The group has agreed basic specifications for a blue-laser-based optical-disc system, named "Blu-ray disc". The companies plan to have the first version of the specification finalised and ready for licensing within the next few months.
The format is initially designed for the recording of high-definition television video, but also marks a milestone in the road towards systems offering greater data storage than DVD.
Blu-ray discs will be rewritable and will have a data capacity of around 27Gbytes, which is enough for two hours of high-definition digital television. They will employ blue lasers rather than the red lasers used in DVD and CD players.
Blue lasers have a shorter wavelength - 405 nanometres compared to around 650 nanometres on DVD systems. This means the laser beam can be focused onto a smaller area of the disc surface, therefore more data can be stored on a disc.
Prototype blue-laser-based optical-disc systems have been around for more than a year. However, cost hampered the development of commercial systems. A sample blue-laser diode currently costs around $1,000 (£702), which makes the development of consumer products unrealistic. However, Nichia, the major source for blue lasers, is expected to begin volume production this year, which could lead to a sharp drop in price.
Among the Blu-ray disk group are six of the 10 companies that worked on developing the DVD format: Hitachi, Matsushita (Panasonic), Philips, Pioneer, Sony and Thomson Multimedia. They have been joined by Sharp, LG Electronics, and Samsung.
Four of DVD's main backers - Mitsubishi, AOL Time Warner, JVC and Toshiba - were absent from the initial Blu-ray disc consortium.
Toshiba's absence is the most significant. The company is chair of the DVD Forum, and has publicly stated that it intends to propose its prototype blue-laser optical-disk format to the organisation as a next-generation DVD format.
Toshiba's absence from the Blu-ray disc group raises the possibility that a format battle, just like the one that took place before the industry settled on DVD, may be about to begin again.
"We are not in that discussion group," said Midori Suzuki, a spokeswoman for Toshiba. "For the next-generation blue-laser optical disc, we will keep proposing a standard to the DVD Forum."
Before the DVD specification was announced, a group led by Toshiba and Matsushita was pushing a system called Super Density while Sony and Philips were promoting their Multimedia Compact disk. In the end, both sides came together to back one format, although in the computer area, where multiple standards often battle against each other or coexist, there has not been such harmony.
The DVD Forum has standardised two re-writable formats, DVD-RW and DVD-RAM. However, a group of companies, including forum members Sony and Philips, have developed their own competing system, DVD+RW, which despite its name is not an official DVD format.
Sony and Philips are also pushing Double Density CD, which is a CD-based technology with double the storage capacity of regular CDs, and a multitude of other formats also exists, including Magneto Optical (MO) and CD-RW.
Blu-ray discs are expected to be available in three similar sizes: 23.3Gbytes, 25Gbytes and 27Gbytes. The group has yet to decide whether the disks will be enclosed within a cartridge or not.
Right now much of the talk about blue-laser-based systems is focused around high-definition television, where data needs are great. However the Blu-ray disc group is also considering development of write-once and read-only formats for use with personal computers, the group said.