The home theater war to end all wars -- the battle between the Blu-ray and HD-DVD next generation platforms -- has amounted to little more than a back-alley skirmish so far.

You don't own a Blu-ray or HD-DVD player? Join the club. It's been a struggle for either format to gain much of an audience early in the adoption cycle. Between product delays, high sticker prices, and bickering studios, neither format is any closer to displacing the conventional DVD as the physical media of choice.

No one was expecting a short flight to the mainstream, but we certainly got excited about the possibilities of superior image quality and dramatically greater storage capacity a couple of years ago. Seth Jayson and I wrote about the potential, the partner jockeying, and even coattail stock plays, back in 2004 and early 2005.

Like the rest of the world, we were so hopeful back then. I can be so naive sometimes.

This morning's Wall Street Journal interview with Netflix (NASDAQ:NFLX) CEO Reed Hastings shed some more gloom and doom over the struggling platforms.

"They're running neck-and-neck, but the total volume is less than 1% of our volume," he says. "Consumers want high-def, but the perception of a format war is freezing consumers out. Until that perception stops, very few consumers will try the new high-def discs."

Less than 1% combined? Netflix has all of the titles that are available on Blu-ray and HD-DVD. The company's 6.3 million subscribers would appear to be the ideal audience for the upgraded discs. They love movies. They have enough disposable income to toss nearly $20 a month at Netflix for unlimited home delivery of movies. And somehow 99% are doing just fine with DVD?

That can't be good. Will that change? It may, now that prices are starting to come down. Entry-level players were fetching nearly $1,000 last year. Checking the Amazon (NASDAQ:AMZN) storefront this morning, I see a Samsung player that was once selling for $899 marked down to $469 in a clearance sale. Sony's (NYSE:SNE) best-selling player is now going for $799.

Oh, that Sony. It was Blu-ray functionality that bumped the release of its PS3 player last spring and led to a production shortage over the holidays. Gamers also were turned off by the $499 and $599 price tags, though in retrospect that's a pretty good price for a Blu-ray player alone.

We can't write off the platforms just yet. The 2007 holiday shopping season will be critical. The studios are on board. Players will be even cheaper. But keep an eye on Netflix. If its movieholic user base isn't warming up to next-generation, they may both wind up being Betamaxed out.

Netflix and are active Motley Fool Stock Advisor picks.

Longtime Fool contributor Rick Munarriz doesn't have a pressing need to upgrade his DVD players, but he'll see what holiday deals are to be had later this year. He does own shares in Netflix. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.