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China sends DVD royalties South

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In an attempt to woo China back into the fold, the group of manufacturers responsible for setting royalties on DVD discs and equipment has slashed the rates that licensees must pay.

DVD6C, which represents five Japanese manufacturers plus Warner Home Video and IBM, has cut the royalty rate for DVD players and drives by 25 per cent - from $4 to $3 - and the per disc rate by 10 per cent, from 5 cents to 4.5 cents. The rate payable on DVD recordable discs, DVD-R, DVD-RW and DVD-RAM, has also been cut, from 7.5 cents to 6.5 cents. The new rates will apply retroactively from January 1.

Last week China formally adopted its home-grown EVD video disc format as the national standard. EVD means no royalties need be paid to the DVD licensing bodies, and it has the added bonus of playing HD-TV images too. Chinese manufacturer Wuxi is suing the 3C and 6C licensing groups claiming that they're discriminating against Chinese manufacturers, and the suit seeks to rule the DVD patent pool invalid. 3C consists of Sony, Philips and Pioneer, while 6C represents Matsushita, JVC, Toshiba, Hitachi and Mitsubishi, in addition to IBM and Warner.

However if Hollywood retaliates - and in turn shuns the Chinese market - it could turn an obscure economic issue into a cultural schism which deprives the PRC of many of the US' finest artistic exports: such as Weekend at Bernie's 2, Christmas With The Kranks and Bum Fight. ®

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