Blu-ray Gets IP Clearinghouse

Do you have an idea about how to make an insanely great Blu-ray player, or maybe something new that includes a Blu-ray player, such as an an ultimate mult-media bicycle? Before you go into production, make sure that you have all the necessary rights to build it. This means getting licenses for all the various patented parts that go into a Blu-ray player. This can include pieces such as the blue laser, the circuitry that controls the laser, and the software that decodes the data stored on the disc.

Until recently, you’d have to go to all the patent-holders individually and negotiate terms for the use of their intellectual property (IP). This task is now a lot easier. According to a press release from CyberLink this week, the company is working with Hitachi, Panasonic, Philips, Samsung and Sony to create a one-stop clearing house for “patents essential to Blu-ray Disc products.” This new company is named One-Blue, LLC. According to the companie’s Web site, the license for all the patents needed for a BD player costs $9, and for a BD recorder the fee is $12. The site also lists the license fees for DB drives and discs, as well as related software.

This convenience is certainly helpful for manufacturers, but consider these costs with some back-of-the-envelope calculations. There are many BD players available now for under $100. Let’s assume that the wholesale price is 50% of the street price, which leaves $50 for the manufacturer (assuming that there isn’t a distributor in the middle). If the manufacturer pays $9 for the licenses, that leaves $41 for all the parts, the manufacturing process, and all the overhead which includes the design work and the marketing. And if they’re lucky, there may be a few dollars left over for profit. As a result, it’s easy to see why some manufacturers may choose to build unlicensed products; when 18% of your revenues go just to licensing fees, there’s a strong incentive to cut that corner. That’s something to keep in mind when you’re scouring the Web for the lowest price on a Blu-ray player. My advice is to pay a little extra for a name brand model, as you’re likely to get better performance and features than you’d find in a bargain basement model.