced Audio Coding), arrive to compete in a crowded arena. There will continue to be multiple audio formats to satisfy the needs of different users, devices, vendors and environments. DVD players are no longer just for playing DVD videodiscs. Manufacturers will incorporate more features and playback capabilities to differentiate their products. In addition to the audio formats mentioned above, these features include the ability to play picture CDs and high-definition video, and connect to networks to access multimedia content stored on other devices in the home. Gartner Dataquest expects consumer DVD players able to play high-definition video content using one of the emerging compression technologies — like MPEG-4, Windows Media 9 or H.264 — to be available mid-2004. These technologies will allow high-definition video content to be stored on current DVD media without needing a higher-capacity disc. They will also allow DVD recorders to capture and play high-definition quality broadcasts. DVD players will continue to be combined with TVs, audio/video receivers, VCRs and other consumer electronic devices. Incorporating other technologies, like ClassD amplifiers and digital 1394 connections based on the Institute of Electrical and Electronics Engineers (IEEE) 1394 standard, will increase the versatility of devices. The strongest potential for growth of new audio formats is in home theater in-a-box (HTIB) systems. These combine DVD and audio/visual capabilities in one box with a built-in amplifier. The automotive market will not be a driver for new audio technologies until they are standard on devices in the home. ©2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 5 September 2003 8 Consumers Face Confusing Range of DVD Audio Formats However, the average consumer is satisfied with the sound quality of the CD and is accustomed to listening to cassette tapes and FM radio. Limitations regarding "ripping" and managing high-resolution content on the PC are serious inhibitors. Until these issues are addressed, SACD and DVD-A formats will be limited to the high-end audiophile market. Consumer electronics devices will continue to incorporate multiple technologies and playback multiple formats of audio and video. This trend will grow as manufacturers include features to avoid losing out to competitors and to fulfill consumer expectations. Consumer electronics manufacturers and semiconductor manufacturers that can deliver a wide variety of functionality will be at an advantage in a market where multiple features will be a key differentiator. Key Issue How will electronic equipment production trends affect market growth opportunities? This document has been published to the following Marketplace codes: SEMC-WW-DP-0320 For More Information... In North America and Latin America: In Europe, the Middle East and Africa: In Asia/Pacific: In Japan: Worldwide via gartner.com: +1-203-316-1111 +44-1784-267770 +61-7-3405-2582 +81-3-3481-3670 www.gartner.com © 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. 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