We're one step closer to crowning a victor in the next generation of optical discs. Time Warner (NYSE: TWX) will be releasing its high-def DVDs exclusively on the Blu-ray format starting in June. It's a blow to the HD-DVD fan base, but at least it gives consumers a little more confidence in picking sides. Five of the seven major movie studios have backed Blu-ray, leaving just Universal and Viacom's (NYSE: VIA) Paramount as the lone HD-DVD holdouts.

Blu-ray discs have greater capacity than HD-DVD, but the players typically cost a bit more. Sony (NYSE: SNE) championed the Blu-ray movement, figuring that it had the perfect Trojan horse to get the system into homes by incorporating rudimentary Blu-ray playback on its PlayStation 3 video game consoles.

It wasn't an immediate knockout blow in 2005. The PS3 systems were slow sellers at first, but cuts that have dropped prices to as little as $399 have made the gaming platforms brisk sellers over the holidays.

Game over? Blu-ray wins? Not so fast. Microsoft's (Nasdaq: MSFT) Xbox 360 offers external HD-DVD players. If Microsoft decides to begin shipping new 360 systems with HD-DVD playback as a standard feature -- a persistent rumor that is only now being squashed -- the playing field could be rebalanced.

Microsoft is really Toshiba's last hope for HD-DVD support, but Microsoft may not want to commit to a high-def format that is falling out of favor within Hollywood. Even Blockbuster (Nasdaq: BBI) chose a side when it decided to expand its Blu-ray offerings this past summer. There is even speculation that Apple (Nasdaq: AAPL) will begin offering Blu-ray playback on its pricier Macs after this month's MacWorld conference.  

I'll feel sorry for anyone who bought an HD-DVD player if Blu-ray wins out, but a runaway winner was inevitable. Do you think that Netflix (Nasdaq: NFLX) is happy stocking some of its new releases in three different formats? Of course not.

If you've been on the fence about backing either Blu-ray or HD-DVD, feel free to finally make the jump. Rest in peace, HD-DVD.

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Longtime Fool contributor Rick Munarriz has a PS3, but he owns just two Blu-ray flicks. He does own shares in Netflix. Rick is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.