The format war around next-generation DVDs may be over before it has begun, thanks to a breakthrough from a British media technology company.

Britain-based New Medium Enterprises said on Tuesday it had solved a technical production problem that makes it possible to produce a cheap multiple-layer DVD disc containing one film in different, competing formats.

"Current technologies to create multiple-layer discs mostly don't work. We've created a technology for mass production of multiple layers that does not suffer from the well known problem of low yields," said NME Chief Technology Officer Eugene Levich.

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A low yield means that many DVDs coming off the manufacturing lines are not working and have to be discarded.

The production costs of a multi-layer DVD using the new NME technology are estimated to be around 9 cents, compared with the 6 cents for a standard single-layer play-back DVD, according to Dutch company ODMS, one of the world's leading makers of production lines for optical discs.

This 50 percent cost increase compares favorably with the current generation of multi-layer recordable DVD discs, which cost 3 to 5 times as much to produce than a single-layer disc, due to low yields.

The technological breakthrough comes one week after three employees at movie studio Warner Bros. filed a patent for the application of multiple formats on a single DVD disc.

"There's no collision between Warner and us. They patent the application, we are patenting the technology. These are complementary patents. I'm glad it's happened. Warner opened our eyes, because it shows they really want to do this and create multi-format, multi-layer discs," Levich said.

Time Warner (TWX) is the world's largest media company and owns Warner Bros. Former Warner Home Video President James Cardwell joined NME as a board member last month.

NIPPED IN THE BUD?

Multiple-format DVD discs can solve the emerging war between the two new high capacity DVD formats: Blu-ray Disc, which is backed by Sony Corp. (SNE), and Toshiba-supported HD DVD.

High capacity DVD discs are needed to store high-definition movies on a single disc. Movies stored in high definition provide five to six times more picture detail than standard definition which is used in normal DVDs.

Hollywood studios have been choosing sides in the DVD format war, each supporting one of the two formats. Some have said they will produce films in both, in addition to the standard DVD format.

By putting the same film on a single disc in the two competing formats, movie studios can save money and consumers do not have to worry if they are buying the right disc for their player.

The technological breakthrough by NME was confirmed by ODMS.

"I can confirm this. We were very skeptical when NME approached us. We have experience with producing dual layer recordable DVD discs and the yield is below 50 percent. But their technology gives a much higher yield and also brings other cost savings," said ODMS Chief Executive Jadranko Dovic.

ODMS said it will have the first prototype production line using NME's technology running by early 2007.

NME said it had also created new technology for the machines which have to read and write the disc, which is another bottleneck with multi-layer discs.

The current generation of DVD players can read up to two layers.

NME has created DVD discs with up to 10 different layers that were still readable. It has created its own player, but it is willing to license the technology to mainstream consumer electronics companies, Levich said.

Movies on a DVD are stored at different depths depending on the technology. Blu-ray discs store information only 0.1 millimetre from the surface, while HD DVD discs store it at 0.6 millimeters.

Movies longer than two hours would need to be stored on two layers of the same format very close to each other.