"It will bring consumers, basically, the best possible way to play, create and share video and build up a personal video library, using the fastest and most high-quality encoders and decoders on the market today," said Udo Eberlein, president of Nero Inc.

The new trial version will include Recode 2, which allows users to recode DVDs and videos to the Nero Digital format; Showtime 2 CE, a multiformat video player that allows for visual adjustments and customizable display; and Mediahome CE, software that enables multimedia to be shared through a home network. This same software is included in the complete Nero 6 package and has been available since December.

On its own, Nero Digital allows users to compress video content to 20 percent of its size, which allows it to be transported and used on various mobile devices and over the Internet. The software is entirely based on the MPEG4 codec, which is widely used in cameras, mobile phones and other devices.

Eberlein said the company wanted to offer the three-part package for free, but unspecified changes in the MPEG4 patent—most likely that the patent holder is now asking for licensing fees from its customers—forced it to change its strategy.

Eberlein said Nero is contractually obligated not to talk about details concerning the changes and said more specific announcements will be made shortly.

But he did say Nero officials have known about the changes "for some time and have tried to negotiate" and that the company has, as a result of the new patent rules, "completely changed the engineering roadmaps and components."

Nero is a licensee of MPEG LA, which was not immediately available for comment.

While no one has specifically confirmed that companies using the MPEG4 codec will be charged licensing fees, it would be a move that would have a widespread impact on the tech entertainment space. A huge number of companies employ the codec for their service, including Apple Computer Inc. and Microsoft Corp.

Jupiter Analyst Michael Gartenberg said that while he can't confirm news about the new patent fee, he wouldn't be surprised if that was the case.

Gartenberg said if companies start charging for the patents, companies using the codec will simply have to figure out how to deal with the consequences. "Like anything else, he said, "there will be those that pay [the fee] and don't pay—ultimately it will get passed along to the consumer."

Steve Vonder Haar, research director at Interactive Media Strategies, said the consequences of a new MPEG 4 patent fee would have more implications than increasing costs for the consumer; it would have major consequences for the industry at large.

"Whenever people start charging for licenses, it tilts the competitive playing field for those trying to build off the foundation of that format. So, depending upon the terms that are instituted, the more onerous the terms are, the more likely it is to become a big-company battlefield," Vonder Haar said.

"Heavy-duty licensing fees can run the risk of killing the goose that lays the golden egg," he added. "If you don't have innovative startup companies embracing your format and embracing fresh new ways to use the tech, you could be leaving upside market potential on the table down the line."

On that note, Nero said it will not be passing the costs to consumers who buy the full version of the program, Nero Digital Pro, which is set for release in July. In addition to the ability to use to program to recode DVDs, watch them and share them over a home network, the Pro version also will contain Nero Vision Express video-editing software and PhotoSnap, Nero's photo-editing program.

Users who download the 30-day trial before July can access Digital Pro features by paying $69.99 to upgrade to the full Nero 6 package. After July, trial users will be able to pay $29.99 for an all-access pass to Digital Pro.

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