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The Best Products to Come in Second Place

HD DVD sings the blues
As high-definition discs began to replace standard DVDs, the folks at Sony must have had a foreboding sense of deja vu.

Sony had lost its Betamax battle years earlier and its mini-disc media -- though praised by audio professionals and music enthusiasts -- withered on the vine. In the past decade, as high-resolution TVs went mainstream, it found itself in yet another format battle.

On its side was Blu-ray, a format it had developed with Phillips. Over time, its supporters would include Hitachi, LG, Samsung and Sharp.

But Sony had a rival company competing for a new, souped-up standard for DVDs. Its HD DVD (originally named Advanced Optical Disc) counted Microsoft (which offered Xbox integration) and Intel (INTC - Get Report) as its allies.

Among the claims of HD DVD supporters -- private reviewers and Toshiba itself -- were that it offered better video (an encoding issue that today isn't as relevant), greater interactivity (unlike early Blu-ray discs, HD DVD and players could use an Internet connection for firmware upgrades and added features), region-free discs (meaning U.S. and overseas formats would be the same) and less-expensive hardware (another gap that has since been overcome, with prices dropping substantially).

HD DVD had a more perfected, stable technology; early Blu-ray players were seen as a buggy works-in-progress.

Although both formats were sold for a time (as were players built for them) it became clear there could only be one. Although movie studios and hardware makers may have picked their side of the battle, it was deemed inefficient and profit eroding to try to serve two masters.

So why did Blu-ray win?

Sony is widely considered to have had the more effective marketing campaign and created additional, much-needed buzz by adding Blu-ray capability to the PlayStation 3.

Movie studios were won over by Sony's commitment to their choice of additional anti-copying and digital rights management technology, the specifics of which Toshiba had been reluctant to implement above and beyond their existing piracy protections.

The tipping point came when Warner Brothers decided to put all its eggs in the Blu-ray basket, which led retailers such as Wal-Mart, Blockbuster and Best Buy (BBY - Get Report) -- a well as Netflix (NFLX - Get Report) -- to also pick that side of the battle.

In 2008, Toshiba waved the white flag and said it would abandon HD DVD.
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