If that is the case then studios will opt for the less costly format, which is HD-DVD.

Wal-Mart does hold more weight than any studio, in America, but with their firm neutral stance we have no hope of them deciding anything anytime soon. As it stands, losing a studio is far worse than a company like Blockbuster or Target going exclusive, so the Paramount move affected things far more than anything thus far.  Also, Wal-mart only has considerable sway in NA.  In Japan, Blu-Ray has over 90% marketshare, and in the EU HDTV adoption is so slow that the format war will probably be decided long before they even care.  Studio support is far more important to Japan and the other regions than Wal-Mart is.

You say price can win this battle, yet Blu-Ray has garnered roughly 40% of standalone sales despite HD DVD's lower price points. Had the ps3 not been an option, I'm sure even more standalone Blu-Ray players would've been sold, thus equalling things out.  Also, HD DVD movies often cost $5 more than their Blu-Ray counterparts because of the HD DVD combo discs (300, for example).  How's that for a price advantage.

Why are so many Blu-Ray standalone players being sold?  Maybe it's the higher quality (early adopters usually don't care about price, only technology, which is why they are early adopters).  Maybe it's the larger studio support.  Who know.  Personally, I think it's because things snowball.  More people are adopting Blu-Ray standalone players despite the higher price point because Blu-Ray is winning, so they feel that it is the safer investment.  This then leads to Blu-Ray being even further in the lead, leading to more people adopting because they feel it's a safe investment.

Also, just because most ps3 owners don't buy Blu-Ray discs now, doesn't mean they won't in the future. THe vast majority of ps3 owners don't even own HDTVs, however, once they do upgrade to an HDTV (and you can assume gamers will most likely upgrade before most J6Ps), then the format choice will have already been made for them. They upgrade to an HDTV, an then begin buying Blu-Rays, because they already own the player. As HDTV adoption grows, so will the precentage of ps3 owners that buy Blu-Ray. This is one point that the HD DVD consistently ignores.

Does anyone know how sales are counted? Are the 'free' discs that are bundled counted as sales. If so, then both blu-ray and hd-dvd sales figures are really inflated to the point of being a joke.

Did anyone expect an early victor? I certainly didn't. For people who aren't really tech savy, which is a clear majority of the population, there's no real incentive right now for them to jump to one of the two formats. All they get is confusion with certain suppliers or certain studios supporting one or the other, they can't keep track. Also HD TV adoption has been very slow to grab hold. I think the HD TV adoption rate will have to be 50% before either format gets to 25% of households or so, and it still may be a while yet before that happens.

Free discs are not counted.  If they were, then Talladega Nights would've been the first movie to hit 500,000 sold instead of Casino Royale.

Do you have documented proof of this? Not just of the single title pack ins, but all offers where discs are given away for 'free'? 

so when everyone told me Blue-Ray had won, they were just fluffing the truth?

Regular DVD's is still the most domaint format currently.