Ailing Sony tries to avert DVD war

STRUGGLING electronics giant Sony today offered an olive branch to competitors backing a rival type of next-generation DVD, saying it was open to talks that could unify the technology's standards to try to avoid a bruising format war.

The offer of negotiations - principally with Toshiba - could head off a painful re-run of the 1980s industry conflict when Sony backed its Betamax technology but eventually lost out to the competing VHS standard.

Avoiding such pitfalls is critical for Sony as it attempts to turn round its loss-making electronics division, which has been hit in recent years as product prices have slumped while competitors have stepped up their challenge.

At stake in the new showdown over the digital discs are billions of pounds in future sales of integrated home entertainment systems, together with the software they support, and the films and games they can play.

'In the area of next-generation optical discs, we continue to be open to discussions with supporters of other formats,' Sony said today after Japanese Press reports suggested that talks with Toshiba over a truce had already begun.

Allied with Matsushita, makers of the Panasonic brand, Hitachi and Philips, Sony threw its weight in 2002 behind a new high-capacity DVD format called Blu-ray. But it has been going up against Toshiba's so-called HD DVD, which is cheaper and simpler to produce.

These new discs will in time replace the existing generation of DVDs, but they are not compatible and any long-running format war could limit future movie, game and player sales for everyone until someone triumphs.

The emerging conflict over which type of new DVD technology to embrace has already spread beyond Asia's electronics manufacturers to include the major US studios and software makers, whose support is vital to the eventual success of a new format.

Both Sony and Toshiba have started to inform US major players AOL Time Warner and Walt Disney of their moves to bury the hatchet, Japanese newspapers reported, hinting that a resolution could come within weeks.

Industry watchers often accuse Sony of arrogance in trying - often unsuccessfully - to force its homegrown technology to become the industry standard. They point to the Betamax debacle and, more recently, to the conglomerate's backing of the MiniDisc.

In a dramatic bid to revive Sony's flagging fortunes, the company last month ditched chief executive Nobuyuki Idei in favour of Sir Howard Stringer, a long-serving media executive who used to run Sony's US business.