Forrester: Blu-ray winning drawn-out format war

"After a long and tedious run-up to the launch, it is now clear to Forrester that the Sony-led Blu-ray format will win," Ted Schadler, a Forrester analyst, said in a report. "But unless the HD DVD group abandons the field, it will be another two years before consumers are confident enough of the winner to think about buying a new-format DVD player."

Also on Wednesday, Blu-ray backer Hewlett-Packard said it has appealed to the group to incorporate two HD DVD features: mandatory "managed copy," which will mean consumers will always be allowed to copy movies to their computers' hard drives, and iHD, a Microsoft-designed technology for interactive features.

But Blu-ray has several advantages that will help it win the day, Schadler said. HD DVD is a one-trick pony for video playback, but Blu-ray is also designed for games and computers, he said. Indeed, its inclusion in millions of Sony's next-generation video game consoles is a factor. And when former HD DVD loyalist Paramount endorsed Blu-ray, it shifted the movie studio momentum. Finally, although Blu-ray manufacturing will cost a little more initially, it offers more capacity and employs a proven technology, Java, for interactive features.

But unless the HD DVD camp throws in the towel--a move Schadler recommended--the victory will be slow in coming. "Consumers will postpone a decision until the winner is obvious. The war between Betamax and VHS trained a generation of consumers to be wary of competing formats. Many consumers were caught with an expensive device that couldn't play the movies available at the video store," Schadler said.

Also slowing things down: The image quality of today's DVD is good enough that most people won't be itching to switch until high-definition TV is much more widespread.

The arrival of powerful networks has added a new twist to the situation, Schadler said. "The irony of this format war is that it comes at the tail end of the century-long era of physical media." Increasingly, people order movies on demand or watch Internet video.

In the computing industry, Schadler's prediction doesn't bode well for Intel and Microsoft, which allied themselves with HD DVD in September. Days after, Intel's two main PC chip customers, Dell and HP, reaffirmed their Blu-ray commitment.

Based on discussions with Panasonic, which has a pilot Blu-ray manufacturing plant in Torrance, Calif., Schadler believes HD DVDs will be only "pennies per disc" cheaper to build once Blu-ray manufacturing hits full speed.

Technologies such as Intel's forthcoming Viiv and Microsoft's Media Center help put PCs at the center of consumers' electronic entertainment gear, so it's no surprise the companies want the managed copy feature required by HD DVD. But studios are likely to prefer Blu-ray because it "allows...a higher level of copy protection," Schadler said.