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A Blu-ray Compromise?

Despite several Fools being decidedly in the Blu-ray camp and touting the benefits of the technology here and here, can it be that high-density DVD will ultimately be triumphant?

Speculation has been growing that Sony (NYSE: SNE  ) , one of the main proponents of the Blu-ray standard, has been extending an olive branch to the archrivals in the HD-DVD camp. Incoming president Ryoji Chubachi has now said on several occasions that he thinks consumers' interests will be best served by a single format and that he is not above "integration or compromise." In January, the company had also said that a format war is not in consumers' interests and that the possibility of uniting the competing formats was not out of the question.

The formats in this next-generation DVD technology are actually more similar than distinct. Both use a blue-laser diode instead of the current red laser to read data. With a shorter wavelength, the blue laser can read more data. They are also backwards compatible, meaning that both formats can be used to play existing DVDs -- though older players will not be able to read next-gen DVDs. Both also support existing video and audio codecs.

The differences in the formats come in how the DVDs are manufactured and how much information they can hold. An advantage of the HD-DVD format is that it is based on current manufacturing technologies so that production will not require any significant expenditures for equipment. Blu-ray, on the other hand, will require manufacturers to spend considerable sums of money up front. Yet once this commitment has been made, the cost factor disappears.

And that's where the other difference between the formats comes into play. Blu-ray DVDs can hold significantly more data than HD-DVDs, some 50 gigabytes on a dual-layer disc vs. only 30 gigabytes for high-density DVDs. While the gap may not seem too significant, the disparity becomes apparent when you realize that a typical movie, with video and multiple audio, and the extras that movie producers put on discs, will push up against the limits of HD-DVD capacity. While it may be sufficient for today's movies, it might not be enough for tomorrow's content.

Two possible outcomes to the format battle have been proffered. Manufacturers could produce a single player with a dual deck that would play both formats, or, as Sony has hinted, they could merge the two formats into a mutually compatible single standard. Neither outcome seems particularly likely.

Both sides have powerful interests aligned with them. On the HD-DVD side, the DVD forum includes NEC and Toshiba, plus movie studios such as Viacom's (NYSE: VIA  ) Paramount, Vivendi's (NYSE: V  ) Universal, and Time Warner's (NYSE: TWX  ) New Line Cinema. Blu-ray, through the Blu-ray Disc Association, has lined up virtually every major consumer electronics company except NEC and Toshiba and boasts Disney (NYSE: DIS  ) and Fox Entertainment. Apple (Nasdaq: AAPL  ) has also joined the fray. On the game front, Electronic Arts (Nasdaq: ERTS  ) has come down decidedly in the Blu-ray camp, though Microsoft says it will support HD-DVD with its Xbox console.

Sony did seem to backpedal from its conciliatory position when a company spokesman in Tokyo last week said the only compromise it would accept would be HD-DVD proponents accepting Blu-ray as the standard. Perhaps it was just bluster, as DVD Forum companies are expecting to launch product very soon while Blu-ray is not expected until the end of this year, if not next year. That early launch might be enough to give HD-DVD an edge.

Regardless of the eventual winner in the format wars, consumers will benefit from the enhanced capacity they will get. Read more on the battle for your next DVD with these bits of related Foolish thinking:

Interested in Blu-ray and the next next big thing? Take a free trial toMotley Fool Rule Breakerstoday!

Fool contributor Rich Duprey thinks he looks cool in Blu-Blocker sunglasses. He does not own any of the stocks mentioned in the article.

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