Although retailers would prefer to market only one product, incompatible video formats HD DVD and Blu-ray are both ready to hit the market.

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Movie buffs, brace yourselves for another round of Betamax vs. VHS.

Two decades after the competing video formats battled for space in American living rooms, a new war is looming between two incompatible types of high-definition video discs scheduled to hit the market later this year.

One, called HD DVD, is the official choice of the group that backs conventional DVDs, and last week Microsoft and Toshiba agreed to develop players for the format. The other, called Blu-ray, is spearheaded by more than a dozen big-name consumer-electronics and high-tech companies.

The two camps are still trying to strike a last-minute deal and agree on common technical standards. But with the first devices and discs slated to hit store shelves this Christmas, the window for a compromise is closing fast, people close to situation say. In addition to the money and egos involved, the physical differences in the two disc formats are keeping the two sides far apart.

“The train is going to start leaving the station shortly,” said Josh Petersen, director of strategic alliances for Hewlett-Packard, which backs Blu-ray. A format war “looks more and more inevitable every day. We’re approaching the point of no return.”

Major Hollywood studios exacerbate the problem by splitting their support between the two formats, each of which promise to deliver richly detailed pictures and cinema-quality sound. Guided by differing visions for the high-definition future, half of the studios have announced plans to release HD DVD discs, and the other half are expected to back Blu-ray.

DVD formats

HD DVD and Blu-ray systems will play current DVDs, but differ in these ways:

Data capacity (per layer)

Current DVD: 4.7 gigabytes

HD DVD: 15 gigabytes

Blu-ray: 25 gigabytes

Maximum image resolution (in pixels)

Current DVD: 640×480

HD DVD: 1920×1080

Blu-ray: 1920×1080

Thickness of recorded layer

Current DVD: 0.6 mm

HD DVD: 0.6 mm

Blu-ray: 0.1 mm

Key patent holders

Current DVD: 10 electronics companies and Time Warner

HD DVD: Toshiba, NEC Time Warner

Blu-ray: Sony, Philips, Matsushita, Pioneer

Studio backers

Current DVD: All

HD DVD: Warner Bros., Universal, Paramount

Blu-ray: Sony, Disney

Retail launch

Current DVD: 1997 Christmas

HD DVD: 2005

Blu-ray: Spring 2006

Source: Los Angeles Times

Should the format war reach consumers, the battle could be over quickly. Sony plans to include a Blu-ray drive in its highly anticipated PlayStation 3 video-game console next year, which could put Blu-ray in several million homes in a matter of months.

The worst casualties could be the video enthusiasts who spend close to $1,000 on a new disc player only to have it become quickly obsolete. Analysts say a format war would also slow the transition to high-definition discs, reducing sales for consumer-electronics manufacturers and studios alike.

To spend, or not

At stake is a multibillion-dollar market for next-generation DVDs. Since their introduction in 1997, DVD players have become the fastest-selling consumer-electronics device of all time and are now in two-thirds of U.S. homes. Americans spent more than $20 billion buying and renting DVDs last year.

But sales of players are starting to slow, prompting technology and entertainment companies to lay the groundwork for a replacement.

The audience for high-definition discs is relatively small today. Viewing the new discs requires a high-definition TV set, and fewer than 13 million homes in the United States had one by the end of 2004, according to market-research firm In-Stat.

That number is rising rapidly, helped in part by the growth in TV programs aired in high definition by broadcasters, cable and satellite TV networks. The main piece missing for these viewers has been an improved version of the DVD that could bring high-definition pictures to home video.

Consumers such as Mike Fujii from Emeryville, Calif., are prepared to spend $1,000 on a new DVD player — as long as the picture quality is a significant leap over his current DVDs.

“If the difference in picture quality is that great, then yeah, I’ll buy one fairly soon,” said Fujii, 41, who bought a 52-inch rear projection HDTV two years ago to watch high-definition satellite-television broadcasts. “If not, I would just use the DVDs I have now. A thousand dollars is a lot to spend on a player. Right now you can get a DVD player for under $100.”

