Blu-ray and HD DVD - Where are we now?

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In the US, Toshiba is now selling HD DVD players at under $100 (£48) per unit, and with it reportedly running up a loss of nearly $500 on each unit sold. Disney, meanwhile, recently stumped up a deal on Blu-ray discs, again in the US, that saw customers able to buy one, and get one free.

Meanwhile, with blows exchanging about the sales numbers of the Blu-ray exclusive Spider-man 3 and HD DVD exclusive Transformers movie releases, Microsoft has denied it's going to release an Xbox 360 console with a HD DVD drive inside, while the president of Disney Studios Home Entertainment has blasted the format, instead calling Blu-ray's victory an inevitable one.

That's just from the last two weeks. They're the latest blows in an increasingly bitter war of high definition formats, the end result of which thus far has been simply to put many people off either format. Even in the more welcoming computer space - itself having now recovered from a futile format battle over writeable DVD formats - there's little appetite to convert interest in HD formats into purchases.

Right throughout this battle, the seeds of which were arguably planted in the wake of the success of DVD, if not the original CD, the comparison has been Betamax vs VHS. But surely never in the technology sector has a format war - be it over DVD, video formats or even good old Mac vs PC - become so nasty so quickly. And things, bluntly, are not going to get better soon.

High stakes

The reason for the intensity of it all? Quite simply, the stakes are sky high. Format ownership, as every technology company on the planet is only too aware, is a one-way ticket to a lot of healthy balance sheets. Take Philips: still reaping steady and significant revenues from CDs nearly three decades after the inception of the format. Or take Toshiba: the unprecedented speed of adoption of DVD as both a consumer and enterprise format has guaranteed it revenues far into the future.

However, format creation is a business laden with corpses. Sony - the big player behind the Blu-ray format - itself has a veritable graveyard of formats that have failed to significantly catch on. Take the UMD, the Super Audio CD, Betamax, even the ATRAC audio format. Each of these, had they become major mainstream successes, would have generated hundreds of millions of dollars in revenues at least. As it stands, while some enjoyed moderate success, each demonstrates just how hard it is to sell a new format to a public who are happy with their lot.

And that is one of the key challenges with the high definition format war. The two competing camps - the Toshiba-backed HD DVD and the aforementioned Sony-supported Blu-ray - are aiming to sell a format that, for many in its target audience, they have little need for. Sure, in the computer space, the idea of an optical disc with storage capacities of up to 50GB is ideal, but that's not the sector that's determining a winner or loser. No, it's the movie industry where the main blood is being shed, and many - in the same way that they're content with the quality of a CD - are entirely serviced by the digital versatile disc. In spite of perhaps investing in a high definition television, the jump from DVD to a format capable of 1080p picture output simply isn't tempting.

But the problems run deeper than that. Most would agree that even if the appetite for a HD format isn't at the level of the hunger for a successor to VHS tapes, that there's still a market for it. Furthermore, with margins being eroded on DVDs to the point where major Christmas releases sell online with discounts in excess of 50% from day one, many content producers would gladly back a new format that could bring some of those margins back.

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