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Talks between Sony and Toshiba to develop a common standard for next generation DVDs have broken down, heightening the prospect of a damaging format war reminiscent of the clash between VHS and Betamax videocassette recorders more than 20 years ago.

“There was a lot of political pressure exerted upon us to standardise the formats, but because of different approaches a compromise was not technically possible,” said Ryoichi Hayatsu, head of high definition DVD development at NEC, the Japanese electronics maker.

Mr Ryoichi told FT Deutschland, the FT’s sister paper, that NEC would begin in September to deliver HD-DVD disc drives to computer manufacturers, producers of video recorders and as peripheral devices for end customers.

Hopes were raised earlier this year when Sony and Toshiba held talks to establish a unified format for next generation DVDs capable of recording high-quality content, including high-definition movies and video games.

Sony is supporting Blu-ray disc technology along with most consumer electronics makers, including Samsung and Matsushita. Toshiba is championing HD-DVD with the backing of NEC and Sanyo among others.

Entertainment industry officials, hardware executives and analysts have all said a divided market would likely probably confuse consumers and delay adoption of the technology. It would also hit the manufacturers and content developers that end up backing the losing format.

Only one standard will survive, said Masaya Yamasaki, an electronics analyst at Nomura, the Japanese brokers. “A co-existence of the two formats is unlikely – that does not make economic sense,” she said.

The two camps have battled for years to win over hardware makers and content providers, particularly Hollywood studios, to gain supremacy. But Hollywood has split over the new technology, with Time Warner, Viacom, Paramount and NBC Universal supporting HD-DVD and Walt Disney, 20th Century Fox, Sony Pictures and Universal, which Sony recently took over, backing Blu-ray.

Published reports said negotiations fell through because neither the Blu-ray or HD-DVD camps yielded and time ran out to develop a format before the launch of new products from both groups. “A compromise would have brought bad results for both sides,” said Mr Hayatsu.

However, one studio official dismissed reports that talks had broken down. “It’s posturing. Just because they walked out of meetings today doesn’t mean they won’t talk tomorrow.” the official said.

NEC said it aimed to have a HD-DVD player on the market by Christmas. Several studios have announced plans to release titles on next generation discs by the end of the year. , although some seem likely to delay the launch until next year

HD-DVD offers lower manufacturing costs, since production techniques are similar to current DVDs. But analysts think Blu-ray will be the core of any compromise, because it offers more capacity and is seen as a technological leap forward. Despite the breakdown in talks, it was understood neither side had ruled out the possibility of a unified format in the future.

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