Agreement Reached on a New Format for Video : Technology: Toshiba and Time Warner end battle with Sony and Philips on disc for use in devices to replace VCRs.

Clearing the way for a new consumer electronics technology that could eventually supplant the videocassette recorder, two warring industry factions on Friday reached an agreement on a single technical standard for a next-generation compact disc system known as the digital videodisc.

The new technology promises to bring movies into the living room on a shiny silver disc similar to an audio CD, but with video and sound quality far superior to that offered by a VCR. In addition, the new CDs will be used as a computer storage medium offering 10 times the capacity of today’s CD-ROM discs.

One industry alliance led by Toshiba Corp. and Time Warner Inc. and another led by Sony Corp. and Philips Electronics have been fighting for nearly a year over technical standards for the new medium, and if both had gone ahead with their own standard, consumers would probably have been slow to buy either. Friday’s agreement was hailed by electronics and entertainment industry executives as a major breakthrough that would assure the technology’s success.

“It’s a victory for the consumer,” Toshiba Corp. Executive Vice President Taizo Nishimuro said at a press conference. “Nobody wants to purchase something that can become obsolete after two or three years.”

“All the energy that could have been wasted trying to persuade the consumer that this format is better than that format can now be concentrated on telling the consumer that this is a great new product, which will let them see movies at a higher quality and a very good price,” said Richard Cohen, president of MGM/UA Home Entertainment. “That’s the beauty of a single format.”

The unified format--which has yet to be named--incorporates the Toshiba proposal for the basic structure of the disc, which will be made from two thin discs bonded together. The modulation system--which refers to the way the computer in the player reads the signal on the disc--belongs to Sony/Philips.

The discs will initially be able to hold up to 133 minutes of high-quality video and audio in a single layer of data encoded on one side of the disc, and will also have high reliability for use in storing data for computers. It will be possible to increase the playing time with “dual-layer” technology, or by using both sides of the disc.

“I wouldn’t call it a compromise--it’s a unification,” said Alan Bell, an IBM researcher who headed an industry consortium that had evaluated both formats for the discs, which will eventually replace the current CD-ROM. “From a technical point of view this represents a stronger proposal than either of the two other proposals.”

Both sides had long insisted theirs was the superior format, even as representatives from the film and computer industries pleaded with them to come to a compromise. The fight was reminiscent of an earlier industry battle when VCRs were first developed, which pitted Sony’s Betamax technology against Matsushita Electric’s VHS format, the ultimate winner in the marketplace.

Many feared that rival formats for digital videodisc would mean failure for everyone. But a breakthrough came last month, when Sony and Philips presented a new proposal to the rival camp. After meetings in Honolulu last week with the IBM representatives who offered an independent technical evaluation of the two schemes, the Toshiba/Time Warner camp accepted it.

Representatives of the seven leading firms in the Toshiba/Time Warner alliance met for more than six hours in a Tokyo hotel Friday, then held a news conference to announce they had approved a compromise proposal that combines features of each group’s technology. Sony then announced its agreement to the compromise.

“Rational minds prevailed,” said Warren Lieberfarb, president of Warner Home Video and longtime proponent of a new digital videodisc system. ‘It’s a win-win, because a format war is a lose for everyone.”

Not all the details of the standard have yet been worked out--and it is not clear how the patent royalties will be divided--but the risk of a full-scale standards war appears ended. All the major players in the consumer electronics world are expected eventually to license the technology and sell digital videodisc products.

The first machines using the new technology are expected to go on the market in September, 1996, Nishimuro said. The price of digital videodisc recorders is expected eventually to fall to the general range of $500, but will initially cost considerably more, said Teruaki Aoki, a director at Sony.

Equipment using digital videodiscs is expected eventually to replace both videocassette recorders and CD players, though all agree it will take some years--and probably the development of a recordable version of the technology--for that to happen. Global annual sales of VCRs and audio disc players combined currently are about 60 million to 80 million machines, Nishimuro said.

The movie studios consider the digital videodisc a major opportunity because it will allow them to sell many of their existing films again, just as music companies have done with the audio CD. In addition, they hope to develop the videodisc business as a retail business rather than a rental business--which will be made possible by the low cost of the discs.

“This is let the games begin time,” said Tom Adams, president of Adams Media Research, a media technology consulting firm in Carmel Valley. “Two formats were death for the concept. Now there’s time for real bullishness.”

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Holley reported from Tokyo and Harmon reported from Los Angeles.

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Videodisc Drive

Friday’s agreement on a digital videodisc standard paves the way for the introduction next year of a machine that could eventually replace the videocassette recorder.

DVD’s key advantages:

* It provides better video and audio quality.

* Movie discs will be more convenient, more durable and perhaps cheaper than VCR tapes.

* Viewers will be able to cut directly to particular scenes, with no need to rewind.

* When used as a computer CD-ROM, the disc will have far more storage capacity.

Its liabilities:

* DVD players will initially cost more than VCRs, probably about $500.

* The disc machines will not record.

* Current CD-ROM drives will not play the new discs.

* DVD systems will eventually be overtaken by delivery of movies on demand over cable or phone lines.