FAQ - DVD Playback and Windows Media Center in Windows 8
What are the codecs needed to play DVD?
A codec is software that is used to compress or decompress a digital media file, such as a song or video. MPEG-2 is widely used as the format of digital television signals that are broadcast by terrestrial (over-the-air), cable, and direct broadcast satellite TV systems, and DVD Video. Dolby Digital is the widely used audio standard for terrestrial (ATSC, over-the-air), cable, direct broadcast satellite TV systems, and DVD Video. Dolby audio is also a mandatory format in Blu-ray.
How has Windows handled DVD related decoder licensing prior to Windows 8?
The issue surrounding the incremental costs of codecs to play DVDs isn’t new to Windows. In Windows XP and Windows Vista we addressed it by offering specialized editions, such as Windows Media Center Edition, or codec add-ons to Windows Media Player. DVD playback was not included in Windows Vista Starter, Home Basic, Business, and Windows Vista Enterprise editions. OEMs (PC manufacturers) had the option to license Windows Vista Starter, Home Basic, and Business “with DVD” where we offered a version that includes the Dolby Digital codec to enable the OS to support DVD playback for a nominal price increase. In Windows 7, we decided to make these codecs available broadly in most editions, except Windows 7 Home Basic (available in some emerging markets) and Windows 7 Starter editions (available for netbooks and some emerging markets). That means royalties related to DVD playback in Windows 7 have been paid broadly, regardless of whether or not the PC has an optical drive. Based on sales and usage, we supplied codecs to a very large number of PCs that were not capable of playing DVDs or simply did not ever play DVDs.
Who pays decoder royalties associated with DVD playback on PCs?
Typically, media codecs are based on intellectual property (IP), often patents, held by consumer electronics consortiums or companies. The result is that entities who wish to sell products that include these codecs must pay royalties to the IP owners; sometimes to a single entity (e.g. Dolby Laboratories), and often through a license agency (e.g. MPEG-LA) who administers licensing for a number of IP holders under specific terms. The rules surrounding who pays these royalties vary by licensing program. According to the MPEG-LA program, the company that ships the end product is responsible for paying. In the case of new PCs with Windows pre-installed, that would be the PC OEMs. The Dolby program for Windows 7 was defined based on an agreement between Dolby and Microsoft where Microsoft has paid Dolby directly for the rights to Dolby Technologies built in Windows 7. Royalties are also paid by ISVs that include those technologies in their applications, even if those applications are bundled on new systems. This means that in many cases the same royalties can be paid multiple times over for a single PC (Microsoft pays some, OEM pays some, ISV pays some). In Windows 8, we will continue to include some technologies licensed by MPEG-LA and Dolby that will be paid by OEMs, but only those that relate to online media consumption (e.g. MPEG-2 container for H.264, Dolby Digital Plus audio) and not those related optical media. The costs associated with those codecs are lower, but significant, compared to optical media playback. Also, Windows 8 apps will be able to use these technologies as part of the Windows 8 Media Foundation APIs at no additional cost, as long as they are not providing optical media and broadcast related functionality.
How much does it cost the PC ecosystem to play DVDs?
Playing DVDs generally require MPEG-2 video compression and Dolby Digital (AC-3) audio. Even though it is possible to use other formats, the majority of commercial DVDs are encoded using these formats. In order to decode these formats, the playback device needs to be licensed to use these decoders. MPEG-2 decoder costs $2.00 per unit under current MPEG-LA terms. Dolby license is an additional cost that varies by the technology licensed, the type of device, and unit volume. While not related to Windows, Blu Ray would be an additional cost on top of these. So when you add all this up and apply to all Windows PCs, it is an ongoing cost of hundreds of millions of dollars per year to the PC ecosystem, well over a billion dollars over the lifecycle of the operating system and yet by most predictions the majority of PCs will not even be capable of playing DVDs.