Efforts to come up with a compromise on the next generation of DVD format appear to have stalled.
The new DVDs can hold much more information
Technology giant Toshiba and Sony had been in talks about bringing together rival DVD technologies.
But the two are planning to go ahead with their own formats after talks on a single format failed, reported the Japanese Daily Yomiuri newspaper.
Toshiba, with NEC and Sanyo, is pushing HD-DVD, while backers of Sony's Blu-ray include Dell and Samsung.
The next generation of DVDs, due to go on sale later this year, will be able to store much more data, including high-definition video.
This offers incredible 3D-like quality pictures which major Hollywood studios and games publishers are extremely keen to exploit.
The clash between HD-DVD and Blu-ray parallels the battle a generation ago between VHS and Betamax, which resulted in the demise of Betamax.
The groups backing the rival next generation DVD formats had been keen to avoid a repeat of the format wars of video.
Sony plans to use Blu-ray in the PlayStation 3
But negotiations between Toshiba and Sony on coming up with a hybrid DVD system have stalled, with Toshiba pressing ahead with production of HD-DVDs.
Toshiba "is planning to launch our first HD-DVD products by the end of this year. To do that, we have to start production of software for it by the end of this month," said a spokeswoman.
However, neither side has closed the door on developing a single format.
"We have not set a time limit for the talks," added the Toshiba spokeswoman.
For its part, Sony said future negotiations would be held "if there will be an opportunity for it".
Sony plans to put a Blu-ray disc drive in its new PlayStation 3 game console next year.
Blu-ray backers include Apple, Dell, Hewlett Packard, Samsung, and Disney.
HD-DVD supporters include Paramount Pictures, Universal Pictures and Warner Brothers Studios.
Blu-ray discs can store 50GB of high-quality data, while Toshiba's HD-DVD can hold 30GB
Both disc formats offer much better quality audio and video, and could also mean there is a lot more space for interactive elements.
Analysts say that new technology might be able to overcome the problem of different DVD formats, much like multi-region players can play DVDs from any part of the world.