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COMPANY TOWN : Two Sides in Videodisc Battle Begin Talks on Single Format : Technology: Philips-Sony, Time Warner-Toshiba agree to end squabbling and discuss creation of industry standard.

August 25, 1995|JAMES BATES | TIMES STAFF WRITER

In what almost seems analogous to the start of the Paris peace talks in the entertainment technology business, the two competing sides developing digital videodisc machines acknowledged Thursday that they are finally in discussions about creating a single format.

The development brings together two parties--on one side, consumer electronics giants Philips Consumer Electronics Co. and Sony Corp., and on the other, media giant Time Warner Inc. and electronics conglomerate Toshiba Corp.--that have been at loggerheads in their battle to establish a format that will soon allow consumers to view movies, listen to music, play video games and retrieve information on a new generation of compact disc machines.

Each side has stubbornly insisted on the superiority of its own technology and has sniped publicly at the other as they jockeyed for support among Hollywood studios, computer companies and consumers.

Thursday's disclosure marks the first time the two sides have said they are trying to work out their differences.

In the past, Japan's Sony and the Dutch-owned Philips have taken the harder line in spurning discussions.

Executives cautioned that the two sides are only talking and that there are no assurances that any agreement will be reached. One major hurdle, sources said, could be how to figure out patent rights if the parties agree on some sort of unified format.

Warren Lieberfarb, president of Warner Home Video and a key player in Time Warner's camp, said in an interview that he is "cautiously optimistic" that some agreement can be reached.

Discussions on a common format come after top executives at the various companies--including Sony President Nobuyuki Idei and Time Warner Chairman Gerald Levin--became personally involved in brokering an agreement to start discussions, sources said. A formal announcement was made Thursday during a joint Sony-Philips news conference at the 1995 Internationale Funkausstellung, a consumer electronics trade show in Berlin.

Mounting pressure on the two sides has come from the computer industry, as well as major companies in the entertainment business. Executives want to avoid a repeat of the fruitless battle that occurred in the 1980s between Matsushita Electric Industrial Co.'s VHS and Sony's Betamax formats for home videocassette recorders, a battle the VHS forces won.

Pressure increased two weeks ago when a group of computer companies--part of what is known as the Technical Working Group--said it will withhold its support of a technology until both sides work toward a common standard. Sony and Philips had been counting on the computer industry's support. The group includes such heavyweight companies as International Business Machines Corp., Compaq Computer Corp., Microsoft Corp. and Apple Computer Inc.

So far, Time Warner and Toshiba appear to have the edge, with most major Hollywood studios and consumer electronics companies lining up with them. Some CD-ROM makers and small computer companies have picked the Sony-Philips format.

Digital videodiscs will resemble CDs, are expected to cost about $30 each and will play on machines that cost about $500. The Time Warner-Toshiba group introduced a double-sided disc that holds much more data for such things as movies and video games, while the Sony-Philips group developed a one-sided disc it claimed would be cheaper and easier to use.

In any event, the start of talks is likely to delay the introduction of videodiscs while differences are being worked out, executives and analysts said. Manufacturers had been aiming to introduce the product as early as mid-1996.

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