With this week's news that Toshiba Corp. will no longer make any HD-DVD products, the death knell of its next-generation, high-definition DVD standard has been sounded and rival Blu-ray‚s victory has been assured. However, after years of a standards war, the major question for Sony Corp. and the Blu-ray camp is whether a physical format for high-definition still has any relevance to consumers in this era of Internet-delivered movies and video on demand.

"The demise of HD-DVD will reduce consumer confusion, since everyone will talk about a single next-generation DVD player and the benefits of owning such a player," said David Carnevale, vice president of multimedia content and services at iSuppli Corp. "But the biggest question of them all now is: Do consumers even care?"
 
Blu-why?
During the years while the DVD war raged, online services from iTunes, Amazon and others  have gained traction and now offer numerous movie titles, television programs and other content, all in a digital format downloaded directly to a consumer's PC or portable device and now, on their television with products like Apple TV and Sony's Bravia Internet Link.
"This begs the question: Do consumers even want or need a physical copy of their movies or TV programs anymore?" Carnevale asked. "As standards change and as digital content improves, consumers don't have to buy a new DVD player; instead, they can just download an update or even a new version of the online service's software. The need to spend hundreds of dollars every few years for new hardware goes away completely."
As faster broadband pipes and newer technologies come online, physical media distribution could become a thing of the past, according to Carnevale.
 
Why so Blu?
Another obstacle for Blu-ray is the prices for such players are likely to remain at high levels, especially now that the competitor is out of the equation.
Blu-ray DVD players now sell for about $400. In contrast, a decent standard-definition player is priced at about $60, a huge difference for Blu-ray to overcome. Furthermore, upconverter DVD players, which translate standard-definition DVD content to 720p resolution, are becoming commonplace. With these players priced at about $100, cost is likely to be an area where Blu-ray will continue to struggle.
 
Blu upside
Despite the factors that may inhibit many consumers from adopting Blu-ray players, there are some compelling reasons why some will make the switch:

• Less confusion in the market
• Larger capacity for more special features on DVDs beyond the feature presentation
• Internet-enabled functionality, picture-in-picture and other options that appeal to a number of consumers for a variety of different reasons
• The desire to get in on a hot technology
• Early adopters who were on-the-fence awaiting a winner to emerge, will be less concerned about price and will begin to make purchases, spreading the word about the advantages to others

 
iSuppli's present forecast, developed before the news from Toshiba, calls for worldwide blue-laser DVD player shipments, i.e. Blu-Ray and HD DVD, to rise to 45.4 million units in 2011, up from 6.6 million in 2008. This figure excludes PCs and game consoles.
Shipments of blue-laser recorders will rise to 6.6 million units in 2011, up from 500,000 in 2008. However, the total of both players and recorders in 2011 will fall far short of the peak shipments of the older-generation red-laser players and recorders, which amounted to 156 million units in 2006.
 
What will Microsoft do?
Microsoft Corp. has been offering a separate HD-DVD player option for its Xbox 360 video gaming console. Unlike the PlayStation 3, where the Blu-ray player is embedded, the Xbox 360 employs a separate optional drive that connects to the console.
Microsoft now faces an interesting dilemma: Does it now provide a Blu-ray option for its consoles, should it establish its own facility to produce HD-DVD players for those users who want to continue to buy titles only available on HD-DVD systems, or should it offer new systems with Blu-ray integrated into the console?
iSuppli believes the chances are high that Microsoft won't stay with HD-DVD, because it has little effect on core gamers that are using the console for online and offline gaming since the games already purchased can continue to be played and existing HD-DVD games can be migrated over to Blu-ray with little difficulty.
Those who already bought HD-DVD players for the Xbox 360 may just find themselves out of luck as new titles come out on Blu-ray, or be faced with another incremental purchase of either a new Xbox with an integrated Blu-ray drive or a Blu-ray drive add-on to their existing hardware.

 
iSuppli