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HD Discs to Compete with VOD HD-SD Content

High-tech researcher In-Stat said while today's standard-definition DVD sales continue to do relatively well, the market is likely nearing its peak and alternative delivery systems like VOD will soon impact both the home entertainment landscape and DVD sales. In other words, physical discs could experience a slow exit from the culture in the near future, even as two competing HD disc formats have yet to be launched.

In-Stat, while pointing out the obvious that migration from standard DVD to HD discs is not going smoothly, said the PC industry is now champing at the bit to provide downloaded movies that might compete with DVD sales, and cable is ramping up its SD and HD offerings via VOD.

In-Stat projects that by 2009, when the analog switch is now set to be turned off (unofficially, for now), slightly more than 40 percent of U.S. and Japanese households will watch movies in HD on HD displays (which must, by definition, include 5.1 surround sound and 16:9 aspect ratios). It also said DVD players that support HDMI today already deliver HD quality, so that "next-generation high-definition optical products will need to provide something more."

And portable DVD player products and online download services are likely to lead industry growth, especially in Europe and Asia. (Portable DVD players with screens of 7 inches or smaller reportedly are among Wal-Mart's hottest-selling electronics products this holiday season in America.)

In-Stat also says while intense media interest in next-generation DVD formats "is selling lots of magazines," HD discs will not have much impact on the Hollywood "packaged goods" business until late in this decade. And then they may rapidly be replaced altogether by mainstream VOD, DVR, and who-knows-what else.