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A year ago, HD DVD players were touted as the next big thing in home entertainment. Now, industry watchdogs wonder if Toshiba's pet project will become obsolete.

In the high-definition DVD war between Blu-ray and HD DVD, Blu-ray is pulling ahead. On Monday, Blockbuster announced that its next batch of high definition DVDs will be exclusively offered in the Blu-ray format.

The Blu-ray boost, expected in mid-July, will feature 170 titles to be distributed at 1,700 Blockbuster (nyse: BBI - news - people ) stores.

Shares of Blockbuster were up 0.4%, or 2 cents, to $4.60 in pre-market trading from $4.58, Friday's closing price.

Since late 2006, the movie rental company has offered both formats at 250 stores across the country. Both formats were given equal billing, but Blockbuster soon realized that Blu-ray outsold its competitor by 70%.

Blockbuster will continue to rent the HD DVD titles it already offers and may expand its HD DVD inventory in the future but, for now, the company has placed all its chips on Blu-ray.

�We intend to meet the demands of our customers and based on the trends we�re seeing, we�re expanding our Blu-ray inventory to ensure our stories reflect the right level of products,� Blockbuster executive, Matthew Smith, said Monday.

Blockbuster�s news is a major victory for Sony (nyse: SNE - news - people ), the maker of Blu-ray DVD players, which has been locked in a heated race with Toshiba (other-otc: TOSBF.PK - news - people ), which makes the HD DVD players, to dominate the high definition market. The battle recalls the showdown between JVC's VHS and Sony's Betamax in the 1980s, when customers were forces to pick one format over the other. While all HD DVD and Blu-ray players can play standard DVDs, they can�t play competitor�s discs.

In the format war, Toshiba had the head start with the introduction of its player in March 2006. However, since then, Sony crept up on Toshiba by forging strategic alliances with movie studios. Blu-ray now has exclusive partnerships with a handful of studios including Sony's holdings, Disney and 20th Century Fox. In a bit of a role-reversal Sony looks like its borrowing a page straight from JVC's old playbook, when it courted major film studios to tighten the noose on Betamax.

The strategy seems to be working. This month, Sony predicted Blu-ray player sales could jump from 100,000 to 600,000 units in 2007 because of the popularity of DVDs exclusively released on the format. Meanwhile, Toshiba lowered its 2007 estimate 44.4% to 1.0 million units from 1.8 million.

The outcome of Toshiba and Sony's scuffle has implications which extend far beyond the sales of high definition DVD players. It may also affect the video game sole console, with Microsoft's XBox squarely positioned in Toshiba's corner and Sony's Playstation obviously siding with its parent company. The XBox 360 has an add-on HD-DVD drive, which allows the user to run HD DVD movies on the console. Meanwhile, the Playstation 3 console has Blu-ray capabilities built in.

In Monday afternoon trading, shares of Sony were down 1.0%, or 53 cents, to $54.00.

http://www.forbes.com/markets/2007/06/18/bluray-blockbuster-update-markets-equity-cx_er_0618markets31.html?partner=rss