New Domestic DVD Format Introduced in China Nov 19, 2003

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China's Beijing E-World and U.S.-based company On2Technologies joined forces to unveil a new domestic video compression standard designed to save Chinese companies millions of dollars in annual royalties paid to the patent holders of the current world standard.

Enhanced Versatile Disk (EVD), the new expected standard for recording and playback of digital audio, audio, and data, was developed by Beijing E-World using the VP5 and VP6 video compression technologies licensed by On2.

Unlike the current standard MPEG2, or Moving Picture Experts Group 2, EVD technology does not require a charge for disks and enables high-definition movies to fit on a single disk, a task said to be currently impossible using current DVD encoding standards.

Under the contract with E-World, On2 received $1 million for the use of the VP5 and VP6 codes, and will get $2 for each EVD player manufactured, compared to patent fees of $13.80 per DVD player made by domestic companies.

E-World will be the sole reseller of On2's technology in mainland China, Hong Kong, Macau and Taiwan under the deal which is expected to bring in $15 million for On2's revenue next year, 10 to 20 percent coming from E-world.

E-World is projected to produce at least 800,000 EVD players next year, and will reportedly double that number in 2005. (Dow Jones)

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