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slowmo said:

I believe one of the main advantages of HD-DVD was it didn't requie a lot of retooling of manufacturing plants like Bluray did.  Not saying I think they'd go that route but creating the disks isn't an issue, the supply of lasers and drives on the other hand would be an issue if they were tied to one drive manufacturer.  Not sure I'd like to be reliant upon Toshiba drives, they're hardly the best drives out there in my experience.

When both formats were initially being rolled out, HD DVD did have that advantage, given it is a red laser-based format just like DVD.   However, economies of scale have made Blu-ray the much cheaper alternative today, given hundreds of thousands of drives and millions of discs are being produced on a weekly basis.

HD DVD would be a relatively cheap alternative to any proprietary format Microsoft could come up with, or a new format like HVD, but it would still be more costly than Blu-ray, and why go down that road when you can just include Blu-ray and check off another box on your feature list compared to the competition.

It's the same reason the PS1 used CDs, and the PS2, Xbox 360, and Wii all used DVDs.  Looking at Nintendo and Sony, they only go the proprietary route for their handhelds (aside from Nintendo's earlier consoles), as that's a necessary evil given the nature of the business, but even the Vita will be using a flash-based cartridge.