For Sony, it can afford to breathe a welcome sigh of relief. They dodged a bullet and avoided going 0-2 in media format wars (its Beta format lost out to VHS in the previous round). But they can't afford to relax too long. Blu-ray may be the victor here, but Sony may ultimately not have much to celebrate.
For starters, I doubt there will be a sudden upsurge in sales of Blu-ray DVD players. Most users will be content, for now, with their current DVD players. Only when the price of a Blu-ray player begins to approach what standard definition players cost today (under $100) is that likely to change.
On a related front: When I shifted from videotape to DVDs, I wound up repurchasing many of the movies I already owned in VHS. Doing so was worth it because the quality of the display and sound was so much better with DVDs. It was also a huge convenience to be able to skip almost instantly to any part of a movie (and not have to worry about rewinding). The added features that came with DVDs (such as deleted scenes and commentary tracks) were a bonus, although not critical ones for me.
I don't expect to make a similar conversion to Blu-ray, even after I buy a Blu-ray player. First, many older movies will never be released in a true HD-quality version, because such quality will not be possible. Second, the improvement of the HD version over a standard DVD version is not enough to make it worth the cost (at least to me) of purchasing a second (or even third) version of the same movie. If studios had some trade-in policy (where you get a discounted version of a Blu-ray DVD by trading in your old standard DVD), I might be inclined to bite, but I don't see this happening.
But all of this may well be moot. The DVD format, Blu-ray or otherwise, could be dead (or at least on life-support) before too long. It will take a few years, but it's coming. Downloading movies is what will slay the DVD. The specifics are still a bit unclear, but my crystal ball sees a mash-up of the Rhapsody music service, the iTunes Store, Apple TV, and Netflix. Let's call it TedFlix. I see it working something like this:
TedFlix will have a library that includes almost every film currently available (much like what the iTunes Store is today for music). Where an HD version of a movie exists, TedFlix will have both HD and standard definition versions of the movies. The HD version will be true 1080p. With devices similar to Apple TVs (let's call them Ted TVs), you will be able to download the movie directly to your TV. With just slightly improved download speeds, you should be able to start watching the movie almost immediately after you click to rent it.
The rental period will be 72 hours. Further, you will be able to rent up to a maximum of three movies in any 24 hour period and up to a maximum of 60 movies a month. The cost? A monthly subscription fee of $24.95 (perhaps less if economics allow).
TedFlix, if successful, would effectively kill off most of the demand for Blu-ray discs, as well as the DVD rental business. There will likely be some market remaining for retail purchases of DVD packages (such as to give one as a gift). But the demand will be small.
Still, there may be a place where Blu-ray could survive, even thrive: Blu-ray DVD burners. Let's include such a burner as part of each Ted TV unit. Why? Well, what if you want to watch all those "extras" that come on a purchased DVD, instead of just watching the movie? Or what if you want to be able to play a movie on a television other than the one to which your Ted TV is connected? Not a problem.
With TedFlix, you can optionally select to download and burn a complete DVD, an exact duplicate of what you would otherwise buy in a store. I foresee two variations here. In one case, the burned DVD only plays for 72 hours, and probably only plays on "authorized" devices (similar to how iTunes now works for purchased music). You pay a small fee (say $1.00) for each DVD that you choose to download and burn in this way. In the other case, you purchase the burned DVD (for a competitive price). It's now yours forever and has no authorization restrictions. However, just as with a purchased DVD, you won't be able to make copies of it. Admittedly, given the size capacity of Blu-ray DVDs, these burns may be impractical to do at current download speeds, but much faster connections are not too far off.
What about transferring movies to iPods and iPhones? I don't quite have this worked out yet. But a model for doing this already exists in the iTunes Store; I am sure it can be adapted to work in TedFlix.
With TedFlix and Ted TV, you will be able to watch any movie you want, whenever you wantâ€”for just one monthly fee. Want to watch a movie for a second time, months after you first watched it? Just select it again. There's no additional cost. And if movie technology improves, you'll get the benefit of it, without having to repurchase your DVD library.
This may not be the future that Sony or the movie studios would prefer, but I doubt that will stop the train. I think I already hear the whistle in the distance. I certainly hope so.
Update: After writing this, I noticed that David Pogue also posted a column today on this topic. He takes a much more pessimistic view of downloaded movies. I don't disagree with his assessment. However, he is talking about the present. I am talking about a hopeful future.