Technology group Forrester Research on Wednesday declared Blu-Ray, a new DVD format backed by electronics makers led by Sony Corp (NYSE:SNE - news) as the winner in a heated battle over next-generation DVD technology.

"Two groups are competing for control of high-definition DVD formats to be launched in the spring of 2006. After a long and tedious run up to launch, it is now clear to Forrester that the Sony-led Blu-Ray format will win," said Forrester Research analyst Ted Schadler in a report.

For years the Sony group and a rival set of companies led by Toshiba Corp which back HD DVD technology have been locked in a heated battle over whose standards will be used to make a new generation of DVD players that promise consumers sharper pictures and manufacturers new revenues.

A key to which technology wins has been the support of Hollywood's major film studios, which until only recently had been split evenly with three majors supporting Blu-Ray and three behind HD-DVD. Both formats deliver movies in sharp high-definition and store more data than traditional DVDs, enabling them to offer interactive features such as games.

Earlier this month, however, Paramount Home Entertainment said it would release digital movies in the Blu-Ray format, becoming the first major studio to support both rival formats.

Paramount, owned by Viacom Inc., had previously said it would release titles in HD DVD. Paramount's support of Blu-Ray was prompted by the failure of the two factions to join forces before the new high-definition DVD players went on sale, industry sources have said.

HD DVD supporter Warner Bros. has declined to comment on reports it may soon follow Paramount's lead by endorsing both.

FORMAT WAR, BAD IDEA

The formats are incompatible, which Hollywood fears will lead to consumer confusion. Industry watchers believe one format will ultimately win like in the case of the high-stakes home video battle between VHS and Betamax in the 1980s.

Schadler of Forrester said in his report that Sony learned from its painful Betamax loss that the format with the most industry support will win, and it set out years ago to assemble an "impregnable lineup of partners."

He said a format battle would be risky for both sides. "Unless the HD DVD group abandons the field, it will be another two years before consumers are confident enough of the winner to think about buying a new format DVD player. In the meantime, they will expand their video on-demand, downloadable video, and Internet viewing habits," he said.

Sony and Toshiba held high-level talks earlier this year to try to unify their formats and avoid an all-out standards war, but those discussions broke down.

Backers of HD DVD were not immediately available to comment on the Forrester report, but in an interview earlier this week, HD DVD spokesman Mark Knox said he believes two formats will ultimately reach the market but that HD DVD remains hopeful a unified format will be agreed upon.

"Our position has not changed. We're always open to finding a way to unify the format, but we want to make sure every parameter is available for discussion, whether its on the disc structure, file format," and other issues, he said.

"Let's lay everything on the table and do our due diligence. Unfortunately some of the replies we have received, are that some of the parameters, particularly on the disc structure, are not up for discussion," he said.

In yet another interesting twist to the never-ending Blu-ray vs HD DVD Gen-Next format war, camp Blu-ray has declared that it will not adopt the proposal put forward by Hewlett-Packard.

HP, which has long been a supporter of the Blu-Ray format, said in October that if two technologies it considered important to PC users - iHD and Mandatory Managed Copy - were not included in Blu-ray's specifications, the company would consider switching over to Toshiba-led HD-DVD.

Mandatory Managed Copy lets users legally copy DVDs, and store the digital file on a home network; while iHD offers new interactive features, and is slated to be implemented in Microsoft's Vista operating system.

Blu-ray has announced that it will incorporate Mandatory Managed Copy, but will launch it in Spring 2006, with interactive features based on Sun Microsystems' Java software.

A spokesperson for Blu-ray said that while HP's request is being taken seriously and Mandatory Managed Copy will be part of the Blu-ray format, the Blu-ray group is not willing to delay the launch of the format, and will go forward with the Java-type option.

Maureen Weber, general manager - personal storage, personal systems group, HP, said that if Blu-ray remains committed to its latest stance, HP will adopt a more neutral position vs. being an exclusive Blu-ray supporter. She also said that if Blu-ray is unable to incorporate technologies that HP thinks are critical for the PC architecture, HP will be more neutral. The company will think of cost and implementation across the board. Potentially, it could support both HD DVD and Blu-ray. She added that people will see HP supporting both formats, in various trade show booths.

In a separate development, Microsoft has re-affirmed its support of the HD-DVD format. The format also enjoys Intel's support. But whatever HP, Microsoft and the rest might say, the fact of the matter is that current consensus seems to be in favor of the Blu-ray format.

With billions of dollars at stake, as the electronics, computer, movie and television industries gear-up for a technology change, it looks like the Blu-ray vs. HD-DVD format war might leave behind utterly confused consumers, besides proving an expensive loss for so many companies involved.