First let me reiterate that I am format neutral so I am not picking favorites or putting either format down.
Okay with the disclaimer out of the way...
I've seen some people on various forums talk about the Paramount deal and try to say HD DVD did something underhanded. That was business and no different than Bluray signing up studios at the beginning, and then of course there are the Sony owned studios...
Both sides have conducted 'business' but where HD DVD has the battle is at the store front. Bluray dominates at almost every store I go to that carries High Def movies and stores do take money for premium displays, end-caps, more shelf space and so on. Target announced they would become Bluray exclusive, but after the explosion of HD DVD sales third and fourth quarter 2007 they rethought that and not only still carry HD DVD, but they expanded the shelf space. Still, Bluray shelf space is almost double what HD DVD has. Not because there are more movies, but because a financial deal was made. When is the last time anyone has walked into a Sams Club and seen an HD DVD display right up at the front of the store? Never. Sams is Bluray exclusive but that doesn't mean there is just one format, just that they signed a deal to carry one format. Actually, when has anyone walked into any store and seen an HD DVD display up front and prominant?
Block Buster also prematurely said they would be BD exclusive and when I called their main office back in October they stated they would definitely be carrying both formats.
The reason is obvious, player sales. Companies do accept financial deals for space, but that isn't loyalty and if they see HD DVD growing they will want to have a piece of that too.
Store personnel education is also a factor. Fact is most employees don't really know the difference. I have listened to countless conversations where the store staff was saying incorrect information about both formats, right down to a Walmart employee telling someone they didn't want HD DVD because it was developed by solely by Microsoft. Then other conversations where the customer said "I don't understand, I want HD and HD DVD is High Def right? What is Bluray? Can I play Bluray in my regular player?"
So the bottom line is the general public doesn't understand the two formats, and neither do store staff in most cases.
What does all that have to do with sales? Perception. People see more Bluray than HD DVD on the shelves, store staff gives out bad information... and the perception is Bluray is clearly winning. Right now it's a stalemate on many levels though. There are 'waves' where one side is riding the top of the wave, but the next month the other format finds a higher wave and rides that... Bluray may have more sales of discs, but that gap is closing and a stalemate is close at hand.
BD Profiles- Some people that shelled out hundreds of dollars on first gen players will never be able to get to the final Bluray profile, while HD DVD is a more robust and developed format. Disc size is smaller, but compression is better and doesn't need as much space... again another marketing gimmick and perception.
Prices- HD DVD owns the front line of the war when it comes to unit prices, but really only for entry level units and those are 1080i. We on the forums know there is an imperceivable difference between 1080i and 1080p, and I can say with first hand experience with a good 1080p HDTV, you won't see a difference. It boils down to how well the disc was mastered and that applies to both formats. Sony has clearly won this front line by convincing people that 1080p is dramatically superior, and Toshiba dropped the ball by not making the A3 1080p if for no other reason than public perception...
Sony will win the console war in my opinion though. Including a BD player built into the PS3 allows them to put out games that are native Bluray format without the need to buy anything additional, therefore in the long run bigger and better games... but this isn't about game consoles, it's about High Def players. Where Sony messed up in my opinion is they should have made the PS3 look like a piece of HT gear and sold it with a remote, and this is the most important thing- marketed it as a Bluray Player first and foremost and one that just happens to be able to play games too. It is also one of the few players that will make it to the final BD profile, just getting Profile 1.1 this month. They cut their own throat by actually 'competing' with themself. When the PS3 was first launched it was crippled in the sense it didn't upconvert Standard Definition DVDs (it does now though). They did that because why would anyone want to buy their flagship BD player at almost twice the price but not nearly as good of a player in both quality and features- not to mention far more upgradeable.
Content- This is probably the biggest mis-perception of them all. That is that Bluray has far more movie content than HD DVD and that is not really the case. Only in stores other than Best Buy does Bluray dominate and look like all the movies are on BD. What is more important is what type of movies does a person like?
I've outlined this before and that is for people to take some time and look through both formats and make a 'wish list' of what movies are exclusive to each format. When I looked at the full list for both formats, Bluray did have a slight edge in total titles, but it really wasn't as big as people say or think. More important though is that the movies that I personally like are more HD DVD titles. So for me it wouldn't matter if BD had three times the titles, if I personally don't like them, then volume means nothing to me when it comes to enjoying a movie.
I know this was lengthy. I love both of my players dearly but for different reasons. Most of my collection is HD DVD, but that's because they have the titles I personally like and want. My PS3 is an outstanding Bluray player and also doubles as a media server and complete entertainment system. Both upconvert exceptionally well, but I give a slight edge to the PS3 over the A2, and the PS3 has played everything thrown at it, even DVD+/-R discs that the A2 wouldn't play.
So disc sales numbers may be slightly more for Bluray, but HD DVD isn't down for the count and people have to remember that even as BD lowers prices, HD DVD counters with even lower prices, and that equates to more HD DVD disc sales. This is actually a win/win for us consumers. If there weren't two formats, we'd probably still be looking at $700-800 BD player prices.
HD DVD needs to start marketing and spending some of the money from those record 3rd and 4th quarter player sales. Until they do that, perception will be Bluray is superior and the clear winner, at least to the general public.