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I checked the region -just incase it changed, and it is region 2 (Europe). I used to use PowerDVD to play the Avatar disc.
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It plays most DVDs normally (it can't recognize some DVD movies (EPIC MOVIE to be more specific), I get the same message to insert a disc). The drive is Blu-Ray reader/writer Pioneer BD-RW BDR-TD03 Now when I put the disc in the drive I get a message to insert a disc. I have an Avatar Blu Ray disc that I've watched before on my VAIO several times.
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