Japan's Sony Corp. and Toshiba Corp. are considering developing a common standard for next-generation DVDs in a move that would avoid a pricey battle over formats and create a bigger market.

The two camps have agreed that this incompatibility would pose a problem and will announce an accord as early as this month on joint development of a next-generation DVD, the Nihon Keizai Shimbun business daily and Kyodo News said.

"Toshiba believes a single format will benefit consumers. We are in talks (with the rival camp and related parties) and we will continue engaging in the talks," a Toshiba spokeswoman said. A Sony source said the two groups are in talks to jointly develop a new standard for next-generation DVDs but declined to elaborate.

Sony and Toshiba, have waged a three-year battle to have their new technology standards adopted by the industry. At stake is pole position in the $10 billion-a-year DVD player and recorder market, and a similar-sized PC drive market.

Toshiba, with NEC Corp. and Sanyo Electric Co. Ltd., has been promoting a technology called HD DVD. Sony's Blu-ray technology is backed by a group including Dell Inc., Samsung Electronics Co. Ltd., Philips Electronics NV, and Matsushita Electric Industrial Co. Ltd., maker of Panasonic brand products. Despite the intentions of both groups, however, the success of the negotiations is far from certain, with the clock ticking on the planned launch of DVD players based on the new formats by the end of the year.

Toshiba, while admitting it is in talks with Sony and others on an unified format, said it has not changed its plan to launch HD DVD-based DVD players and notebook computers equipped with HD DVD drives in the fourth quarter of 2005.

Sony has proposed using Blu-ray's disc structure and HD DVD software technology, while Toshiba has suggested using the HD DVD disc structure, which is closer to that of current DVDs, and employing Sony's multi-layer data-recording technology, business daily Nihon Keizai said.

Although the companies have yet to forge a detailed agreement, the talks are expected to produce a workable solution since both sides are likely to be eager to avoid a repeat of the war over the VHS and Beta formats for videocassettes.

Sony and Toshiba have already begun briefing Walt Disney Co. and AOL Time Warner Inc., as well as Hollywood movie studios, for approval of a unified standard and to pave the way for the signing of an agreement between the rival camps.