Digital Media

Updated at 9:15 a.m. PDT with background on the DVD format wars.

Research firm In-Stat has declared a "winner" in the DVD format wars between Blu-ray and HD DVD. And the winner is...

Blu-ray.

In-Stat, in a research report released Wednesday, noted that the Blu-ray and HD DVD format war ended in the early part of the year, and that Blu-ray recorder and player sales are expected to reach 5 million by the end of the year.

With the death of HD DVD earlier this year, some took it a step further, saying Blu-ray's top-dog spot may be short-lived should digital downloads replace the need for Blu-ray discs. But for now, Blu-ray is expected to enjoy its position.

In February, Toshiba said it would stop making HD DVD products, following a two-year war between the HD DVD and Blu-ray formats. Shortly thereafter, the three movie studios that were then still supporting HD DVD withdrew their support and declared they would get behind Blu-ray.

Sales of DVD players and recorders worldwide hit 142 million units last year, according to the market research firm. This year, In-Stat expects a decline in the DVD hardware market because of saturation in some markets and also because DVD recorders failed to grab consumers' interest as DVD players did.

What isn't clear is whether Blu-ray's growth will make up for the decline of HD DVD sales by the time digital downloads of movies become pervasive.

Blu-ray's adoption rate is hampered by the price of the players, according to In-Stat.

Two years ago, a Toshiba DVD player cost $500 to $800, while the cheapest Blu-ray player ran nearly $1,000.

UPDATE:To include quotes from NPD Group analyst Russ Crupnick

DVD sales are flat but the drop doesn't have anything to do with movie downloads, according to the NPD Group.

The research group reported Tuesday that, on average, consumers spent 41 percent of the money budgeted for movies and other video content by purchasing DVDs of films. Movie rentals on DVD were the next biggest category with 29 percent. Consumers spent 11 percent purchasing TV shows on DVD. About 18 percent went to theater tickets, according to the report.

Here's the kicker for Internet video: only 0.5 percent was spent on renting or purchasing TV shows or movies off the Web.

This shouldn't surprise anybody. Digital video is still in its infancy. Narrow bandwidth in the United States, compared with much of the industrialized world, makes it time-consuming to download the enormous movie files.

Technology that compresses those files have improved but the quality and viewing experience is still far inferior to watching a DVD. Hollywood still doesn't allow digital downloads the same kind of portability as DVDs. A consumer can buy a movie on iTunes that may not play on a non-Apple device.

Then there is the problem with choice. Most of the services still have only a fraction of the films available as any corner video store.

Stats like those from NPD Group, while they may be accurate, don't tell the whole story. Hollywood believes digital media is the future as evidenced by the deals made with Microsoft's Xbox, iTunes, Roku's Netflix Player, and others. Let's see how much market share downloads account for in the next couple of years.

"Main street continues to line up behind Blockbuster and Best Buy," said Russ Crupnick, NPD's industry analyst. "I think the studios are smart to try different things and learn what they can. Eventually, we're going to see downloads start to get traction. But from a consumer point of view, there's just not any stickiness now."