Despite the fact that prices have plummeted for next-generation high-definition DVD players, the two systems – Blu-ray, developed by Sony, and HD DVD, from Toshiba, have sold only about one million stand-alone players combined.

In June, we suggested that the winner in the war between HD DVD and Blu-Ray could be Internet TV. Increasingly, it’s looking like that may be the case.

According to the New York Times, in the war over high-definition DVD formats, most buyers are sitting it out.

Neither has a clear advantage, either in terms of technology, number of movies or, increasingly, the price of the equipment. According to data from Adams Media Research, 578,000 HD DVD and 370,000 Blu-ray machines will be sold by the end of this year.

The winner of the format wars could be determined by which company has the most content, in the same way the VHS-Betamax VCR war was decided. But both formats offer about 400 movies. Studios allied with the Blu-ray camp include Columbia, Disney, Fox, Lionsgate, Miramax, New Line and Sony.

In the HD DVD camp are DreamWorks, Paramount, Universal, the Weinstein Company, and several smaller TV and motion picture companies. Warner Brothers releases movies for both systems.

In November, Howard Stringer, the Sony chairman, publicly acknowledged that the formats were in a stalemate, and predicted that neither side would fold.

There are a lot of things holding back interest in high-definition DVDs:

• Lack of standardization
• Lack of content
• Lack of availability
• Lack of need – most people don’t have TVs that can benefit from the extra resolution
• Desire to avoid investing in the “Betamax” of high-def DVD formats

Here Comes HD Internet

While Sony and Toshiba fight the HD DVD fight, HD Internet video is slowly becoming a reality:

• There are a growing number of HD video podcasts. Apple has added an HD section to its iTunes podcast directory.
• Adobe Flash Player 9 directly supports HD video, which is likely to make it the new standard for HD Internet video.
• New services, like Hulu, are being introduced that offer streaming HD Internet video.

HD Internet television offers many benefits over high-definition DVDs:

• Standardization – Flash is ubiquitous
• A growing body of free content
• Availability everywhere
• A growing need – Internet video has proven itself, now people want higher quality
• No risk – most Internet users already have monitors that can handle high-definition video, so there’s no risk to trying out HD internet video.

It’s too early to call HD DVDs dead, but it looks like 2008 will turn this into a three-way fight.