That could mean disappointment for some of the tech industry's biggest names, particularly if other studios follow suit. Companies such as Microsoft and Apple Computer have been betting that their work on advanced video software formats, called codecs, will help them sell their own products.
It's a little-known but equally intriguing subchapter in the yearlongbacked, respectively, by consumer-electronics manufacturers Sony and Toshiba.
Video codecs (a contraction of "coder-decoders") are important because they determine what quality of video can be squeezed into a given amount of digital storage space, or can be sent over a DSL or cable television line. The codec is an essential part of a DVD.
Microsoftwhen it submitted its Windows video technology, called VC-1, to technical standards bodies in hopes of seeing it appear on the new DVDs. Other technology giants hold patents in a rival advanced format called MPEG-4 AVC.
Last week, studio giant Sony Pictures quietly voted for "none of the above," and took a swipe at the new codec formats. The new advanced codecs aren't immediately necessary for discs released in Sony's high-capacity Blu-ray format, Sony Pictures executives said in an interview with CNET News.com, and the studio would instead use the 11-year-old MPEG-2 video codec used on today's DVDs.
"Advanced (formats) don't necessarily improve picture quality," said Don Eklund, Sony Pictures' senior vice president of advanced technology. "Our goal is to present the best picture quality for Blu-ray. Right now, and for the foreseeable future, that's with MPEG-2."
None of this alphabet soup of acronyms is likely to mean much to the average consumer. Once the discs come out, it will be a matter of matching a Blu-ray disc with a Blu-ray player, or an HD DVD disc with an HD DVD player. The discs should play as simply as they do today, no matter which underlying video format is being used.
But the studios' decisions could mean a great deal to companies that have invested heavily in creating or supporting the new video technologies. Microsoft has been betting that the adoption of its advanced video format by Hollywood studios, cable networks and satellite TV companies will help Windows-based devices capture a bigger share of the home entertainment market.
Why does it matter?
The new, advanced codecs are much better than MPEG-2 at squeezing high-quality pictures into small packages. As Sony Pictures notes, they don't necessarily make a picture clearer, but they allow roughly the same picture quality to be created using only about half the digital storage space.
Sony Pictures says this help simply isn't needed in the new Blu-ray disc format. The smallest standard Blu-ray disc will have 25GB of storage space, plenty of room to hold a high-definition movie and extras, even in the old video format, Sony Pictures' Eklund said.
The studio's decision represents a setback for the advanced codecs and their backers--an even greater one if other studios such as Disney, Paramount or Universal Pictures decide to follow Sony's lead, as some industry insiders predict. And that could happen, particularly in the early days of the new DVDs, when the new codecs are unfamiliar to producers and engineers who have to create the DVD files, some analysts say. Hollywood production staff know how to make a clean DVD picture using the old technology, while the newer formats remain relatively unexplored territory.
"For the first year or so, inertia and familiarity may count more than being more efficient," said Envisioneering analyst Richard Doherty. "The professionals that do this for a living at Technicolor, Disney, Fox, Warner and so on are much more comfortable with MPEG-2."
But so far, studios remain split.
Representatives for Warner Bros. and 20th Century Fox said they were planning to use the new formats. Warner is leaning toward Microsoft's VC-1 format, while Fox is leaning towards the AVC format, the studios said.
Warner has agreed to release movies in Sony's Blu-ray format next year, and plans to use a modified disc that is actually constructed more like an old DVD and is cheaper to produce, holding about 9GB instead of the standard 25GB disc that Sony Pictures and other studios will use. Translation: That could mean cheaper prices for consumers, if the savings in manufacturing costs are passed along.
Nine gigabytes is not nearly enough space to hold a high-definition movie and extras using the old MPEG-2 format. But it will be enough space for a movie encoded with Microsoft's VC-1, or the rival AVC.
"For a lot of video, you could get the same content on media that is much cheaper to manufacture this way," said Ben Waggoner, a video technology consultant.
Warner, like other studios, has not yet put a consumer price tag on its high-definition movies, however.
Satellite TV companies Echostar and DirecTV are close to upgrading their high-definition subscribers to equipment that supports the MPEG-4 AVC codec. For the satellite companies, this will allow them to broadcast more channels in the same space they use today.
Insiders like Waggoner say they expect most of Hollywood to move to the advanced codecs over time, too, as studios adapt to the new production tools, and start putting even more high-definition content on discs to set them apart from their DVD predecessors.
But Sony Pictures made it clear that day is still a ways off.
"We're really trying to set this apart from DVD," Eklund said. "Sony Pictures' belief is that in order to launch the HD format, it should be done without compromises."