China launches Blu-ray Disc rival

China Blue High-definition Disc a cheaper format

SHANGHAI -- The Blu-ray/HD-DVD war is over, right? Maybe not in China.

Shanghai United Optical Disc said Tuesday that it has completed the first production line for CBHD (China Blue High-definition Disc), a high-definition optical disc format, which comes with a substantially cheaper copyright royalty fee.

Based on Toshiba's now-redundant HD-DVD format, the government-supported CBHD is being positioned as China's alternative to Sony's Blu-ray Disc.

With lower costs for setting up a production site -- $800,000, compared with the $3 million needed to do the same for Blu-ray -- and a much smaller royalty fee ($8.10 per player) for producing CBHD players, CBHD is expected to be considerably cheaper than Blu-ray.

But industry observers aren't necessarily sold on the fledgling format, which was known as CH-DVD before Toshiba lost the high-definition format war to Sony.

Drive producers believe the format will have a hard time competing against Blu-ray, which already has made a move into the Chinese market.

While acknowledging Blu-ray's dominance, Hideki Ono, general manager of Shanghai United Optical Disc, told The Hollywood Reporter that there is still enough room in the Chinese market for the new format to grow.

"Just as VCDs became enormously successful within China prior to the arrival of DVDs, while being practically unknown beyond Asia, we expect CBHD to have enough leverage to be a convenient alternative to both DVD and Blu-ray formats in China," Ono said.

Unlike Blu-ray, which has alliances with major Hollywood Studios, CBHD has not tied up with any major studios. However, Ono is unfazed by the lack of studio backing.

"The company is not interested in the international markets," Ono said. "Right now we are solely focusing on China."

This is not China's first attempt to introduce a video disc format. It attempted to launch EVD (Enhanced Video Disc) in 2004 and again in 2006, in order to have a domestic standard that saved manufacturers from paying royalties to foreign patent-holders, but manufacturers never brought the product to market.

Such attempts are based on the belief that, given the size of China's market, even moderate penetration of a new format will have scale and increase profits for makers due to lower royalty payments.

Gianpaolo Lupori in Shanghai contributed to this report.