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After carefully examining the evidence, I've decided that both formats are the Laserdisc of the 2000's (i.e. for enthusiasts only). As such, I won't be buying either.
First, you need a good HD TV to get any kind of higher resolution with the discs. I personally don't own and can't afford an HD set, which I suspect is the case with many others.
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That's the #1 reason why these formats are going to have a hard time reaching the market penetration of DVD.
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Second, I've seen demo units in action, as well as some side-by-side comparisons with regular DVD's, and the effect simply isn't noticible enough. To quote James Berardinelli, the quality jump between VHS and DVD was far more noticible than the jump between regular and High def DVD. I just can't see enoung of a difference
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And this is the second. Joe sixpack will try to get the cheapest HDTV he can get, which is often worse than average SD sets. Then there's the myriad of settings you need to tweak to get a good picture (or even HD resolutions).
In the end, the image or audio quality gains aren't enough to warrant putting that much money into a HDTV + player.
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Finally, the DVD cases are a different size and don't fit in with my collection. That's a silly thing, yes, but psychologically important.
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You answered this one yourself, it's a silly thing. These aren't DVDs, why would they have DVD cases?
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As to which format will win, I'd stake my money on Blu-Ray, largely because it's currently cheaper. But the fact that the buying public at large is indifferent to High def DVD is one of the reasons that the PS3 has fared so poorly--it's just not that much of a selling point to most people.
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There's rumblings that Universal will go neutral, essentially robbing HD-DVD of one of the last exclusive studios it had. Most people just want this format war to be over. Those that are following it, anyway.
Oh, and the PS3? There's a very easy explanation for what's happening there: $599
Jam it back in, in the dark.