The New York times produced an article yesterday giving a brief overview of this format war, read it here
I think it's a very interesting article, and shows some of the behind-door reasons for some of the public moves we've seen the past 6 months (changing alliances, etc). I read another article that delved deeper into the theory that MS is propping HD-DVD only to stall Blu-Ray. I know that MS is pushing their IPTV pretty hard.
Personally, I'm a very strong proponent of purely digital media, and think physical formats are ancient tech. I feel the broader market agrees and people care more about convenience than quality. There will always be people that want the best experience possible, but for the majority care about it's about convenience.
There are two main examples that I can point to when talking about convenience: Xbox Media Center and OnDemand television.
With XBMC in a house with a home network, there's really no better option. Downloading televion shows and movies off the Internet is a cinch, and with XBMC you can play that content on any TV in your house. Most people don't have this kind of setup, but Media Center PCs have been growing tremendously and Microsoft's new operating system Vista has Media Center functionality built in. Combine this with the built-in Media Center Extender inside of the Xbox 360 and the number of people that can stream content increases dramatically. And many people don't care about watching content on their televions, there are millions of college and university students that are happy with watching all their videos directly on their computers.
For more conventional and legit methods of digital content distribution, you have the OnDemand features that various cable providers now offer. In Canada I've had The Movie Network's OnDemand service for about a year now, and couldn't be happier. I have instant access to DVD quality versions of dozens of movies, refreshed weekly. I can even pause, rewind and fast-forward those movies. It's really an amazing technology and still don't know how the heck they do it. What is limiting OnDemand's penetration right now is that not many places have access to it. Furthermore, the economics of OnDemand still don't match the mailing services of cmopanies like NetFlix and Blockbuster. When OnDemand services in general go to a subscription model like with a price that matches the mailing services, like The Movie Network, there will be no reason to use those mailing services whatsoever. Only for HD content. And it's only a matter of short time before Hi-Def OnDemand services start coming online, in which case, Hi-Definition optical formats are needed only by collectors.
What do other people think?