Top movie studios look set to delay the HDCP copy protection system - which would only work on next-gen DVD players with HDMI ports, unlike the low-end PS3 and Microsoft's Xbox 360 HD-DVD peripheral - for four to six years.
The move would mean that all movie content produced until 2010 at the earliest, and possibly as far as 2012, will not carry the Image Constraint Token - a security feature which would restrict high-definition playback only to equipment with HDMI ports and HDCP encryption.
Hollywood studios had insisted on this draconian feature, which would encrypt all image data sent between the player and the television (and would consequently mean that users had to have TVs with HDCP-enabled ports as well as new players), as a measure to prevent piracy - and has stuck doggedly to it so far, despite a number of claims that the technology is flawed and will be easily cracked by determined pirates.
However, now leading German newspaper Der Spiegel claims to have information on an unofficial agreement struck between the movie studios and firms including Sony and Microsoft which will see HDCP, and the ICT, being consigned to the scrapheap for at least four years.
The deal has been widely rumoured in technology circles for some time, but further confirmation is offered by the Der Spiegel article - and at a crucial time for Sony and Microsoft, both of whom are set to launch high definition DVD offerings in the coming six months which will lack HDMI ports and HDCP functionality.
While the high end version of Sony's PlayStation 3 will indeed have a HDMI port, the low-end 20GB version (which has not yet been confirmed for launch in the UK) does not; and Microsoft's external HD-DVD player for the Xbox 360 has no HDMI port. Even if Microsoft launches a HDMI cable for the Xbox 360, there's been some speculation that the console would not be able to implement HDCP on this cable.
What this would mean, if the ICT was imposed, is that neither console would be able to output Blu-Ray or HD-DVD content at higher than 480p (540p in North America), thus effectively negating much of the advantage of the next-gen DVD formats. Games would still be able to run at up to 1080i resolution on either system.
Looking beyond consoles, it's also undoubtedly a major factor in this decision that few of the HDTV sets sold so far around the world - and in Japan and North America, market penetration has grown quite quickly - have HDMI ports or HDCP compatibility, meaning that even people who have already bought into the "HD Era" would be forced to buy new screens again to enjoy HD movies.
Faced with this prospect - and the potential of a massive consumer backlash against the HD formats - it's not hard to see why the movie studios have relented, especially given the amount of pressure a firm like Sony can bring to bear in Hollywood. The Japanese giant, through subsidiaries such as Sony Pictures, Columbia, Tristar and MGM, is responsible for around half of the annual movie output of the US industry.
Although the decision is, so far, only a stay of execution - and the movie studios are reportedly quite unhappy with having to relent on their beloved copy protection system, regardless of how flawed or detested it may be - it does mean that HDCP will probably not become a required standard until this generation of consoles is reaching the end of its lifespan.