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Today Toshiba announced what everyone in the industry had predicted since Warner decided to withdraw support for their high-definition DVD format, HD-DVD is dead. The decision to discontinue this technology will cost Toshiba hundreds of millions of dollars. They are not the only losers, though. About a million customers had bet on HD-DVD and now they are stuck with obsolete players (that fortunately can still be used as upscaling DVD players) and media. However, beyond all those abandoned customers, there are some companies that stand to lose big time from Blu-ray‘s victory.

The first victim is certainly Microsoft’s XBox 360. In January, for the first time since it was launched, Sony’s Playstation 3 outsold the former console by a comfortable margin n the U.S. I expect this to happen again at least over the next few months as many gamers who are now realizing the value of the PS3 as a next generation DVD player are moving in flocks to buy the console. Just look at what regular users are posting on the Internet and you will see that the mood over the PS3 has clearly changed. Microsoft is mulling a Blu-ray external player for the XBox 360 but that could not be enough to reverse the trend, unless they reduce the cost of their Elite console significantly.

Other victims include online video providers such as Microsoft (through XBox and Media Centre PCs) and Apple. Until now, most customers compared the quality of digital downloads to DVDs, mainly because high-definition DVDs had failed to catch on due to the lack of a unique standard. That is now going to change, and even though it is now possible to purchase and rent 720p movies over the Internet, this media is no match to Blu-ray movies. That really means that wide adoption of Internet movie downloads will be delayed. Don’t get me wrong, it will happen, but physical media will still reign for a few more years until faster and cheaper Internet connections become available. This is certainly not bad news for those of us not living in the U.S. There are still many legal and distribution issues that need to be sorted out before all countries in the world can have access to Hollywood and other dream factories media from around the world through the Internet, legally. Knowing that in the meantime there will be a physical alternative is tranquilizing. I would hate to be stuck for another decade with DVDs on high-resolution screens.

When I bought my PS3 early last year there where no compatible UPnP solutions for the Mac to stream music, pictures or video to Sony’s console. I was disappointed but since the PS3 didn’t support many popular media types at the time I quickly realized that even if such a solution had been available I probably wouldn’t have used it very frequently. That totally changed last December when Sony released version 2.10 of the PS3 firmware with support for DivX and WMV.

When I tested EyeConnect 1.0.1 in February 2007 I had little success, the console could see the files stored on my Mac but was unable to display my media files. Fortunately, version 1.5.1 which was released later in the year offered much better support for the PS3, using a familiar Mac interface. However, some glitches remained. For starters, EyeConnect does not stream album art or previews of your pictures which is quite annoying. More troubling though is the fact that the PS3 reports frequent (non-fatal) network problems. I have no doubt that ElGato will eventually fix these problems, but at US$49.95 EyeConnect will remain an expensive solution for most console owners.

Yesterday Nullriver announced a new solution called Medialink. This is the same company that produces Connect360, the software Mac owners use to stream media to their XBox 360. The good news is that Medialink works perfectly. During my initial tests yesterday I ran into absolutely no problems. Unlike EyeConnect, MediaLink supports album art and media preview. Pricing is attractive too, at US$20 nobody should hesitate to buy this product since it instantly converts your game console into a gorgeous 1080p media centre.

There has been much talk recently about an upgraded AppleTV with a built-in Blu-Ray drive (and presumably support for 1080p, up from the current 720p). I am quite skeptical that such a product would be very competitive. Even if Apple was able to maintain the price of the enhanced device at US$299, that is just US$120 less than a PS3, including Medialink for your Mac and a Blu-Ray movie. Sure, movie rentals are not available yet on any console, but that is probably not a real differentiator for most customers in the U.S., let alone for those of us who live in countries with no iTunes store.

I am sure that everyone at Apple understands the situation. That is why I am very interested to see what Apple is planning to offer next week at MacWorld. My gut feeling is that Apple will not add Blu-Ray support (maybe 1080p support) and will instead try to make the device more attractive by dropping its price and add more new features beyond the widely expected movie rentals. Welcomed additions could be a web browser that syncs bookmarks with Safari and an RSS reader. DivX support would be nice too, but we all know that with Steve Jobs at the helm of Apple that is extremely unlikely.

