According to sources close to the DVD Forum and the Blu-ray Disc Association, the groups are on the verge of agreeing on a higher-level protocol and interactive layers as well as the physical formats of the incompatible standards.

A compromise would allow Hollywood studios to produce a single title in one HD format and compile it later for either platform. Such a move also means consumer electronics manufacturers would have to spend less time developing dual-format software and hardware for new HD DVD players.

Sony Corp. is promoting its Blu-ray format with Matsushita Electric Industrial Co., Pioneer and others. Toshiba Corp. and NEC Corp. are the key proponents of HD DVD format.

Asked at a Sony press event this week why Blu-ray disk players are not ready, senior manager Tomihiro Nakagawa said the "physical format is already determined, but the interactive layer for Blu-ray ROM is not done." Nakagawa said the group is planning to include an interactive layer that would, for example, allow the downloading of subtitles in different languages.

The Blu-ray group is apparently pushing for use of the Java-based Multimedia Home Platform — an API now used in European interactive digital TV set tops as well as U.S. cable set tops — in its new players. By contrast, the DVD Forum is reportedly promoting a derivative of the Microsoft-developed MSTV, which among other languages uses HTML, ECMAScript and the W3C markup language, but not Java.

The HD DVD debate is a replay of an earlier clash over an an API for an interactive digital TV set-top spec — where one side promoted Sun Microsystems' Java language while the other backed Microsoft's MSTV.

Discussions are far from over, but industry sources said Blu-ray group members have been attending marathon meetings this week at the studios of Blu-ray backer Disney. The DVD Forum is also expected to meet soon at the offices of member Time Warner Inc.

Sony's Nakagawa said the debate over software for the Blu-ray disk player is "in the home stretch."

Hollywood remains split over the competing standards. Paramount, Universal and Warner Bros. are siding with the DVD Forum while Walt Disney Co., Sony Pictures and MGM support the Blu-ray spec.