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DVD Video crack delays DVD Audio Launch
TOKYO -- Japanese digital video disc (DVD) manufacturers were forced to postpone the launch of long-awaited new audio equipment after a European hacker broke open the copyright protection of DVDs and raised new piracy fears.

Matsushita Electric Industrial Co. postponed the launch of DVD audio/video players by about six months to next May or June, while Victor Co. of Japan plans to withhold the release of its new equipment for an unspecified period.

Pioneer Corp. is also considering postponing the release of new equipment scheduled to debut for later this month.

The incident jolted the DVD industry which has just started to see sales of DVD players pick up after a slow start and was preparing for a major push to begin marketing DVDs as a better alternative to conventional music compact disks (CDs).

DVDs can hold more information than CDs and were launched in late 1996 as the successor to video tape players, boasting superior sound and video quality.

A Matsushita spokesman said the setback emerged after a Norwegian hacker posted instructions on a Web site last month detailing how to override the copy-protection function installed in software for connecting computers with DVD-ROM drives.

The instructions showed it was effectively possible to download DVD data such as songs onto a computer hard drive, potentially allowing audio files to be copied and distributed freely over the Internet -- a major breach of copyright.

The incident raised alarm bells among DVD content providers, such as the music industry, and they appealed to the Japanese companies to delay rolling out the new DVD products.

"We are very sensitive to concerns of content producers," the Matsushita spokesman said.

Another Matsushita official said existing DVD video players already released in the market were not intended for use with computers and therefore not affected by the decoding concerns.

The hacker cracked software sold by a US company, Xing Technology Corp, that allowed computers to read DVDs. Xing has since been suspended from DVD format licensing.

"Although the latest incident merely showed that the decoding is possible only on Xing's software, we will delay the launch of DVD audio equipment and devise a new encoding format to ensure the content providers that sufficient copy-protection is provided in the new products," the Matsushita official said.

Hiroshi Takada, senior analyst at ABN Amro Securities in Tokyo, said the incident raised concerns over future copyright piracy in the DVD market.

"The hacker incident could cast a long shadow over the DVD market as it indicates that DVD makers may fall into a vicious circle with hackers over the copy-protection problem," he said.

Matsushita earlier planned to launch two types of DVD audio/video players, a DVD car audio device in mid-December, and wide-screen televisions equipped with DVD audio/video players on December 20.

Pioneer had also planned to release two types of DVD audio players in late December. It was going to produce 500 units per month of the expensive model, priced at 500,000 yen ($4,902) each, and 2,000 units of a less expensive 200,000 yen model.

But Takada said he did not expect the delay in DVD audio players to have a major impact on the makers' earnings.

Meanwhile, Pioneer will start sales of a newly developed recordable DVD player and DVD disks in North America and Europe next year as originally planned.

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