http://www.emedialive.com/Articles/ReadArticle.aspx?ArticleID=13529
Guiding a rented minivan through the truck-heavy streets of the industrial
side of Eindhoven, in central Holland, Sanjay Khar gives a passenger pause
when he states, unequivocally, "They're either going to think we're
geniuses
or that we're crazy."
Khar is director of New Medium Enterprises (NME) and head of its
optical division, which for NME is the franchise. The pink sheet-traded,
Nevada-based company that also has offices in London and R&D facilities in
this city is behind the Versatile Multilayer Disc (VMD), a dark horse
entry
into the still-nascent high-definition disc derby. It's January, and still
fewer than half of Americans polled even know about the two frontrunner
formats, Sony's Blu-ray (BD) and To****ba's HD DVD. It is a couple of weeks
after Warner Home Video announced at the CES Show in Las Vegas that it
would
back BD over HD DVD, and days after Netflix announced the same, putatively
tilting Hollywood and its treasure trove of content towards that format at
the expense of HD DVD. (A few weeks later, HD DVD would drop out of the
race
entirely, but at the time of this minivan ride, HD DVD's demise is still
en
route from rumored to real.)
Khar is having none of it. "Not everyone is behind Blu-ray and
precisely because there is no one single format, there is still
op****tunity
in the [high-definition format] space," he states. "If BD were a success,
there would be no space for us to enter. There is no winner yet."
Compared to Sony and To****ba, which are rumored to have spent as
much
as $150 million per studio lobbying for the backing of a partisan
Hollywood,
NME is the mouse that roared. The company's market cap is a scant $24
million and its share price on the volatile OTCBB bourse (symbol: NMEN)
has
plunged along with many others in the recent market vortex. Sony has its
own
huge vault of movies to tout BD with, along with those from Fox and Warner
Home Video. VMD, on the other hand, has a chunk of Bollywood, disparate
clumps of foreign films (if you're into Finnish cinema, boy, are you in
luck) and a couple of U.S. film distributors, such as SME Entertainment,
offering a relative handful of movies that ring a mass-market bell, like
Alexander, Apocalypto, Blade Trinity, Passion of the Christ, Pulp Fiction,
and Saw. Another is Anthem Pictures, which adds Mother Ghost, 8th Plague,
Enigma With A Stigma, Cutting Room, and ****d Ape to the pot.
Just as well, since there is only one VMD manufacturing line in the
world, at NME's R&D facility in Eindhoven, in the former Toolex factory,
now
owned by Dutch technology company VDL, NME's research and manufacturing
partner. Of the 3,300 or so titles that Khar says are committed to VMD,
only
a few hundred have actually been sent, authored and mastered, to
replication. And VMD's planned holiday season, official rollout was
rescheduled for Q1 of this year by manufacturing delays in Eindhoven.
But Wait, There's More.
If this sounds like a scenario that would have Jim Kramer creating
new
sound effects for on Mad Money on MSNBC, NME does have some serious stuff
going for it. Chairman of the board Michael Jay Solomon brings significant
street cred: He is the co-founder of syndication giant Telepictures
Cor****ation, which later acquired TV superpower Lorimar, which gave the
world winners like Dallas. Warner Brothers bought out Lorimar-Telepictures
and installed Solomon as Warner's president of international television.
He
came onboard at NME in August 2007.
But most of all, NME has an interesting technology, and it's found
in
the "M" in VMD. The format can keep adding layer after layer of digital
real
estate to each disc; the standard production model has three layers
offering
15GB of storage, but four (20GB) are almost as easy. Theoretically, they
have taken the process to 10 layers. (BD uses one and two layers, though,
theoretically, it can also go beyond that.) This means that VMD can use
red
lasers to read the discs, the same as are used for DVD and CD. BD, by
contrast, uses the narrower-aperture blue laser to scan smaller pits on
its
discs (same with the late HD DVD). BD is more expensive than DVD to
manufacture, has lower yields (still, re****tedly, in the 80%-plus range),
and requires a completely new manufacturing infrastructure.
VMD's manufacturing is more similar to the upgrade some replication
facilities used for HD DVD, which involved using existing DVD lines with
additional stations inserted. The core of the one extant line is VDL's Dex
DVD line. But the combination of red laser and a huge existing
manufacturing
infrastructure, says Khar, gives VMD a powerful edge, as well as a
90%-plus
manufacturing yield, since the VMD is basically a DVD on steroids. Thus,
the
manufacturing expertise is already in place. Just add NME's new bonding
station.
Khar says VMD will also maintain control of the format vertically.
In
addition to owning the patents (he will not comment on VMD patent
royalties
or any arrangement with the DVD patent holders, such as 6C and 3C,
regarding
underlying DVD patents that VMD uses) and selling manufacturing lines. For
$10,000, they are also selling the authoring tools they developed (no
buyers
yet).
In addition, NME is manufacturing consumer VMD players, which Khar
says will retail for $149, or $199 bundled with five titles. BD
manufacturers have been lowering their player prices, and HD DVD players
dropped as low as $149 before To****ba pulled the plug, but Khar twists the
knife when he notes that "VMD players are not subsidized to stimulate the
market," referring to a famous CNET study that analyzed an HD DVD player
and
found its components to cost more than its retail price. According to
Solomon, 20,000 VMD players have been ****pped as of late January to two
retailers in the U.S. and Europe and he projects 500,000 by year's end.
(PC
Rush is the American distributor). The packaging for the VMD, dubbed the
NL
box (for Netherlands), is designed and manufactured by Scanovo.
"It is all about the value chain," says Khar. "We author and
manufacture the discs and the players in the beginning, so content owners
can see the process."
Eugene Levich, NME's CTO, says that manufacturing lines have been
sold
to two replicators: POD, in Dubai, and Orava, in Slovakia. He expects the
Slovakia facility to come online first.
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