HD DVD lives on in China as CBHD, but will it have content?

While HD DVD was officially declared dead this spring, the Chinese offshoot of the format is living on, with the first production line created for China Blue High-definition Disc, or CBHD, by Shanghai United Optical Disc.

CBHD began its life as CH-DVD, and its introduction was seen as a potential trump card for HD DVD in its battle against Blu-ray last year. Although CH-DVD differed slightly from HD DVD in terms of codecs, it was essentially the same technology. That meant Chinese manufacturers could develop for the format, and flood the worldwide market with cheap HD DVD-capable players.

But CBHD didn't arrive in time, and Sony convinced Warner Bros. to drop HD DVD, effectively killing the Toshiba-developed format and crowning Blu-ray as the next-generation optical disc standard. Most studios weren't concerned with the Chinese format anyway, as they are still struggling to figure out a successful DVD sales strategy in a country where piracy runs rampant.

So while Blu-ray has become the only option in most of the world, the China High Definition DVD Industry Association (CHDA) has continued to push CBHD locally. Although it's success is far from assured, CBHD remains an attractive option for China, not only because it can utilize the country's own video encoding standards.

As was true with HD DVD, CBHD production lines can be built from existing DVD lines for around $800,000. To establish a Blu-ray production line would cost upwards of $3 million. In addition, royalty rates for CBHD are only 55 yuan, or $8.10 USD, far lower than licensing fees for Blu-ray disc players. Moreover, the format has the capability to store a DVD version of a movie on one side of the disc, easing the transition path from standard DVD.

Still, the biggest hurdle CBHD faces is support from the movie industry. At the moment, no Hollywood studio has said it will utilize the Chinese disc format, which could relegate it to obscurity.

There's no denying that China's population of more than one billion poses an enticing market, but piracy has made it nearly impossible for the movie industry to make money. Some studios, including Fox and Warner Bros., are offering cheap DVDs in the range of $3 in order to lure Chinese consumers away from counterfeit DVDs. However, it's not clear how effective the effort has been.

Blu-ray is also preparing to enter China, which could lead to direct competition with CBHD, and 11 Chinese manufacturers have reportedly been authorized by the Blu-ray association to produce players and discs next year.

But at the moment, CBHD is the only format officially sanctioned by the Chinese government, as Blu-ray contains no Chinese-developed technologies. The Blu-ray Disc Association is attempting to develop a modified version of its format for use in the country, which includes digital audio encoding technology developed by China's state-owned Guangdong Guangsheng Assets Management Company.

Meanwhile, volume production of CBHD discs will begin in the fourth quarter, according to Chinese-language media outlet enorth.com.cn, as translated by DigiTimes. Initial CBHD players from a handful of manufacturers and some discs are expected to be ready in time for the 2008 Beijing Olympics this summer.