The war at home
The first Blu-ray and HD-DVD players have just arrived in stores. Should you upgrade? Our columnist dives into the summer's biggest drama.
By Peter Lewis, Fortune senior editor

(FORTUNE Magazine) -- One will live. One will die. You make the choice.

Okay, maybe that's overly dramatic, given that we're talking about a new standard for high-definition videodiscs. But this is the movie business and the drama is real, because potentially billions of dollars are at stake - not just the money spent and earned by big electronics companies and movie studios but your hard-earned dollars as well.

You'll thrill to the dazzling video and sound quality of the new high-definition DVD formats. You'll laugh out loud at the absurdity of another video format war, la Betamax vs. VHS. You'll cry if you spend $500 or $1,000 or more on a new player and new movie discs that are doomed to be obsolete in a year or two. It's the feel-confused movie of the summer. It's ... Blu-ray vs. HD-DVD!

The plot starts with the digital videodisc's (DVD) introduction less than a decade ago as a superior replacement for videotape. Movie studios tried to kill DVD in its crib, saying the technology would destroy the movie business - just as they said videocassette recorders would destroy the movie business a generation earlier - but DVD grew up and made them lots of money. So much money, in fact, that they're now battling to establish a new, even better DVD format.

The rival formats are HD-DVD and Blu-ray Disc (alias BD-DVD). Although they could survive in an undead state to battle for eternity, like vampires vs. zombies or the even scarier CD+R vs. CD-R, more likely one high-definition DVD format ultimately will conquer the other, just as VHS triumphed over Betamax.

The first Blu-ray and HD-DVD players have just arrived in stores, along with a small but growing number of movie titles. Blu-ray discs will not play in HD-DVD players and vice versa, so until hybrid players come along - probably by the end of this year - if you want to watch prerecorded movies in high definition, you'll have to choose sides.

To help you do so, our FORTUNE Mad Gadget Scientist has been testing the first HD-DVD and Blu-ray players in his secret laboratory.

The scene: In the center of the room is a Samsung HL-S5087W 50-inch widescreen DLP HDTV with 1080p resolution. Tentacles of cables and wires from the Samsung TV snake out across the floor to a Toshiba HD-XA1 HD-DVD player on one side, and a Samsung BD-P1000 Blu-ray Disc player on the other. Elsewhere in the room, chained to examination tables, are a Toshiba Qosmio notebook computer with a built-in HD-DVD drive, and a Sony VAIO desktop computer with a built-in BD-DVD drive. To the side is another 50-inch Samsung HDTV with a hybrid Panasonic VHS and a standard DVD combo player attached. On a desk in the corner sits a diary. Excerpts follow:

Monday: At last the 1080p Samsung TV arrives and the experiment can begin! No ordinary HDTV set will do, because I need the absolute best resolution available to test the new players, which means one of the new ones capable of displaying 1,080 lines in progressive fashion (1080p) instead of the slightly inferior, every-other-line, interlaced 1080i format that I recklessly bought a couple of years ago and that I plan to use as a control subject for this experiment.

The Samsung DLP is beautiful, with a thin black bezel. Although the screen size is the same, the new 1080p model looks less bulky than the older 1080i model, and even Mrs. Mad Scientist approves. Fortunately, she doesn't scream when I tell her it costs $2,700.

Tuesday: I'm pleased to discover an HDMI cable has been thoughtfully included in the Samsung BD-P1000 Blu-ray Disc player (and for $1,000, it should be). It's a beautiful, surprisingly small device with a piano-black case and glowing blue eyes - er, display lights - a perfect aesthetic match for the Samsung TV.

Drat! The shiny black case is a magnet for fingerprints. The remote control is a disappointment. But, oh, the joy when the HDMI cable is connected and Igor hits the switch. It's alive!

Wednesday: A lost day. Once we figure out that we have to manually select HDMI as the source by pressing buttons on the front of the Blu-ray player, Igor and I are mesmerized watching the first batch of 1080p Blu-ray movie titles. We marvel at the rich colors and detail compared with standard DVDs.

Of the handful of titles available, we especially enjoy watching the governor of California reveal himself to be a robot sent to destroy Los Angeles and exterminate mankind (Terminator). But it's clear that the selection of movies is minuscule for now and will still only be in the dozens by this holiday season. Mrs. Mad Scientist screams when she finds out that Blu-ray movies cost about $30 each and have scary copy protection.

Thursday morning: Darn that Igor! Against my orders he dissected the entry-level Toshiba HD-A1 HD-DVD player and discovered that it's a Pentium-based PC with a fancy DVD drive attached, and the parts alone cost way more than the $500 Toshiba charges for it.

Maybe Toshiba is subsidizing the price of HD-DVD players, taking a big loss in order to boost the format's chances against Blu-ray systems. Sony is going to include a Blu-ray player in its $499 PS3 videogame console this November, after all.

Thursday afternoon: Fortunately Igor did not destroy the high-end Toshiba HD-XA1 HD-DVD player, which costs $800. We hoisted it on a rack (a stereo rack, that is), because it is a brute and weighs 20 pounds. Connecting it to the 1080p TV was easy, but we had a minute or two of panic when the first few HD-DVD discs we fed it did not work.

Surprise! Because the Toshiba players are really Pentium-based computers, it simply took them an eternity to boot up. Patience paid off when the video showed up onscreen, as colorful and sharp as the Blu-ray images.

Friday: Another day lost watching beautiful but boring movies. Blazing Saddles is amusing in HD, but why can't they send me something truly great, like Young Frankenstein? The remote is no improvement over Samsung's.

However, like the Samsung Blu-ray player, the Toshiba HD-XA1 not only makes HD titles sparkle but also makes standard DVDs look better by "upconverting" them to 1080i. Mrs. Mad Scientist likes that, because HD-DVD movies are just as expensive as Blu-ray movies.

Friday night: Agony. We have to decide between the two formats, because there are no Players With Two Heads on sale yet. Then, in an epiphany, we realize that only videophiles who already own a 1080p HDTV will really care at this point. It will be months before a wide selection of movies are available in either format.

There are initial technical glitches in both formats (Toshiba released a software patch too late to be tested for this experiment). If we had to choose tonight, we'd go with Blu-ray and hope we were not stuck with a dead-end format. But we don't have to choose tonight. Instead, we'll download some videos over the Internet from YouTube.com.

Idea for my next great experiment: Creating high-definition video downloads over broadband that don't use either Blu-ray or HD-DVD. That's a scary idea for the movie and electronics companies, isn't it? That they have wasted all this money and effort on format standards that no one will care about? (Fade out to maniacal laughter.)

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.