..Gary Dretzka
..Noah Forrest
..Leonard Klady
..R.J. Matson
..David Poland
..Douglas Pratt
..Ray Pride
..Michael Wilmington

Last Wednesday, on the eve of the International Consumer Electronics Show, reporters shuttled between separate ballrooms in the Bellagio Hotel to learn more about the immediate past and hear plans for near future of the still-explosive DVD industry.

As expected, the Digital Entertainment Group announced that consumers spent a record amount of money in 2004, renting and buying DVDs. Retail sales grew to $15.5 billion, representing an increase of 33 percent over last year, while another $5.7 billion was spent on rentals. Throw in VHS-cassette sales and the combined numbers represent an increase of 9 percent over 2004, to $24.5 billion. Ho hum.

Meanwhile, down the hall at the Digital Experience gathering, reps from Sony were inviting reporters to compare movies transferred to disc, via existing digital technology, with those recorded using its high-resolution Blu-ray format. Toshiba would wait until the next morning to start banging its drums over the rival HD DVD format.

Naturally, both technologies looked great. Movies shot on film lose quite a bit when forced to conform to the limited resolution now provided by analog television and standard DVDs, with room for only a third of the lines available on 1080i screens. While differences between old and new formats were obvious to the eye, it was impossible for the lay journalist to distinguish between the competing high-def technologies.

The battle was joined.

Historically, CES has been used by manufacturers as a major staging ground in the war for the hearts and minds of retailers, distributors and the media. The various combatants have represented an alphabet soup of competing technologies, including Beta and VHS vs. laserdiscs; 8-track tapes and cassettes vs. compact discs; digital vs. analog; DVD vs. DiVD; Nintendo vs. Sega; MP3 vs. iPod; LCD and CRT vs. plasma; rear vs. front projection; XM vs. Sirius; CD-ROM vs. DVD-RAM; DBS vs. cable. The casualties bleed green blood, and few prisoners are taken.

Ultimately, though, it’s the consumer who suffers the most in the end. Like any innocent bystander in any conflagration, the end-user is the one forced to pay for the mistakes of the mighty. Pick the losing format up front, and you’ll end up paying for the winner in the end.

In the coming battle between Blu-ray and HD DVD, caution should be the watchword for those who can’t afford to end up with an obsolete technology. At $1,000 per playback unit, that includes just about all of us.

It’s for this reason, the annual CES convention -- which this year attracted more than 140,000 attendees from 115 countries -- is as exciting place to be on the second weekend of January as anywhere on else on Earth. Throw in the 330 exhibitors, 8,000 industry professionals and nearly 20,000 fans (tickets cost $45) who attend the Adult Video News’ concurrent Adult Entertainment Expo, and the 4,000 diehards who spend an additional $2,500 for a chair and dinner at its sold-out awards show (covered this year by Sirius radio), and you have a real party.

In the early days of the VCR and laserdisc era, purveyors of video porn helped determine the eventual winner of the format war, by siding early-on with VHS. It was a decision based more on necessity than any side-by-side comparisons of the merits of the formats. Beta may have offered the best audio and visual quality, but VHS promised a less restrictive economic model. Despite Sony’s insistence on controlling the market for Betamax, that single decision pretty much sealed the deal for the far more populist-minded backers of VHS.

The adult industry probably won’t play as crucial a role in the impending skirmishes between backers of Blu-ray and HD DVD, if only because the hoi polloi will be in no hurry to pay $1,000 for the right to be the first one on their blocks to own a hi-def playback unit. After all, how much better could a best-selling movie -- this week’s toppers include My Ass is Haunted and Crack Her Jack 3 -- look with 800 more lines of resolution?

Still, we’re talking about an industry that represents several more billion dollars in annual sales and rentals. So, any blip in the numbers would resonate like a cherry bomb in a mail box.

Last week, while Hollywood was still twiddling its thumbs, the on-line retail store Adult DVD Empire announced it was making available to its customers the industry’s first hi-def video-on-demand download. It is a scene from Digital Playground's best-selling Island Fever 3, itself the first adult feature to be shot, edited and delivered to consumers completely on HD DVD.

"High-definition content is going to become very important over the next few years, and being on the forefront of technology has always been a core business strategy for us" said Mike Barry, the company’s director of adult operations.

Unlimited monthly access to the download can be purchased for $14.95. The company suggests that, because of the large size of the file, buyers download it to their hard drive and view it from there.

