BluRay is going to win this battle. I was a bit worried for a while that an inferior format like HD-DVD would pull through, but recent announcements by studios and press releases from MS/Intel that are more about FUD than real information have me feeling a lot better. Paramount, who until recently was a staunch HD-DVD supporter, just announced they'll be supporting BluRay as well. Warner Bros. and Universal--the only big guns who are still maintaining support for HD-DVD only--were waiting for Paramount's announcement and are expected to follow suit. The huge catalogs of exclusive content these big three studios were expected to deliver to HD-DVD have evaporated. Content is no longer an issue in this format war. MS is blathering about their support for HD-DVD, yet their XB360 won't even feature an HD-DVD drive.
There are a lot of myths regarding HD-DVD and BluRay.
1. Backwards compatibility
HD-DVD and BluRay are both backwards-compatible. There's nothing magical about HD-DVD's support of the current DVD format. Manufacturers will slap a red laser and MPEG-2 decoder into HD-DVD and BluRay decks, letting them play all your current DVDs. HD-DVD's "hybrid" approach isn't genius. They're literally gluing two discs together and creating two-sided discs. The hybrid capability BluRay has in development is a true single-sided, multi-layer hybrid solution.
2. Launch dates
People keep saying HD-DVD will hit the market first. The HD-DVD launch has been pushed back to 2006 because they're still hammering out specs, just like BluRay. The idea that BluRay has a half-finished product and HD-DVD is ready to leave the gate is incorrect. They'll both hit the market around the same time.
3. Studio support
As I mentioned above, it now looks like every major studio will be supporting BluRay. When Warner Bros., the biggest studio supporting HD-DVD and a holder of various patents guaranteeing a lot of revenue if HD-DVD is successful, decides they need to support BluRay, it should tell you how much faith they have in the format.
4. Storage capacity
The numbers being compared are misleading. The 30GB HD-DVD capacity is based on two layers. It's 15GB per layer. BluRay is 25GB per layer. With one layer, BluRay has almost the same capacity as HD-DVD dual layer discs. 25GB is enough for about 2.5 hours of HD content with the codecs being used in HD-DVD and BluRay. I'm betting manufacturers will have dual layer BluRay capability working in time for launch.
5. Manufacturing costs
The cost difference between manufacturing HD-DVDs and BluRay discs is nowhere near as large as HD-DVD supporters claim. The initial estimates were enough to concern studios at first, but with pretty much every studio changing their minds and supporting BluRay, it's obvious they feel the cost savings offered by HD-DVD aren't enough to justify supporting only that format.
There are other issues. Look at the hardware support for HD-DVD. They have three manufacturers in their camp: NEC, Toshiba, and Sanyo. You think they'll be able to pump out enough quality product to keep up with the likes of Pioneer, Panasonic, Sony, Philips, etc.? Most American consumers couldn't even tell you who NEC is because they've never been a huge retail brand here. Their last big launch in the US was the TurboGrafx-16. Toshiba's DVD players over the last several years have been consistently some of the worst available. Sanyo? Please.
I'm grateful for the existence of HD-DVD simply because they forced Sony and their BluRay association partners to go beyond mere 720p/1080i with MPEG-2 compression and Dolby Digital 5.1. We now have a BluRay spec capable of full 1080p output encoded with the most advanced codecs available and some truly outstanding hi-res multichannel audio. We owe that to HD-DVD.
However, BluRay has now incorporated everything that was great about HD-DVD while maintaining the superiority they initially offered (more storage capacity, higher data transfer rates, and better hardware support from manufacturers who know what they're doing). BluRay is now equal to HD-DVD in many respects and superior to HD-DVD on several important points. There's nothing HD-DVD offers that BluRay can't meet or beat except for disc production costs, and the studios seem to have made their decision regarding that issue.
Given the huge marketing effort it will take to launch HD-DVD and fight off BluRay's supporting manufacturers, it's possible NEC and Toshiba will recognize they don't have the clout or funds to maintain such a campaign. They could very well fold under the pressure unless they get a lot of financial assistance from Warner since they hold patents associated with HD-DVD.
This is going to be much less than a format war. More like a skirmish if you ask me.