Sony and Toshiba are negotiating to develop a common standard for next-generation HD DVDs and to end a fierce battle over formats that has been threatening to stifle the industry's growth.
The companies, which head rival groups, have waged a three-year battle to have their new technology standards adopted by the industry and gain pole position in the multi-billion dollar markets for DVD players, PC drives and optical disks.
While a final deal is still far from certain, both camps are well aware that a drawn-out fight would likely confuse consumers and hinder the industry's development, just like the famous spat between the VHS and Betamax video tape formats two decades ago.
Sony's Blu-ray technology is backed by a group, including Dell, Samsung Electronics, Philips Electronics NV, and Matsushita Electric Industrial, maker of Panasonic brand products.
Toshiba, with NEC and Sanyo Electric, has been promoting a technology called HD DVD.
At the core of both formats are blue lasers, which have a shorter wavelength than the red lasers used in current DVD equipment, allowing discs to store data at the higher densities needed for HD content.
Toshiba has suggested using the HD DVD disc structure and employing Sony's multi-layer data-recording technology.
In HD DVD discs a memory layer is sandwiched between two substrates, while in Blu-ray a layer to hold data is put on the surface of a substrate and covered by thin protective layers.
The dominant industry view has been that since HD DVD discs have virtually the same structure as current discs, makers can use much of their existing manufacturing equipment to offer low-priced discs, a critical factor in winning end-user support.
Either way, the clock is ticking on the planned launch of DVD players based on the new formats by the end of the year. Toshiba, while admitting it is in talks with Sony and others on a unified format, said it has not changed its plan to launch HD DVD-based DVD players and notebook computers equipped with HD DVD drives in the fourth quarter of 2005.