Will that be enough to save the Apple TV? It will all depend on price. If Apple is willing to make no money on the hardware in order to increase movie sales and rentals it may work. That would be a major change for Apple though as they have until now consistently followed the opposite strategy, making money on the hardware while working with razor thin margins on the software. However, in order to compete effectively against Sony, a company that is used to lose money on the hardware (at least on their game consoles), they have to adopt the same strategy. With hardware margins hovering around 30% at Apple, a US$199.95 40GB Apple TV seems achievable. Will Steve Jobs announce that next week? Who knows, but it is much more likely than a Blu-Ray equipped AppleTV.

Today I have spent most of my day staring at a screen, saying Wow! In fact that is not totally true, sometimes, instead of Wow! I would say Amazing! or Holly cow! Before you ask, no, I did not install Vista on my laptop. That would be a total waste of time and it wouldn’t justify a single expression of amazement, I am much too familiar with the kind of garbage Microsoft produces to be surprised.

What happened is that today I got a brand new 1080p 60” plasma television installed in my living room. If you have been reading my blog you may now that I have been watching less and less television and you may therefore wonder why on earth I would spend good money on a new TV set. You are right, I didn’t buy it to watch television. That is good, because regular channels do not look very good on such a huge screen and I only have about ten HD channels, most of which are extremely boring.

What I really wanted was to be able to view the output of my PS3 the way it was meant. You see, until recently I have been using my console primarily as a Blu-Ray player. That by itself justifies a large screen, but what really convinced me were some of the recent titles released for the PlayStation 3. One clear example is Uncharted:Drake’s Fortune. This is a typical platform game but incredibly well executed. It is the first time that I have found myself spending time just looking at the amazingly beautiful landscapes instead of running to the next level. It is that gorgeous. The same happens with Ratchet & Clank: Tools of Destruction and even simpler games such as Super Stardust HD.

Many do not even imagine how much current games cost to develop. As you probably already know, there are many games that cost more to produce than a feature film. I am not surprised, when you see modern games you see that they are the future of entertainment. That doesn’t mean that I expect movies to quickly become obsolete. For that to happen, many problems need to be solved first. For starters, computer games still cater to a relatively small audience, primarily young males. That needs to change, quickly. The second problem is more complex. Consoles have become very good at online gaming. However, that does not really mean playing with others, it generally means playing against others. That is why consoles do not provide the same kind of feel good experience as going to the movies with the family. That is why most generally play alone and watch movies in group.

That dichotomy is, from my point a view what is causing problems for Sony. It is clear that the PS3 was designed to conquer the living room. That is why they included features such as HD movie playback, picture browsing, music sharing, etc. The problem is that if you are a hardcore gamer you do not want to put your console in a place where you may not be able to play, simply because other family members are sitting there to spend some quality time together. I strongly believe that the PS3 would have been much more successful if it had casual games that can easily be played in small groups of people across gender and age barriers. That would be much more consistent with the way Sony’s console has been marketed so far. That also means that even though I am looking forward to Metal Gear Solid 4, I think that Sony needs to release more games like SingStar or SceneIt to make major inroads into the living room.

If you have been following the gaming scene you must have noticed it. The mood is changing over the PS3. Just one year after it was introduced, Sony’s latest console is getting better press and less hate from bloggers. As a results sales are rocketing and Sony looks again like a strong contender.

Many credit the PS3 revival on the US$100 price cut recently announced by Sony. My personal opinion is that gamers are finally starting to understand the true potential of the PS3. Since last year, HDTVs have continued to gain popularity and are now becoming mainstream. HDTV owners want high-def content and the PS3 delivers both high definition games and movies right out of the box. Suddenly, the Nintendo Wii doesn’t look as cool as last year and buyers are left with only two viable options and the PS3 is the cheapest. The timely release of some great exclusive titles such as Ratchet and Clank and Uncharted: Drake’s Fortune is also helping. These games are finally showing what this console is capable of.

Last year Sony got a lot of bad press for releasing the PS3 too late. It turns out that they may have launched it one year too soon.