You think that dvd player is just a bunch of parts? It’s so much more. Each DVD player not only has equipment costs but also royalties for using the technology. Anywhere from $4-6 per drive and up to$.15 per disc.

Forget about customer satisfaction or superiority of image quality. The real issue in the war between Blu-ray and HD DVD was about royalties. It will also get studios and disc makers to deliver Blu-ray discs to consumers. And every time one of those drives or discs leaves a factory, the Blu-ray Disc Association will get a royalty. The numbers add up quickly. Look at DVD, for example. To make a DVD player legally, manufacturers recently had to pay around $4 per player or drive, according to some estimates. A few years ago, those fees were around $15 to $20. Fees get paid every time a DVD drive gets included in a PC. Nearly every PC in the world has a DVD drive these days and roughly 250 million PCs get shipped every year. Companies that legally make DVD discs also pay fees. Then there are verification fees. The royalties, in fact, lead to what Chinese leaders call the “DVD mistake,” said Zhisheng Niu, vice dean of the school of information sciences at Tsinghua University, in an interview with CNET News.com last year. Chinese manufacturers often got around the licensing issues problem by making illegal players. (The DVD Forum eliminated the royalty for DVD players made and sold in China for a few years, but a lot of those systems ended up overseas.) The royalties are one of the prime reasons China has pushed for its own optical standard. “We have to develop our own standards so that we can have our own industry,” said Niu.

Read more over at cnet.com