China is developing its own entry into the next-generation DVD battle. According to the country's official Xinhua news agency, the country is developing a DVD format based on HD-DVD that it plans on introducing by 2008, about 1 year after HD-DVD will likely be declared dead in the market. Although the new format will be based on the HD-DVD format, it won't be compatible with other HD-DVD systems, according to Lu Da, deputy director of the National Disc Engineering Center in China. The plan will no doubt add to the confusing mess that is the battle to create next-generation, higher-capacity DVDs. China currently produces 70 to 80 percent of the world's DVD players, and the new format is an attempt to avoid having to pay licensing fees to overseas patent holders in the DVD industry. Currently, licensing fees account for about 40 percent of the cost of each DVD player, according to Lu.