Blu-ray Takes the Lead

Electronics giant Sony (NYSE: SNE  ) had a rough 2006. Laptop batteries that it had supplied to Dell (Nasdaq: DELL  ) , Apple (Nasdaq: AAPL  ) , and Toshiba had to be recalled. Its PlayStation 3 debut was held up by manufacturing issues. Finally, its new high-definition disc format, called Blu-ray, suffered against the launch of the rival HD-DVD format, backed by Toshiba.

But things may be changing for the better for Sony on at least one front this year: Its Blu-ray format appears to be taking the lead over HD-DVD. According to an article in Home Media Magazine, which references research done by Understanding & Solutions, for each HD-DVD movie sold, consumers are springing for three Blu-ray titles. High-definition movie sales have done a 180-degree turn since the PS3 launch: Before the PS3 came out, HD-DVD movies outsold their Blu-ray counterparts by about three to one.

Sony was criticized for building the Blu-ray player into its PS3, rather than following Microsoft's (Nasdaq: MSFT  ) strategy of offering a player (HD-DVD, in this case) as an add-on to its Xbox 360. After all, not everyone who wants to play games on the PS3 cares about high-def movies. Nevertheless, Sony probably figured that forcing the Blu-ray player down gamers' throats would ensure that there were lots of Blu-ray players in the world's living rooms, which would help get its Blu-ray format off the ground at some point. It appears to be doing just that.

Will the Blu-ray lead continue? The cards seem to be stacking firmly in its favor. Although a stand-alone Blu-ray disc player is still more expensive than an HD-DVD player, prices for the Blu-ray players will certainly fall during the next year. Furthermore, Blu-ray has the support of most movie studios, and it's getting an extra kick in the pants from Amazon (Nasdaq: AMZN  ) , which is running a sale on some Blu-ray titles. I've always shuddered at the thought of paying $25-$30 for a movie, high-definition or not, but Amazon has priced some Blu-ray titles at less than $15.

I certainly wouldn't mind if Toshiba just let HD-DVD melt away. Living-room consumer electronics are already complicated enough -- you should see the tangle of wires connected to the back of my receiver. The existence of two high-def formats just adds to the complication.

For related reading:

Microsoft and Dell are Inside Value recommendations. Dell is also a Stock Advisor pick, as is Amazon. Try out these or any of our other Foolish newsletters for yourself, free for 30 days.

Fool contributor Dan Bloom holds no position in any company mentioned in this column.


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