Report: Toshiba Quits DVD Talks With Sony

SAN FRANCISCO - The possibility that consumers will have to choose from two competing DVD formats next year is growing now that negotiations have broken down between the groups behind the different standards.

Japanese electronics giant Sony Corp (NYSE:SNE - news)., which supports a format known as Blu-ray, and a bloc led by Toshiba Corp., which backs the rival HD DVD system, began discussions this year to see whether they could agree on a unified format. A Tokyo newspaper reported that negotiations have been suspended indefinitely.



Andy Parsons, a Blu-ray spokesman, confirmed that the talks had stalled but denied that it meant the two groups had reached an impasse.

"We are hopeful that we can still find a resolution," Parsons said. "We still have time to find a way to avoid having two formats go to market, which isn't good for consumers or us."

This is the latest snag in the efforts to avoid a war between the groups. Both sides, which represent Hollywood studios, manufacturers of DVD players and disk makers, have recently stepped up their public attacks of the other's technology.

Should the two groups launch their own disks, disk players and separate content, the costs to each group could be in the billions.

Confused shoppers most likely would stick to their old DVDs until a single format is established, said Josh Martin, an analyst with the technology research firm IDC. He said video-rental stores probably wouldn't want to cram their shelves with both Blu-ray and HD DVD disks.

"DVD sales are already hurting and this is not going to help spur sales," Martin said.

Sony's Blu-ray disks have a more sophisticated format and store 25 gigabytes of data, compared with HD DVD's 15, but are more expensive to produce.



Taro Takamine, a Sony spokesman, said that while Sony remains open to discussion with the Toshiba bloc, the firm's goal is to agree on a single format, not a jointly developed one.

"We have no intention on settling on a compromised format that only plays back 20 gigabytes, for example," Takamine said.

Toshiba spokesman Junko Furuta also acknowledged that a unified format did not look likely for the time being. Blu-ray disks would be harder to adopt for use in laptop computers, as well as in car navigation systems that are popular in Japan, Furuta said.

"We have doubts as to whether the Blu-ray format is a viable technology in terms of production cost," she said. "We're also not convinced that consumers would need to store so much data on disks, especially now that internal hard drives are more popular."

Both sides are already developing products that feature their respective DVD formats. Toshiba plans to roll out HD DVD players by the end of this year, while Sony's popular game console PlayStation 3, which will play Blu-ray disks, is due in spring 2006.

Entertainment companies are also split over the two formats. Walt Disney Co. and 20th Century Fox support Blu-ray, while Toshiba has won the backing of companies like Warner Bros. and Universal Pictures.