HD DVD Vs. Blu-ray: Who Will Win on Black Friday?

This year all eyes are on the high definition market and the battle between HD DVD and Blu-ray: which side will sell more movies and more players this crucial holiday season?

This showdown involves every single media company. Sony

SONY CORP SNE 47.37 -0.77 -1.6% NYSE

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[SNE 47.37 -0.77 (-1.6%) ] is leading the Blu-ray brigade, with a bunch of manufacturers also supporting the format. So you can watch a Blu-ray disk on a PlayStation3, or on a stand-alone player made by Samsung, Panasonic, or in your Dell computer. Sony's biggest advantage is the studios it has in its court: Sony Pictures (of course), Disney/Buena Vista, 20th Century Fox, MGM, and Lions Gate.

On the other hand, HD-DVD is backed by Microsoft

Microsoft Corp MSFT 34.47 -0.11 -0.32% NASDAQ

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[MSFT 34.47 -0.11 (-0.32%) ] , which sells an HD-DVD player to connect to its Xbox360, and Toshiba is the main manufacturer of HD DVD players. HD DVD has had Universal exclusive to the format for a while, and as of August got Paramount/DreamWorks, and DreamWorks Animation to be exclusive to the format as well, reportedly in exchange for a $150 million payoff.

HD DVD's biggest advantage is its much lower cost--the lower end players are around $199, about half the cost of a typical lower end Blu-ray player. And earlier this month a price war (led by Wal-Mart

Wal-Mart Stores Inc WMT 45.0 -0.50 -1.1% NYSE

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[WMT 45.0 -0.50 (-1.1%) ] , of course) pushed the prices of HD DVD players at some retailers below $100 dollars. At that price, what consumer wouldn't want to go with the cheaper option.

It's not that easy. Consumers are clearly confused about what player to buy. Especially because there's a much much cheaper option. You can buy a DVD player that does an "upgrade" as it aims to take your regular old DVDs and make them look *more* like high def on your fancy high def TV. These players cost less than $100.

So when trying to see which format will emerge as the victorious standard bearer, and which will go the way of the Beta tape, why not do the temporary fix of buying one of these alternative players. Ah, and that's what the studios are so worried about.

The DVD market is worth about $20 million annually, but its growth is slowing, seriously, and the studios are desperate to supplement that slowdown with a new format. Digital distribution isn't there yet, and in the meantime it needs something like high def disc sales to supplement that.

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