An Ars Technica report citing the German news publication Spiegel Online indicates that an unofficial agreement has been reached between Hollywood and hardware manufacturers, including Microsoft and Sony, which could delay the implementation of Image Constraint Token (ICT) until 2010 or even as late as 2012.

What does this mean? Well, ICT is a form of copy protection as part of the AACS (Advanced Access Content System) that automatically downgrades a 1080p resolution to 540p (which technically isn't even considered high definition) unless the signal is output through an HDMI cable.

With the $499 version of the PlayStation 3 lacking HDMI output the Internet has been ablaze with the notion that it wouldn't be able to output in 1080p, thereby rendering its hi-def Blu-ray movie playing capabilities almost useless. And as such, Sony's advertising both models of the PS3 as Blu-ray players could be considered false advertising. However, if the $499 version will be able to output a 1080p signal through traditional component cables, the low-end PS3 suddenly becomes a much more appealing option.

A delay to the use of ICT could also be good news for Microsoft, which is introducing an HD-DVD player add-on for its Xbox 360. The Xbox 360 does not contain any support for HDMI in either the core or premium SKUs.

Sony and Universal have already formally dropped ICT from their upcoming movie releases, and according to the news on the agreement from Spiegel, most of the other major studios will also be dropping ICT.

Perhaps Sony is a lot smarter than many of us give them credit for. It's possible that they got word of this agreement before deciding to announce dual SKUs; of course, it's also possible that they simply decided to take the risk of removing HDMI.