Digital media playback in Windows 8 has fallen casualty to the savage economics of the PC industry and changing tastes in consumer viewing.

We knew Windows Media Center would be sold at extra cost in Windows 8, but Microsoft now says you won’t be able to play DVDs on Windows Media Player in Windows 8.

If you do want DVD playback, then it’ll be a case of shopping judiciously and picking a PC whose manufacturer has licensed the codecs from a third party.

The twist? Windows 8 customers will end up paying more than others, as PC makers will likely be compelled to license the required codecs themselves to enable DVD playback.

In the latest Windows 8 blog, Microsoft said:

Windows Media Player will continue to be available in all editions, but without DVD playback support. For optical discs playback on new Windows 8 devices, we are going to rely on the many quality solutions on the market, which provide great experiences for both DVD and Blu-ray.

The development came as Microsoft separately announced a deal to use audio playback technology from Dolby in Windows 8. Microsoft will include Dolby Digital Plus 5.1 channel decoding and two-channel encoding in Windows 8.

To use this technology in their machines, PC makers will have to pay Dolby licensing and royalties.

What’s going on is an attempt to pare the costs of PCs and keep down the price and maximise the margins. In its blog post Microsoft didn’t say why it’s killing the Windows Media’s ability to play DVDs, but overall the blog talks about the broader decision to make Media Player available as a separate addition at extra cost.

Price is one factor: vendors will be looking to avoid the need to license codec decoders on all machines. The idea is only a small market would want DVD-ready PCs. The irony is Microsoft is one of the planet's biggest licensees of media codecs, with Apple and others behind H.264 for video compression licensed through MPEG-LA. H.264 is used in Windows Media Player.

There was a time when such licensing costs could have been lost in the cracks, but that time has passed. One factor is that the internet is killing DVD: “The vast majority” of video consumption on the PC and other mobile devices is coming from online sources such as YouTube, Hulu and Netflix, Microsoft says.

Another factor is margin: on the reseller front, companies could make 30 per cent on a PC at the dawn of the PC revolution in the mid-1980s by convincing happy shoppers to spring for peripherals and consumables (printer and ink cartridges) with their new machines. However, margins today hover between 3 and 5 per cent. ®