HD DVD And Windows Vista Futures and Opportunities

1. HD DVD And Windows VistaFutures and Opportunities Jordi Ribas Director, Technical Strategy Windows Digital Media Division Microsoft Corporation

2. Agenda • Why HD DVD? • Opportunity • Benefits • Demo • HD DVD Architecture • File system, codecs, interactivity, copy protection … • HD DVD Experience Initiative for Windows Vista • Summary • Call to action

3. Why HD DVD?

4. Gap between “US HDTV households” (US HHs) and current cable/satellite offerings is great market opportunity Appetite For HD Content Increasing US HHs 40 30 HD Dig Cable HD Satellite US HHs (MMs) 20 10 0 2003 2004 2005 2006 2007 2008 2009 2010 Source: Forrester Research – HDTV & the Coming Bandwidth Crunch, 2/17/2005

5. Next-Gen HD Content Opportunity • HDTV sales growing • Broadband connectivity exploding • Interactive entertainment on Web, cell phone and video games becoming mainstream • DVD retail market declining • Content companies looking for growth opportunities

6. SolutionHD DVD • Next-gen optical media from DVD Forum enables HD video with advanced interactivity and internet connectivity • New features provide incentive for consumers to buy new (faster) PCs and HD displays • Higher capacity 30 GB discs using blue laser technology • HD video of up to 6x SD’s resolution • Lossless audio of up to 7.1 channels • Advanced interactivity • Overlaid menus, picture in picture, web updates, … • Flexible content protection • Managed copy to HDD and portable devices, streaming, …

7. Warner Bros. HD DVD Introduction

8. HD DVD Differentiators • Here today!! • Higher proven capacity (30GB versus BD’s 25GB) • Lower manufacturing cost for discs and drives • “Twin” HD DVD discs play in both DVD and HD DVD players • Superior iHD interactivity • Only HD DVD mandates PIP, persistent storage, and networking • Simpler, secure copy protection

9. People Are Noticing… • “The economics of HD-DVD make a lot more sense for us. I’m starting to wonder about the manufacturing ability of Blu-ray.” - Maureen Weber, HP, quoted in the New York Times • “With plans to release a wide range of HD DVD titles, Universal also needed a flexible interactive layer that can scale to accommodate new features. This is a scenario where VC-1 and iHD came out far ahead of other technologies.” - Craig Kornblau, President of Universal Studios Home Entertainment • “The differences between the first six HD DVD movies that were released and their DVD counterparts were nothing short of astonishing… and regardless of what the rival Blu-ray format may bring to the table later — I'd say that HD DVD is a giant success.” - Sound and Vision Magazine

10. Strong Industry Support

11. Strong Studio Support200 HD DVD Titles Planned in 2006

12. Strong Studio Support200 HD DVD Titles Planned in 2006

13. HD DVD Architecture

14. HD DVD Versus DVD

15. Co-designed by Microsoft and Disney with the following goals InteractivityiHD Richness of design Ability of constrained devices to implement Interoperability and conformance

16. Language elements XML for content format for images, buttons, video objects … Cascading Style Sheets (CSS) for layout, color, font type … SMIL for timing and synchronization ECMA Script for programmability Web-like lightweight authoring model Does not require programmers (cheaper/faster to author) HD DVD Jumpstart Package with tools to test, debug and simulate interactive content InteractivityiHD

17. InteractivityiHD • Only HD DVD mandates picture-in-picture (PIP), persistent storage and networking • Many new consumer features • Animated alpha-blended graphical menus • Zoom, pan & scan • Favorite scenes and user playlists • Director’s PIP commentary over the video • User bookmarks and progress bar • Web downloads for latest trailers, soundtracks, new languages, current filmography, … • Games • … and many more!

