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However Tadashi Okamura told Japanese business leader said that he expects both HD-DVD and Blu-ray products to be on the shelf before an agreement can be reached.

'We may actually have a situation where merchandise from both sides is put on store shelves. But the market would not allow that situation to last very long,' he said.

The head of Sony's gaming division agreed, but said the only hope for an agreement is if the two parties can agree to use Blu-ray's physical characteristics, as Sony is committed to incorporating the technology into its PlayStation gaming system.

Toshiba backs the HD-DVD format while Sony is behind Blu-ray. Other technology companies and movies studios have lined up behind one or the other or both.

Toshiba is currently leading the race to be first to market and would probably be the narrow favourite to win if the two technologies do go head-to-head, not least because it recently matched Blu-ray's previously superior storage capacity.