I particularly enjoyed the rumor that Microsoft was backing HD-DVD to perpetuate FUD in the next-gen DVD format wars. I have no idea what Microsoft is contributing to HD-DVD's since they dont design or manufacture hardware, but they apparently paid movie studios big money to support HD=DVD over Blue-Ray. Their alleged goal was to keep things unsettled long enough that they can bypass discs altogether with direct downloads.

A fun rumor but not one that passes Occam's razor or even reasonableness.

Direct downloads have a LONG way to go for video. The USA is not even in the top 10 nations in regards to broadband penetration of households. I think we are at about 19% of all households. Many of those folks, like myself, have DSL with its lowly 1.5 Mbps speeds. Trying to download a 5GB movie is an exercise in patience at best.

No, it makes much more sense to think about video games.

If you could purchase a video game player that played hi-definition movies or you could purchase a player that did not -- which one would you buy? Obviously, Microsoft needed a next-gen movie player in the Xbox if they were to keep feature parity with Sony's PS3. Since Sony owns the Blue-Ray standard, it also stands to reason that Microsoft needed a different standard for the Xbox 360. Hence, HD-DVD.

By all accounts, users dont see much visual difference between HD-DVD and Blue-Ray, but that blue laser does push the technology envelope much further ahead than HD-DVD does. Indeed, the HD-DVD's main selling point appears to be that the players and the discs are cheaper.

The install base numbers I have seen are misleading because they do not include PS3's when they compare the number of HD-DVD and Blue-Ray players. Fortunately movie sales numbers shows the reality: there are a lot more BR folks out there buying movies.

With the recent announcements by Warner and other studios, it appears that the studios at least are starting to see the blue light. Im hopeful that HD-DVD will die in 2008 and all studios will be releasing content on Blue-Ray.

This situation might suck for Xbox owners but the HD-DVD drive is not included in the Xbox anyway. (And Microsoft customers are used to be abandoned -- just ask the Plays4Sure folks.) Hopefully the next 360 will include a blue-ray player too and the prices can start coming down.