18. The Phantom Of The OperaThe Bourne Supremacy

19. AACS Content Protection • A format-neutral protection for prerecorded and recordable media • Provides significant new capabilities for permissible copying of protected content for advanced devices • Developed to create a seamless, robust and interoperable environment for the distribution and use of next generation content • Founders are from 3 industry sectors: studios, consumer electronics, and IT industry • Designed to support new business models • Managed Copy, Network streaming… • Adopted by both HD DVD and Blu-Ray • AACS specs and interim agreement available at http://www.aacsla.com • Full agreement expected later this year

20. AACS Robustness • AACS utilizes the Advanced Encryption Standard (AES) block cipher algorithm • Cipher used with data blocks of 128 bits and keys with lengths of 128 bits • Includes a new bi-directional drive authentication protocol using cryptographically strong ECDSA algorithm • Provides for robust communication between drive and host SW • Options • Enhanced robustness: A device key set must be protected such that software-only attacks are, by design, not possible • Proactive renewal: The device key set must be renewed proactively on an 18 month schedule

21. VC-1 And HD DVD • 3 mandatory video codecs in HD DVD for player (content provider can choose) • MPEG-2, H.264/AVC, VC-1 • Video resolution up to 1080i or 1080p • VC-1 = SMPTE 421M standard, March 2003 • Latest video codec standard from Society of Motion Picture and Television Engineers (SMPTE) • Developed by Microsoft (Windows Media Video 9) and submitted for standardization • Over 75 companies contributed to SMPTE effort

22. Benefits Of VC-1 • Excellent video quality • Decoding ~2x faster than H.264/AVC • Efficient encoding tool available • Fast ~2-4x real-time encoding • Allows scene-by-scene re-encoding • Typical bit rates ~12-16 Mbps, leaving plenty of space for bonus materials • Strong Studio support • Warner Bros, Universal and Studio Canal have selected VC-1 for their HD DVD titles

23. … The image quality was superior to any of the previous demos I'd seen—pure, rock solid, pristine, razor sharp, highly detailed, and virtually artifact-free are just some of the superlatives that come to mind ... http://www.projectorcentral.com/hd-dvd.htm … it delivered some of the best video I've ever seen on a pre-recorded consumer format. Many shots are breathtaking … http://hddvd.highdefdigest.com/lastsamurai.html … the picture quality is terrific. I’ve been watching high-definition cable broadcasts for years, and the first few HD DVDs I viewed on the Toshiba looked even better … http://www.dvdtown.com/article/reviewofthetoshibahd-a1hd-dvdp/3255/ Benefits Of VC-1

24. HD DVD And Windows Vista

25. HD DVD Player Solutions

26. HD DVD Infrastructure • Native Windows Vista infrastructure components applicable to HD DVD • MMC-5 commands • Driver commands for AACS • UDF 2.5 file system • VC-1 video codec • MPEG-2 video codec (selected SKUs) • WMA Pro audio codec • Protected Media Path • …

27. Microsoft’s HD DVD Experience Initiative For Windows Vista • Best practices for building HD DVD player on Windows Vista • iHD • Interop Labs at Microsoft • Test suites to work closely with the VPC iHD test vectors and sample code • Facilitates compliance of iHD implementations on Windows Vista • Training support • VC-1 • SDK for codec updates / optimizations

28. Additional Resources • Microsoft HD DVD Experience Initiative • hddvdei @ microsoft.com • Microsoft websites • General: http://www.microsoft.com/hddvd • HD DVD Authoring • http://www.microsoft.com/windows/windowsmedia/forpros/hddvd/default.aspx • Includes link to HD DVD Interactivity Jumpstart Package • Other • DVD Forum: http://www.dvdforum.org/forum.shtml • Toshiba website http://www.tacp.toshiba.com/hddvd/ • AACS: www.aacsla.com

29. Summary • All the key pieces are all in place for next generation DVD • HD DVD provides outstanding value with superior consumer features • Windows Vista includes native infrastructure for HD DVD playback • Launching HD DVD Experience Initiative for Windows Vista

30. Serenity

31. Call To Action • Build HD DVD experiences for PCs! • Participate in our HD DVD Experience Initiative

32. © 2006 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries. The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.