The Death of HD-DVD:

For those people who were not already aware HD-DVD is now dead. Toshiba, who has always been the biggest HD-DVD backer, is now bowing out of the hardware manufacturing. That leaves the consumers with Blu-Ray as their only choice for their Hollywood High Definition Movies. Of course most people aren't really concerned by this and have no idea about the format wars, but now with a dominant format, Sony is hoping that will change. People bought a PS2 to play DVDs way back when, didn't they? Does that mean people will buy a PS3 because it can play back Blu-Ray discs in addition to games? What does all this mean for Microsoft and their Xbox 360? I'm sure we will see for sure in the future, but I have my own predictions as to what is going to happen.

How Blu-Ray helps and hurts the PS3:

First, the Blu-Ray player in the PS3 has always been on of its major selling points and one of its major problems. The reason the PS3's launch was delayed and the reason its price is so high are both tied to the integrated Blu-Ray drive. While the ability to play Blu-Ray movies is a nice feature to have for someone who is already planning on buying a video game system, most gamers (like most people in general) don't really care to pay extra to step up to add the HD movie playback. The major concern for most gamers is which platform offers the game titles that they're wanting to play. The PS3 is still lagging behind in that because of its historically smaller install base (again... high price and late release).

Now, the PS3 is at a more acceptable price and with Blu-Ray seeming to be more valuable the system does seem to compete well with the Xbox 360. However, there are a few exceptions to this. The Xbox 360, for one, could easily have another price cut. Manufacturing costs for both systems have gone down, but my guess is that the Xbox 360 is the lower of the two and then could, in theory, cut deeper. The other thing is that the Xbox 360 could do a redesign. I actually think both of those will happen. First Microsoft will cut the price on the old models then release new models that are quiter, look for it this holiday season. A third thing that prevents the PS3 from being competitive is the lack of a "Killer App". The Xbox 360 has Halo 3, Gears of War, Bioshock, Mass Effect, and others. Though some of these are on PC (or will be coming to PC), the Xbox 360 is the place for console players.

How a Blu-Ray win affects the Xbox 360:

So, how does the death of HD-DVD affect the Xbox 360? It doesn't. Microsoft chose to include a DVD drive in their system, and it has worked fine to this point. The HD-DVD drive is an add-on. People who have bought an Xbox 360 and people who will buy one are aware that it only plays DVDs, CDs, and more importantly Xbox 360 games. That is all it needs to play. Of course should someone who owns an Xbox 360 they can still get their fill of HD movies by downloading them from the Xbox Live Marketplace. Also you can stream movies, even HD movies, from a Media Center computer on your network. You can even use services like Amazon unbox using the media center connection. Of course a lot of that can be confusing for anyone looking to buy a new video game system, but honestly, how much do they know about Blu-Ray?

A look into the future:

In the next 2 months I think we'll see two things, an increase in PS3 sales, and a closeout sale on HD-DVD add ons for the Xbox 360. The PS3 sales will be people who have been waiting for a winning format and now are ready to put their money into Blu-Ray. They will buy a PS3 because it is near the cheapest Blu-Ray player availible and that is the only reason. They might play one or two games on it, but they might not. For a while 360 sales will stay the same, then when Microsoft will start clearing out the old models there will be a lot of sales (maybe around April for GTA IV), and the same thing will happen when they release the new smaller quieter Xbox 360 (later in the year). The PS3 will get more sales when Metal Gear Solid 4 is released, which should be this year... but, Xbox 360 will maintain its larger install base and greater attachment rates and still be a favorite among developers. It is still all about the games, HD-DVD and Blu-Ray don't change that.