Note: This story has been updated. Please see clarification below.
Buried deep in an explanation of how Windows Media Center turned into an extra-cost add-on in Windows 8 came a startling admission from the Microsoft Building Windows 8 team: Windows 8 won't be able to play video DVDs: "Windows Media Player will continue to be available in all [Windows 8] editions, but without DVD playback support."
Windows 7 Home Premium, Business and Enterprise, and Vista Home Premium and Ultimate all support DVD playback out of the box. But starting with Windows 8, there will be no native support for playing videos on DVD. If you want that support, you have to pay for Windows Media Center, which is an extra-cost add-in to Windows 8 Pro.
Customers who buy Windows 8 (and don't know enough to install VLC) will have to pay for the double upgrade to both Windows 8 Pro and Windows Media Center if they want to play DVDs. Unless they can find some third-party software that'll fill in -- perhaps from their PC manufacturer or from a USB DVD manufacturer.
Microsoft assures us that the Media Center Pack pricing "will be in line with marginal costs." But it's highly likely that the jump from Windows 8 to Windows 8 Pro will be anything but marginal.
How did Microsoft get into this mess? It's all about licensing the MPEG-2 decoder. Microsoft provides a detailed description of its licensing woes in a follow-on FAQ: "[W]hen you add all this up and apply to all Windows PCs, it is an ongoing cost of hundreds of millions of dollars per year to the PC ecosystem, well over a billion dollars over the lifecycle of the operating system and yet by most predictions the majority of PCs will not even be capable of playing DVDs."
As soon as I read that, I got on Twitter and raised two eyebrows, tweeting: "Sinofsky: 'By most predictions the majority of [Windows 8] PCs will not even be capable of playing DVDs.' Huh?" It's awfully hard for me to believe that the majority of Windows 8 PCs won't be capable of playing DVD movies.
@BuildWindows8 tweeted back: "Cons. PCs are 60%, moving to ultrabooks/tablets rapidly (80%+ are mobile). Biz PCs are 40% (SFF, AIO) rarely optical drives."
Of course, Microsoft has better records on Windows sales than anybody, so I readily defer to their market share analysis -- amazing that more than 80 percent of new consumer PCs are mobile.
Update: A spokesman for MPEG-LA, the patent consolidator that licenses the MPEG-2 codec (and thus the ability to play DVD movies) has confirmed to me that "nothing in our MPEG-2 License has changed recently." He goes on to say, "The royalty rate for MPEG-2 encoding and decoding products in our MPEG-2 License is $2 per unit, and there is no cap.... Where included in a PC sold to an end-user, the PC supplier is responsible for paying the royalty and where sold directly to the end-user and not in a PC, the software provider is responsible."
If Microsoft were to include DVD playback support in Windows 8, every PC supplier who shipped Windows 8 systems would be required to pay the $2 fee for every unit sold -- and they would owe it to MPEG-LA, not Microsoft. Apparently the license fee even extends to PCs sold without DVD players.
Microsoft is responsible for paying the $2 license fee on software sold directly to consumers. That makes Microsoft's ability to sell the Windows 8 Media Center upgrade much cleaner -- the PC manufacturer won't be responsible for the fee.
Times are changing, with iOS devices eschewing optical drives and an increasing percentage of Windows computers shipping without DVD players. At the same time, it's easier than ever to find media players with native MPEG-2 support. It seems to me that, by showing no flexibility in their prices, the MPEG-2 decoder patent holders are about to shoot each other in their respective feet and accelerate the mass-market move toward open source software. After all, for many PC buyers, being able to play a DVD movie is a make-or-break proposition.
This story, "Update: Windows 8 won't be able to play DVDs ," was originally published at InfoWorld.com. Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow InfoWorld.com on Twitter.