NEC has announced that it’s created a chip that is compatible with both Blu-ray and HD-DVD.

The chip could be used in multi-format players, which have so far been avoided by manufacturers, apart from NME, which announced yesterday that it was launching a multi-format player in January at CES.

The big news about NEC’s chip is that it will cost about the same as the chips that play either Blu-ray or HD-DVD, making an affordable multi-format player a distinct possibility.

However, before these devices can go into production, it’s likely that manufacturer’s are waiting for an optical lens that can read both HD-DVD and Blu-ray, so that two separate lenses won’t be necessary, as the high cost of building two into every player would be reflected in the price.

The lens would be the last piece of the puzzle, as there have already been developments in the creation of a multi-format disc by engineers from Warner Bros, and from NME.

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