Philips Interactive Media of America and Laser-Pacific Media Corp. have finalized an agreement to put digitally compressed video on a compact disc.

Laser-Pacific, a Hollywood post-production house, promises to produce VHS-like quality images for Philips’ CD-I interactive CD format, opening the way for producing music videos, interactive animated games and feature-length films for the format.

Reportedly, announcements by major studios endorsing the format for films could be forthcoming later in the week at the Consumer Electronics Show in Chicago.

Executives at all the major studios have seen the full-motion-video-capable CD-I player and been impressed. Calls to several studios were not returned.

There would have to be some accommodation to the limits of the technology even with compressed images. Following the Motion Picture Experts Group (MPEG) standard for squeezing video images down to the 5-inch discs, only 72 minutes of video can be accommodated without sacrificing quality. Philips is expected to release a multi-disc player that could shuffle several CDs fora feature-length movie.

Laser’s service will be available to any developer for the CD-I platform. The full-motion-video player is expected to be on the shelves for Christmas. It will be backed by a major campaign promoting the player’s ability to handle audio CDs , Kodak Photo CDs, movies and CD-I’s own titles.

Laser-Pacific has been at work recently on a digital compression process using IBM’s latest, the Power Visualization System.