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The Format wars for the next generation DVD’s are over. Blu-ray backed by Sony Corp. has finally managed to trump Toshiba backed HD-DVD. Toshiba finally gave up yesterday, and the decision that Toshiba took was an “agonizing decision” that Toshiba had to take, says Toshiba president Atsutoshi Nishida. But then this decision had to be taken in the best interests of the company.

The tipping point came when Warner Bros. decided to join Sony Pictures Entertainment, MGM, Disney, 20th Century Fox, New Line Cinema and Lionsgate to support Blu-ray as the official format, making about 75% of all new movie releases available on Blu-ray. After that Blockbuster, Netflix and Wal-Mart all dropped support for HD DVD, and Best Buy also said it would favor Blu-ray.

But that battle for HD Video has just begun……

While the commercial and technical superiority of both the formats has long been debated, but with the pullout of the HD-DVD camp, things stand clear for Blu-ray. We would finally see the High Definition Video market take off, with the availability of cheaper  HD TV’s and the market penetration that Sony would achieve with Blu-ray. For most people the format wars are over, and Sony is now effectively the market leader in HD Video.

But things aren’t going to be all that easy for Blu-ray. For sure, Blu-ray is going to be the preferred choice for Disc media in the near future. But isn’t just about everything moving online? Yes HD Video downloads from the Internet are going to be a serious threat to Blu-ray. In the future, we will all be buying and downloading the stuff directly from the Internet, rather than buying Physical Media.

With iTunes, XBOX Live, and Vudu already offering HD Downloads on their services, we might as well see another war on the HD Video format. But iTunes and the other online services are still in their infant stages, so it would take them atleast a year to catch up with Blu-ray. But Apple TV seriously has the potential to tap the HD Movie Market, with its rental service.

With the competition that Blu-ray would face from online solutions, there also lie challenges for services like iTunes, because HD Media demand more storage and bandwidth. Storage isn’t a problem really but Bandwidth will remain a concern. At the current rate of growth, HD Video will clog the pipes.

So the next generation HD Video battle lies ahead.. Who do you think has an advantage here? Lets discuss in the comments.