foxtail said:
To conform to the applicable DVD format standards (DVD disc, drive, codec and software, etc.) you must pay the licensing and/or royalty fees. The company that ships the end product is responsible for paying those fees unless the drive is sold standalone. For new PCs it would be the PC OEMs. Microsoft avoided paying the fees on the original Xbox by excluding the necessary software for DVD video playback. Even for Win7 and later they avoid paying fees by not including the codecs in non-Media versions of Windows out of the box. Since the cap is $8 they would never have to pay more than that no matter if the whole price of the PC was $200 or $4000. If the price was $100 or less the fee would be the $4 minimum, in-between $100-200 it would be 4% of the total price (i.e. if the final price was $150, 4% of that would mean a $6 fee). |
It seems the wording in my last post above may be leading to a misunderstanding. Microsoft didn’t avoid paying fees altogether, they avoided paying fees under the classification of a DVD video player. Any device with a DVD drive has to pay at least the $4 fee somewhere along the line. What Microsoft did with the dongle on the original Xbox is avoid the end product being classified as a DVD video player.
The classification depended on the capabilities of the end product (i.e. does it play DVD-Video/DVD-Audio/or have the ability to DVD Decode out of the box). It depends on what the drive does for the end product device, and what DVD patents it uses out of the box. So yes, the royalty may have been paid on the drive only if that part didn’t assist the Xbox in any other DVD capabilities or use any other DVD functions. But since the Xbox used a standard DVD drive and standard DVD discs it may have been harder to make the distinction to have the loophole apply.
