One day, we’ll all watch movies at home on 5in discs that make today’s DVDs look like low-grade VHS. We know the basic technology that will make this happen: blue-light lasers which increase disc capacity, allowing one disc to hold hours of pristine-quality video. What we don’t know is which of the two blue-laser compatible formats will make it into your living room.

The two competing formats are Blu-ray Disc and HD-DVD. If you remember the VHS versus Betamax war of the early 1980s, be prepared – a similar battle may be about to erupt.

And the contest will be about more than just home video. Today’s DVDs are a medium for computer software distribution, retail videos and PC backups. So next-generation, blue-laser DVDs will have to be equally versatile. The first retail blue-laser units – which are currently available only in Japan and cost thousands of dollars – are set-top video recorders.

Those recorders all use the Blu-ray format, a brand backed by – among others – Sony, Pioneer, Panasonic and HP. The competing flavour, HD-DVD, is primarily the product of Toshiba and NEC.

Earlier this year, the DVD Forum officially endorsed HD-DVD, although the decision was by no means unanimous. All of the major Blu-ray companies belong to the DVD Forum, many of whom have no plans to back what they consider to be an upstart.

Blu-ray was designed with an emphasis on capacity; HD-DVD is aimed at compatibility. The former can hold about 50GB on a two-layer disc compared with HD-DVD’s 30GB.

By comparison, today’s two-layer DVDs hold less than 9GB. But an HD-DVD disc is physically closer to today’s DVDs, making it easier to manufacture discs in existing factories and to make drives that can also read and write today’s DVD and CD formats.

Not surprisingly, each side believes that its shortcoming is less important. According to Pioneer vice president Andy Parson: “The manufacturing process difference has been overstated. Sony believes it can use existing machines to make the discs.”

What’s more, Matsushita – better known by its Panasonic brand name – has announced a Blu-ray recorder with CD/DVD support for the Japanese market.

As for HD-DVD’s smaller storage capacity, Toshiba vice president Maciek Brezski says that the designers of HD-DVD “felt [that 30GB] was enough to get you what you needed”.

Everyone agrees they don’t want a format war, which would dampen consumer enthusiasm and slow market acceptance. The problem is that both groups see only one way to avoid war: having their side win.

And nobody can win without the support of the Hollywood studios, which have been reluctant to champion one format over the other. For now, they’re taking a wait-and-see approach.

The one exception, not surprisingly, is the Sony-owned Columbia Pictures, which has publicly embraced its parent company’s Blu-ray format.

One solution that nobody thinks likely in this case is the one that ended the DVD +/- battle: drives that play discs in either format. That was possible because DVD+R/RW and DVD-R/RW drives are mechanically very similar so supporting both formats doesn’t get much more complicated than adding extra firmware and paying another licensing fee.

But Blu-ray and HD-DVD drives are fundamentally different; a combo drive would probably require one set of arms and motors for Blu-ray and another for HD-DVD. It’s unlikely anyone will ever make such a combo drive that would also be small enough to fit in a computer.

Whatever format they come in, blue-laser DVDs aren’t likely to appear in significant quantities before late 2005 at the earliest. And they probably won’t be common, or inexpensively priced, during this decade.