Following a drawn-out kafuffle, Blu-Ray has finally triumphed over HD-DVD to become the official HD disc format. After losing most of its film studio supporters to the Blu-Ray camp, Toshiba announced in February that they would be retiring the HD-DVD format.

At first glance, it seems like a clear-cut victory for Sony and the Blu-Ray Consortium (which also includes Apple, Dell, Hitachi, HP, JVC, LG, Mitsubishi, Panasonic, Pioneer, Philips, Samsung, Sharp, TDK and Thomson.) When you look more closely, however, it becomes more intriguing. Is it actually possible that Toshiba was working hand-in-hand with Sony to kill its own format? It sounds unlikely, but just one day after Toshiba conceded victory to Blu-Ray, Sony announced that they were selling their chip manufacturing plant in western Japan to Toshiba for $835 million. That’s the factory that supplies Sony with Cell processors for its PS3 game console — which is also a Blu-Ray disc player.

Within one day of ending their drawn out and costly HD format war, Sony and Toshiba had become thoroughly entangled partners. And besides making Cell chips for Sony, Toshiba is now free to use them in its own devices.
Some industry insiders are suggesting that Sony and Toshiba may have agreed to kill HD-DVD over a year ago, engineering the format war simply so that Toshiba could liquidate as much of its HD-DVD product and stocks as possible — and so that the two companies could continue to squabble over the specifics of their secret deal.

If true, some are now wondering whether such a deal to manipulate consumers and shareholders could constitute consumer fraud and insider trading.

During the last format war that resulted in DVD, Phillips and Sony worked together on a format known as MMCD (MultiMedia Compact Disc.) Their competitor in that war was a disc format called SD (Super Density) that was being backed by Toshiba, Time Warner, Matsushita Electric, Hitachi, and others. IBM’s then-president Lou Gerstner was instrumental in bringing the two camps together and helping them to agree on a single format. As a result, Sony and Toshiba gave in and agreed on SD as the new format. They only asked for one addition to the specification, and the final result was DVD. Always a sore loser, Sony began work almost immediately on an even better format — which we now know as Blu-Ray.

Whether or not there were any questionable business dealings, the end of the format war is good for consumers because it ends confusion. But the Blu-Ray win is bittersweet, since there’s the possibility that neither HD-DVD nor Blu-Ray were destined to become the king of HD content.

While Sony and Toshiba were bickering, the world was steadily getting more wired and moving closer towards the promised land of online HD downloads. If Internet providers can upgrade their infrastructures quickly enough, it might just mean that DVD will be known as the last successful disc format. In the same way that Laserdiscs were merely a stopover on the road to DVD, Blu-Ray may end up as just a stepping-stone on the path to online HD downloads.

Apple is already offering HD AppleTV downloads and cable TV providers are now delivering HD Movies-On-Demand into people’s homes. What exactly would it take for online downloads to trump Blu-Ray? There are usually three factors involved when consumers are choosing a dominant format — quality, convenience, and cost.

Blu-Ray’s strength is its incredible quality, offering better resolution and picture quality than either Cable or AppleTV. Its main handicaps are its high prices for media and players and the fragile nature of Blu-Ray discs, which require a special TDK coating called Durabis just to prevent scratches during casual handling.

Cable TV’s On-Demand titles and free HD channels eclipse Blu-Ray when it comes to convenience and value, since most On-Demand HD movies cost around $5 and take only seconds to load. When it comes to quality, however, cable TV comes in last. The current compression techniques being used for HD Movies-on-Demand can create lots of blurring and artifacting, resulting in supposedly-HD content that looks worse than a standard-definition DVD. In addition, most Movies-on-Demand don’t support surround sound — and when they do, it usually results in degraded video quality, since the limited cable bandwidth calls for a trade-off. If they can come up with some improved compression algorithms, however, it might just level the playing field.

The main selling points for AppleTV (besides Apple’s signature style and attention to detail) are its cost and quality. As Apple continues to lower the AppleTV’s price, increase its storage capacity, and expand their movie library, it will become even more attractive to consumers. Apple’s compression algorithms are excellent and surround sound is fully supported, resulting in a level of quality that is just shy of Blu-Ray. It takes 2-3 minutes for HD movie streams to begin (up to an hour to grab an entire film), which is one of the AppleTV’s only annoying quirks.

Each of these new options for HD video delivery has its own pros and cons and it’s still too early to predict which will ultimately be most successful. The HD market is still nascent and industry analysts are convinced that DVD’s aren’t going to be leaving us anytime soon. If you want to upgrade to HD right now, you just need to decide which product best meets your specific needs.

If you’re worried about experiencing some sort of post-purchase letdown after your switch to HD, you can rest easy — because manufacturers are already hard at work on the next big format. It’s tentatively titled Ultra-High Definition and it offers a whopping 7,680 x 4,320 pixels of resolution — approximately 33 mega-pixels — at 60 fps. So relax – because as long as there’s a free market, you’ll never want for your next sexy object of consumer desire.