Code-named Corona, Microsoft's technology is capable of encoding high-definition video at 24 frames per second at a compression ratio superior to MPEG-2. The company said Windows Media, which was previewed Tuesday at the Internet World conference here, will enable movie streaming over the Web. But it will also pack high-definition video on a DVD and offer disk and DVD player makers an alternative to costly blue laser technology on upcoming HD-DVD players.

The DVD Forum's consideration of Corona is unnerving to Japanese consumer electronics vendors, some of whom are interested in exploiting the blue laser technology they've invested in for years. While a blue laser could use MPEG-2 encoding to cram 9 Gbytes of high-definition content onto a two-layer DVD, Corona could accomplish as much without a shift to blue laser technology.

One Hollywood studio executive, who spoke on condition of anonymity, said that some DVD Forum members would like to see MPEG-2 continue, but that a complete switch to blue laser technology would involve a "very costly" overhaul of disk manufacturing and result in more expensive disks.

"Our view is that encoding improvements could deliver an HD-DVD visual experience on a DVD-9 [dual-layer DVD with a 9-Gbyte capacity]," the same executive said. "We have been encouraging Microsoft and a few others [including some MPEG-4 codec players] to attain these encoding goals."

Industry sources from both the Hollywood studios and the consumer electronics industry agreed, but said they see Corona as another effort by Microsoft to establish a strong position in the consumer electronics market. "The question you'd have to ask yourself is whether you want to lock yourself into one solution — whether a coding scheme or a digital management system — offered by Microsoft, forever," one source said.

Rob Koenen, president of the MPEG-4 Industry Forum, said that different profiles of MPEG-4 can provide 1,920 x 1,080 resolution for both progressive and interlaced video at up to 60 frames/s. "These profiles are geared towards HD applications," he said.

And the recent decision to incorporate H.26L into the spec will greatly improve MPEG-4's coding efficiency, sources said.