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Don Eklund, senior vice president of advanced technology for Sony Pictures, has revealed that the it will encode with the same MPEG-2 technology used for DVDs.

'Advanced formats don't necessarily improve picture quality,' said Eklund. 'Our goal is to present the best picture quality for Blu-ray. Right now, and for the foreseeable future, that's with MPEG-2.'

This classic example of Sony's tradition of different divisions pulling in opposite directions - which new CEO Howard Stringer pledged to tackle - makes something of a mockery of Blu-ray's support for MPEG-4 AVC, also known as H.264, which enables content to be encoded at much higher bitrates without huge increases in file size.

The news may also come as a surprise to Blu-ray backer Apple which has native H.264 support in the latest version of its operating system and to Microsoft, which has invested in its

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own high-definition codec, VC-1, that it is pressing to be adopted as a standard.

The Blu-ray Disc Association confirmed today that it still on course for an official launch of the first BD devices in the Spring, despite the intentions of some manufacturers to put them on display at the Consumer Electronics Show in January.

BD-backers including Sony, Disney, Fox, Pioneer and Panasonic were present at a demonstration of the format's interactivity features which include the ability to connect directly to content on the Internet.

A number of them cited this as a key reason for preferring BD over the rival HD DVD format, as it will enable them to link to online stores selling discs, merchandise and more.

'We do intend to be able to have that as an element in the next Blu-ray specification in terms of its being able to be used as a portal to make transactions,' Bob Chapek, president of Disney's Buena Vista Entertainment, told Reuters.

While Blu-ray and HD DVD prepare for their high-profile launches, Taiwan's alternative next-generation system has gone into production. FVD (forward versatile disc) was introduced in March and while it will be cheaper, it will come nowhere near to offering the same capacities in excess of 25GB that the blue-laser BD and HD DVD systems will provide. Instead it sticks with red lasers to restrict it to, at best, 11GB on each disc. However it will allow for content to be encoded at the same 1920x1080 maximum resolution of the blue-laser systems. Triple-layer 15GB discs are also planned.