Hollywood Batters Blu-Ray

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Poor Sony (NYSE: SNE). Only last week, I noticed a sudden flurry of headlines marking the death of VHS tapes, a technology that was replaced with remarkable speed by DVD players. But most of us would have to scratch our heads to remember when onetime videotape leader Betamax died. One thing's for sure. It was much sooner. Though widely thought to be technically superior to VHS, the marketplace and, some would argue, the movie studios killed Beta by favoring VHS.

News today hints that Blu-ray Disc (BD), the next-generation DVD format developed by Sony and others, including Hewlett-Packard (NYSE: HPQ) and Dell (Nasdaq: DELL), is in danger of becoming this decade's Beta. Consumers should hope this doesn't happen, since Blu-ray's advantages -- especially in storage capacity -- make it the clear choice for upcoming generations of media junkies. Those flicks from Pixar (Nasdaq: PIXR) are going to look even better at higher definition. And, in addition to playing prerecorded material, the disc is designed to record high-definition TV -- it can even play and record on a disc at the same time -- meaning it's something like a souped-up TiVo (Nasdaq: TIVO) box with unlimited storage.

Unfortunately a dearth of content could leave BD dead in the water, putting us at the mercy of HD-DVD, the brainchild of Toshiba and NEC. While superior to current DVD, HD-DVD holds 30-45% less data than Blu-ray. Moreover, compatible devices don't even exist yet. That's why the recent announcements of upcoming HD-DVD releases from the movie units of Viacom (NYSE: VIA), Time-Warner (NYSE: TWX), and Vivendi bode ill for Blu-ray. When the execs start giving lip service to the format they think "most beneficial to our consumers" in the face of obvious evidence to the contrary, it doesn't take a genius to figure out what's happening. Some in the industry are betting on inferior vaporware in the hopes of saving a few bucks in the short run.

This Fool, at least, hopes Blu-ray wins the day. Since Sony owns its own movie studio, it's got a lot of heft in the market. But in the end, the BD consortium members may all have to do some heavy lifting. If they can afford to drop the prices on their expensive set-top boxes -- currently costing upwards of $3,000 -- they might just gain enough marketshare to change the movie biz's mind.

Dell, Pixar, TiVo, and Time Warner are all Motley Fool Stock Advisor recommendations. Want to learn more about Tom and David Gardner's market-beating newsletter? Subscribe today with a six-month money-back guarantee.

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Seth Jayson is waiting for Blu-ray to hit the clearance bin. At the time of publication, he had positions in no company mentioned. View his stock holdings and Fool profile here. Fool rules are here.