I see a lot a guessing and speculation about the advantages/disadvantages of the two formats in here. I work on development tools for HD DVD production (another division in my company works on the Blu-Ray side), so maybe it would be best if someone who knows what's going on "clears the air" a bit...
1. Video quality is better on HD DVD/Blu-Ray.
As far as I have observed, that is false. Both formats use the same 3 video codecs (AVC H.264, MPEG2-HD, and VC-1). Both formats also support the same audio codecs (Dolby Digital (AC3), Dolby Digital Plus, Dolby TrueHD, DTS, and DTS-HD). Both formats put a cap on the data rate of the disc during single speed movie playback, at around 29.4 Mbps. If a studio (like Warner Bros) releases a movie on both formats, it's a sure bet they used the same source video when encoding for both formats. There is no discernible difference in picture or audio quality.
2. Blu-Ray is superior technology to HD DVD.
Spec-wise, Blu-Ray media can hold more data than HD DVD can (about 25 GB for a single layer release, vs about 15 GB for HD DVD). But Blu-Ray has a couple of significant disadvantages. One, it's new and largely untried technology. The physical disc size may be the same as standard DVD, but everything else about it is significantly diifferent. In contrast, HD DVD has many similarities to existing DVD tech, and authors have had little trouble adapting their methods and equipment for it. Two, Blu-Ray is alot more expensive and time-consuming to produce, at least for now. The tools for HD DVD production are more robust at the moment.
3. Movies look better on Blu-Ray than HD DVD because the discs hold more.
In actuality, that will only have the biggest effect in the short term. As stated above, the single speed data rate is 29.4 Mbps for both formats (which includes all video and audio streams). That puts the file size of a standard 120 minute movie at around 25 GB if max bandwidth is used throughout (unlikely, since most production discs use variable bitrate encoding, not constant bitrate). Both formats can already handle content that size.
Presently, most hi-def releases currently on both formats use MPEG2-HD encoding, which has the worst image quality of the 3 supported codecs. As a result, authors have to encode at pretty much the max bitrate all the time, to compensate for the inadequacies of the standard. However, usage of MPEG2 will soon start to decline.
Some HD DVD releases are now using Microsoft's VC-1 standard, which achieves much better compression while still retaining image quality. As a result, movie file sizes are smaller, well within the limits of both formats. Microsoft has been aggressively developing and perfecting the VC-1 standard, and you can expect many more HD DVD releases to start using it in the near term. To my knowledge there are no Blu-Ray releases that use it, for political reasons as much as anything else, even though it is supported.
But everyone is really waiting for H.264 AVC to take off (right now there are both encoding and decoding problems preventing its widespread use). That standard achieves the best compression of all, and the image quality is very, very good (much better and more lifelike than MPEG2, you'll see). So while an AVC presentation can
be encoded to use the maximum amount of disc space, it's very unlikely an author will do this. The image quality is THAT good, and increasing the avg bitrate would not improve it appreciably. So therefore the amount of disc space used by the main feature will drop again, and the size advantage that BD has over HD DVD will be reduced still further.
4. More studios support the Blu-Ray format. More studios means more movies.
Not necessarily. The main signatories for Blu-Ray are:
a. Twentieth Century Fox
b. Buena Vista (Disney, Touchstone, et al)
d. Warner Bros (recently joined)
e. Paramount Pictures (recently joined)
The main supporters of HD DVD are:
a. Warner Bros (and by affiliation, New Line as well)
c. Paramount Pictures
d. Lion's Gate
There are a lot of studios on the fence still, but lets start with these. Currently, Warner Bros owns almost 30% of the current-generation DVD market. That's right, ONE studio has about a third of all DVD sales. While they have released some Blu-Ray titles, the majority of their releases are on HD DVD right now. Universal owns almost 10% of the DVD market themselves. They they are only releasing titles on HD DVD at the moment.
Conversely, studios like Twentieth Century Fox have more bona fide system sellers in their catalog (Star Wars, anyone?), even though they don't sell nearly as many DVD's as Warner does.
So anyway, stop bickering. It's still way too early in the game. In fact the game hasn't even started yet. My advice is to watch the next 12 months carefully, because at least 2 things will happen:
a. The manufacturing problems plaguing HD DVD and Blu-Ray hardware will be sorted out, and more units will become available. It's hard to predict who will win a format war when neither side has many troops in the field yet. In the next year, more players will be out, prices will fall, and more movies will be available. Then we will see.
b. The prices on HDTV's will also fall sharply. As of a week or two ago, a major manufacturer announced that they were now able to produce 58" LCD panels with an acceptable QC failure rate. That means that the prices on smaller screen LCD panels will start to fall steeply (much of the high cost of very large screen displays is due to high failure rates during manufacturing). You should be able to get an LCD television of 46-50" for less than $2000 in the coming year. This downward price trend will put pressure on plasma TV makers to cut their prices as well.
Once more players are out, and more people have HDTV's in their homes, we will finally get the chance to see what direction the format war will go. Until then, it can't be predicted so don't even try. Sorry for the length of the post.