Old DVDs fading fast

Still, prettier pictures may not be enough to persuade the masses to embrace high-definition discs, said Bob Chapek, president of Buena Vista Home Entertainment, a division of Walt Disney. “You’d better be chock-full of features” that are not available on DVD, Chapek said.

That is why Disney is backing Blu-ray, which offers at least 25 gigabytes per disc, compared with 15 gigabytes for basic HD DVD discs and 4.7 gigabytes for conventional DVDs.

Executives at Warner Bros., which has announced plans to release HD DVD discs, counter that the Blu-ray group has not been able to answer critical questions about manufacturing costs, their discs’ resistance to warping and other reliability issues. They say the HD DVD group has proved its ability to mass-produce double-layer discs and hybrids that combine a conventional DVD on one side with a high-definition movie on the other — a key product for movie fans who have yet to buy an HDTV.

In spite of the format dilemma, many consumer-electronics executives are eager to shift to high-definition discs because profit margins have shrunk dramatically on conventional DVD players and sales have started to drop. According to Strategy Analytics, worldwide sales of DVD players peaked in 2004 at $20.1 billion and are expected to drop this year for the first time by 1 percent to $19.8 billion, falling to $15.3 billion in 2010.

Disc sales and rentals are growing more slowly, too, yet DVD sales and rentals accounted for about 55 percent of the revenue from feature films in the U.S. last year, according to Adams Media Research. While the studios are leery of disturbing that cash cow, they also want to replace DVDs with a format that is less vulnerable to piracy.

No compromise this time

The home video market has endured two format wars already, starting with the battle between Sony’s Betamax and JVC’s VHS in the mid-1970s. The fight lasted a little more than a decade, with the VHS share growing from about 75 percent of the market in 1980 to 95 percent in 1988, despite Betamax’s reputation for better picture quality. Sony finally abandoned its Betamax product line in 2002.

In the mid-1990s, Sony and Philips Electronics backed a new format for video discs, while Toshiba and Warner Bros. supported a more radical shift to a higher-capacity approach. Sony and Philips eventually backed a compromise approach based largely on Warner and Toshiba’s technology, and the DVD format was announced in December 1995.

But a format war broke out anyway when retailer Circuit City Stores, a handful of consumer-electronics manufacturers and a few of the major studios offered — briefly — a pay-per-play approach called Divx.

This time around, a split-the-baby compromise is virtually impossible, both sides acknowledge. That’s because the core difference lies with a single aspect of the disc — a thin layer of plastic that sits just above the metal surface on which data is written. An HD DVD disc calls for a 0.6 millimeter coating, while a Blu-ray disc requires 0.1 millimeters.

While that doesn’t seem like much, the half-millimeter gap amounts to a technological chasm. HD DVD’s thicker coating is the same as current DVDs, which allows manufacturers to use existing disc-stamping equipment to make the new discs. That gives HD DVD a significant cost advantage and more predictability about what those costs will be, backers say.

HD DVD players can also rely on some of the same technology as conventional DVDs, making it easier to build players that can handle both generations of disc. That’s an important feature, given how many conventional DVDs movie buffs already own, backers say.

Blu-ray’s thinner coating requires all new manufacturing equipment, but it’s the secret behind the disc’s higher capacity. Because the laser travels through a thinner layer of resin, it’s able to focus more sharply and write 67 percent more data onto the disc itself.

“Since they’re different designs, it’s not possible to compromise down the middle,” said Brian Zucker, technology strategist at Dell and a Blu-ray spokesman. “To come up with a mix of the two approaches for that physical layer would not be practical.”

No war, please

The two sides could use one camp’s disc structure and the other’s software, generating royalties for both. But doing so would require one side or the other to give up the core advantages of its format — either the cost, compatibility and reliability strengths of HD DVD, or the capacity of Blu-ray.

Retailers prefer a single format over two competing technologies.

“Ultimately, we believe one standard is far preferable to multiple standards,” said Circuit City spokesman Jim Babb.

“Nobody wants a format war,” said Dell’s Zucker. “Not the device manufacturers. Not the studios. Not the consumers. Consumers will delay their purchase if there’s confusion, and that results in a market stagnation for everyone. The problem is that we all believe we have the solution that’s best.”