Blu-ray Victory Won't Budge Microsoft

Sony has a long way to go towards building demand for Blu-ray players. Most consumers are happy with the DVD format and convincing them to move to a high-definition player won't be easy.

"DVD to some extent is a victim of its own success," says Josh Martin, an analyst with The Yankee Group. "Consumers don't see Blu-ray as a substantial leap over DVD, as DVD was over VHS."

And despite winning the format wars, adoption of Blu-ray players will be slow, says Martin.

That could play right into Microsoft's strategy, says Martin's colleague, Michael Goodman, an analyst for The Yankee Group who covers games, media and entertainment.

"Microsoft's thought has always been that the future of movie distribution is not in the player but in digital adoption," says Goodman. "If they can delay Blu-ray adoption, build out Xbox Live and get a segment to download high-def movies, then they have won."