The news of Toshiba’s capitulation on HD DVD will come as a bitter blow to early adopters who shelled out hundreds of dollars, “backing the wrong horse”. And while Sony and its Blu-ray followers are likely to be pooping the champagne corks, it could have been a completely different story had Microsoft thought more carefully about its console plans.

The battle for the next generation optical disc format closely mirrors the battle for the gaming console between giants Sony and Microsoft.

While Sony copped flak from all and sundry over its excessively priced PlayStation 3 gaming console, it out-manoeuvred Toshiba by incorporating a Blu-ray player into every console, ensuring that it had a ready-made market for its Blu-ray movie market.

The real problem for Toshiba was Microsoft’s decision to stick with existing DVD technology for the basis of the Xbox 360’s internal optical drive. By the time, Microsoft released the external HD DVD add-on, it was all too little too late. Rather than having the drive built-in, consumers had to buy something extra and Sony’s decision to incorporate the Blu-ray drive into the player looked smarter every day.

But had Microsoft chosen HD DVD at the start of the Xbox 360’s construction, the battle for Blu-ray and HD DVD could well have had a completely different ending.

PlayStation 3 vs Xbox 360

According to market research analysts NPD, December 2007 saw Microsoft sell 1.26million Xbox 360 consoles compared with 798,000 PlayStation 3 units.

Home Media Magazine has reported that market analysts Understanding and Solutions counted 55,000 HD DVD players and Xbox 360 drives in European sales. The same report counted up PlayStation 3 consoles numbering 750,000.

As the predominant backer of HD DVD, Toshiba needed Microsoft to get behind the format with more that just vocal support. However, including an HD DVD drive in every Xbox 360 would have pumped up the price closer to Sony’s level, which would most likely have evened out the sales numbers. The end result is the console war would be a much closer affair and the battle between the two optical disc formats would still be on.

It’s easy to blame a big lumbering target like Microsoft and certainly Toshiba didn’t make every post a winner in its release of HD DVD but it does show clearly just how important the gaming console has become in the home entertainment market.

Although Apple boss Steve Jobs has been reported as saying Blu-ray won over HD DVD but will lose to online downloads, it is unlikely Blu-ray will lose any time soon. Broadband, particularly in countries like Australia, have failed to sustain their early speeds growth to the point where few could afford to download even DVD-grade movies, let alone high-definition movies. Most would barely fit a movie into their download quota over a month.

In other countries like Korea where broadband flows like water, online movie downloads may succeed although I suspect even in the country where gaming reigns supreme, download quotas still have some way to go.

Beta vs VHS again?

Almost 25 years ago, Sony lost its war with JVC as the Beta format, despite its technical superiority, lost the VHS. Despite the fact Blu-ray discs hold more than HD DVD, both formats provided the same video quality at up to 1080p (1920x1080-pixel progressive scan) and so any visual difference would have been minor.

The one benefit of HD DVD from a manufacturing viewpoint was its ease of manufacture, particularly compared to the complex efforts required to get a Blu-ray disc out the door.

In the end, none of it matters. Whether or not this is the last format war remains to be seen. Hopefully it will be – the increasing commoditisation of video and audio formats will unlikely support another one in the future.