“Blu-ray’s emergence as the format of choice is now inevitable,” Steve Beeks, president of Lionsgate films, pronounced on Monday at CES 2008. I disagree. As I’ve provocatively maintained for years now, both Blu-ray and HD-DVD formats are locked in a death spiral that will ultimately lead to the failure of both - at least in terms of HD movie distribution. Which leaves one question: If not Blu-ray or HD-DVD, then what?

Of course, I really don’t know how this “Format War” will turn out anymore than anyone else does, but it sure seems like both of these clearly superior format will fail just as spectacularly as Beta or Laser Discs did. One or both of these formats may be the next-gen in optical data storage, but that’s a whole other question.

DVD-Video
DVD-Video disc technology remains the fastest technology ever to be adopted in the United States. It took about five years for half of US households to get a DVD player and, today, market penetration is essentially saturated. I believe DVD-Video will be the last physical format we ever see for distribution of movies, however.

HDTV penetration, by contrast, is still below 36% according to the Consumer Electronics Association (CEA - an industry trade group). Nielsen estimates that the number of people actually watching HD content on their HDTVs is only 14%, meaning that roughly 50% of those that own HD-capable sets are still watching plain old SD cable and DVD-Video discs. So the question is: What fraction of 14% of US households watching HD content are using the winning “format of choice” Blu-ray players? It’s hard to say, but HD - Blu-ray and HD-DVD combined - accounted for 1% of all home market movie sales in 2007.

Broadband HD
Most homes already have HD displays in the form of a computer monitor. And, when combined with the one of the fastest consumer technology ever to penetrate 50% of US homes - namely, Broadband Internet - we have the answer to our initial question: “If not Blu-ray or HD-DVD, then what?”

The popularity of YouTube and other video services teaches us something else: people really don’t care about HD. Grainy, postage-stamp sized video of cats doing, well, crazy cat things seem to be endlessly entertaining to the unwashed masses, to the chagrin of high-priced ad agencies everywhere. And higher quality - but still SD-resolution - television and movies are also going mainstream, as sites like Hulu.com, Netflix.com Watch Instantly and networks like NBC and CBS come online in a big way, either for free or for a fee. Broadband HD can’t be far behind. It might be tempting to predict that 2008 will be the Year Broadband HD makes its debut - but anyone who’d make such a bold prediction would be a fool.

Vimeo, et al
Because it’s already here: Check out vimeo.com. If it makes you sick to watch your gorgeous HD video ruined by YouTube’s 320×240 blocky compression and monophonic audio, then this is where you should be uploading your video. Vimeo let’s you upload stereo HD video at 1280×720, of any duration, with the only limit being that you can only upload 500MB a week. At a reasonable data rate of 4,000Kbps using a high-quality H.264 codec for HD, that’s about 15 minutes or so.

Of course, YouTube HD and other HD Internet distribution services can’t be far behind. It’s almost impossible to imagine what we’ll be talking about in the realm of Broadband HD a year from now.