Sony is in talks with console rival Microsoft about offering a Blu-ray drive for the Xbox 360, according to a senior executive.

The Japanese electronics maker has until now touted Blu-ray as an advantage its PlayStation 3 holds over Microsoft’s console. Microsoft has backed Toshiba’s HD-DVD format and offered an HD-DVD drive that can be plugged into the 360.

But after Sony’s victory last month in the high-definition DVD format war, Stan Glasgow, Sony Electronics US president, said the two sides were now talking about Microsoft adopting Blu-ray.

A Blu-ray drive in a 360 would make Microsoft more competitive with the PS3, but it would also mean extra revenues for Sony’s electronics division. It would also add further cost to the 360, meaning a premium edition of the console could be necessary.

A Blu-ray drive could be incorporated in its top-of-the-range Elite Xbox, or Microsoft could again offer a drive as a plug-in peripheral.

Mr Glasgow, speaking at a media dinner, added that discussions were also taking place with Apple, which has not offered Blu-ray drives on any of its computers so far and has focused on digital media via downloads and streaming through devices such as its Apple TV.

The Sony president said he did not believe Blu-ray would be overtaken by high-definition content becoming available over the internet. Bandwidth limitations meant it was still available to only a few, he said, and consumers favoured disks they could own.

“Downloading will build over time, but this will be over a period of years,” he said.

On Blu-ray pricing, Mr Glasgow expects prices of players to drop to as low as $299 by the end of the year. They currently cost $399 and higher. He feels the price of a player could fall to about $200 by the end of 2009.

The prices of Blu-ray players are not expected to fall as precipitously as they did with regular DVD players. The Blu-ray Association, the group controlling the standard, has yet to license it to Chinese manufacturers, who would be expected to drive down prices.