A novelty item, to be sure. But, it’s a start.

Requirements for a minimal 780p presentation include having Microsoft Windows XP, Windows Media Player 9 Series, 2.4 GHz Processor or equivalent, 384 MB of RAM, 64 MB video card, 1024 × 768 screen resolution, a 16-bit sound card and speakers. For the optimum 1080i presentation, a PC must also have DirectX 9.0, 3.0 GHz Processor or equivalent, 512 MB of RAM, a 128 MB video card, 1920 × 1440 screen resolution, 24-bit 96 kHz multichannel sound card and 5.1 Surround Speaker System

Among its other tech credits, 11-year-old Digital Playground is responsible for the immensely popular "Virtual Sex" series, which it describes as “the first and most technologically advanced cyber-sex simulator on the planet.”

Filmed on location in Tahiti and Bora Bora using an HD 24P camera, Island Fever 3 is exactly the sort of movie necessary to launch the adult industry head-first into the HD era. Unlike most Valley-set gonzos, the island scenery is lush and the colors radiate off the video monitor. The film’s stars -- Jesse Jayne, Tera Patrick and Devon -- are among the most appealing in the industry. The target audience ranges from tech-savvy middle-income users to the truly affluent (yes, they watch porn, too).

Joone, director of Island Fever 3 and founder of Digital Playground, said he chose the HD DVD format over Blu-ray because it was the “only one available right now.”

That’s the way it’s been for a long time. Revenues from pornography and other risque material have continually pushed emerging technologies toward solvency, even as far back as the invention of the printing press in the 15th Century. The promoters of the Consumer Electronics Show are reluctant to publicize exactly how much money their exhibitors make from XXX products -- manufacturers of telephones, cameras, printers, pagers, VCRs all benefit mightily, as does AT&T -- used in the sex industry.

The question that went unanswered in most of the articles written from CES about the competition between Blu-ray and HD DVD, involved how relevant the adult industry will be in determining the survivor.

Joone expects most of the players in the porn market to take a wait-and-see attitude, until both formats are introduced to the public. There is some initial interest, notes the USC film-school grad, but the biggest challenge will come in the form of educating distributors and the audience on the benefits of hi-def.

What we did learn was that history was repeating itself, in the form of studios rallying behind one company or another. The same thing happened 30 years ago, with the emergence of the VCR, and only eight years ago with the DVD and DiVX. It’s the same squabbling that drove HDTV-hungry consumers to satellite providers, when the cable industry, FCC and Hollywood couldn’t iron out the wrinkles in their own digital strategies.

In the wake of the Athens Olympics, stores selling HDTVs and home-theater units have barely been able to keep products on their shelves. This as Congress continues to measure the political impact of the mandated transition from analog to digital, in 2006. Because the studios and networks have dragged their heels on providing hi-def entertainment -- and broadcasters are dragging their heels -- consumers have turned to their DVD players, computers and satellite services for product.

The Blu-ray camp was represented at CES by top executives from Panasonic, Samsung, Thomson (RCA), Sharp, Sony, Dell and Hewlett-Packard. A best-case scenario projects a rollout of hardware in the fourth-quarter, 2005.

For their part, the backers of HD DVD came to CES with a list of titles they expect to release in time for Christmas of 2005. They include Warner Home Video’s Batman Begins, Constantine and Charlie and the Chocolate Factory; titles from New Line’s Austin Powers, Blade and Rush Hour franchises; HBO’s The Sopranos, Angels in America and From the Earth to the Moon; Universal’s Van Helsing, The Bourne Supremacy and The Chronicles of Riddick; and Paramount’s Elizabethtown, The Manchurian Candidate, Braveheart and Forrest Gump.

Sony, MGM and Disney’s home-entertainment units weren’t prepared to name specific titles, but each plans a full slate for the Blu-ray launch.

Joone expects that Blu-ray will enjoy its day in the sun after it rolls out a “Trojan horse,” in the form of Sony PlayStation 3. Considering that PS2 already has tens of millions of satisfied customers, it’s entirely possible that a good number of them will use the box for something other than gaming … HD porn, for example. (OK, some will want to watch hi-res versions of The Matrix and Mary Poppins, too.)

And, in case anyone is wondering, the existing DVD market still has plenty of room to grow. With some 29,000 titles now available on disc, it still is a couple hundred thousand of titles short of the VHS inventory.

- by Gary Dretzka

January 12, 2005