The HD-DVD side appears to be playing their cards right. According to Nielsen data from August, discs sold in the HD-DVD format sold 3 times more than any other competing HD DVD format, including BluRay. The format is also on track to having 230 titles by Christmas. I don't have comparable data for BluRay, but a graph on this page shows that, currently, there are 80 HD-DVD titles to BluRay's 48. Perhaps BluRay will manage to push out more than the 150 titles HD-DVD is planning for Christmas, but given the issues they have faced thus far, I consider that unlikely.
What I find interesting is the short list of top-10 titles in either format at the bottom of that graph page. Granted, it's a somewhat subjective comparison, but the titles they have chosen to release may be a hint of why HD DVD has fared better. In the top 10 for HD-DVD is John Carpenter's "The Thing" (something I rank up there next to Kubrick's "The Shining" in the horror genre) and Terry Gilliam's "12 Monkeys." Nothing approaching the coolness level of those titles is found in the BluRay list of top 10, and though there are other titles that aren't represented, given that it includes such non-starters as Basic Instinct 2, the first title I can remember being advertised as available in BluRay format (which is a marketing problem in its own right), I don't think it matters all that much (okay, I did like 5th Element, though that's because I have a thing for quirky French visions of the future).
In other words, the "cool" factor matters when in a horse race with a competing format, and you need to make damn sure that the titles you are releasing are the sort of thing people might actually buy. Just releasing SOMETHING in your format isn't enough. People will notice the difference, particularly when the only players on the market that read your format are at least twice the price of players for the other format.
Of course, BluRay has a few big tricks up its sleeve, the first being the impending release of PS3. As noted in my last post, however, most people aren't going to play their DVD movies through a game console. The features people want in DVD players aren't there, it's more complicated, and besides, it only has space for ONE DVD. Most homes with DVD-reading game consoles have a parallel DVD player.
Special consideration is given to the types of consumers who are most likely to buy the first PS3 devices. Game enthusiasts are more likely to understand what BluRay and HD-DVD represents, and are more likely to use it if they have an HD TV (no guarantee, given that most don't). That still won't change the fact that BluRay titles thus far have been rather "lackluster." Further, note that current estimates for XBOX 360 shipments are in the 10 million range by Christmas 2006. Only a fraction of those XBOX 360-owners have to buy the new HD-DVD add-on drive (at $199, much less than the cost of a PS3 device) to undermine the advantage Sony has with an integrated BluRay player, given that only 500,000 PS3 devices will be shipped, GLOBALLY, for the Christmas season.
The second trick is 20th Century Fox, copyright holder of the Star Wars series. 20th Century Fox is currently dedicated to the BluRay format. Star Wars can be expected to be a big seller, and could turn the market upside-down...assuming people have some form of BluRay player. Therein lies the rub. The outcome of the BluRay / HD-DVD battle will determine whether 20th Century Fox remains exclusively in the BluRay camp. If trends continue they way they have been, I can easily see 20th Century Fox deciding to hedge its bets the way other studios have decided to do.
20th Century Fox, unlike Sony's film division, has no particular devotion to BluRay. They just want to sell movies.
I re-iterated in my last post that Sony needs to execute successfully with the PS3 to save its gaming business. If they want to save their BluRay licensing business, they have to put together a better strategy with respect to titles and equipment cost. Unfortunately, it's hard to separate the two markets, as Sony has linked them at the hip through its decision to ship a BluRay drive with PS3.
Yet again, the sense is that Sony has put all their chips on the table, with failure in one potentially causing irreparable harm to the other. Such a strategy can lead to a big win, but it can also result in losing your shirt.