With Toshiba’s announcement today, to stop the production and further development of their HD DVD format, Sony is declaring themselves to be the winner of the format war.

The question is, “winner in what contest?”

If we take a look at the Blu-ray/HD DVD market alone, yes, Sony appears to be the winner. However, if we take a look at the bigger picture, Sony doesn’t look much like a winner yet.

If you have read our last blog entry about the “Need for Speed” you will understand that increased storage capacity for silicon discs is not necessarily what consumers want, what is good for them, nor even what they need.

DVD technology is dying. Whether red or Blu-ray, it is only a matter of time until it will be buried. Most experts agree that optical formats will probably only withstand one final generation.

Interestingly, a small and new company is entering the ring for the battle of the last technological advancement in DVD laser development. New Media Entertainment (NMEN.BB) offers a better high-definition quality than does Sony’s Blu-ray. NME also has one huge advantage in that their format is based on red laser technology, which is much cheaper and has a much wider infrastructure than blue laser technology. Best of all, it is compatible with all former optical formats and can play DVDs and CDs in the same drive.

It remains a question if David (NME) will gain the muscles to compete against a Goliath (Sony), but the odds are looking promising as the first players have been shipped and some good content deals have been consummated.

The major force behind Sony’s success of their Blu-Ray format is the Playstation 3, which is still far behind the initial expected numbers sold. It is just too expensive for some consumers to get a new Blu-ray machine, and it is questionable if prices will drop significantly over the next months, as the existing infrastructure doesn’t support larger numbers of production. Furthermore, new infrastructure will require more significant investments for a dead product and I wonder if someone actually wants to make these investments if it is clear that the next years will bring a shift from offline delivery of content to online distribution.

We here at DreamStream are enthusiastic about the potential of our products as we are right now the only company that is able to deliver streaming video fully encrypted and secured. As network infrastructures support higher and higher speeds DVDs will become obsolete and DreamStream might be the winner after all. Stay tuned as history unfolds daily.

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