The war between Blu-ray and HD-DVD to be the standard high-definition optical disc is going strong.

(The Hollywood Reporter) -- The war between Blu-ray and HD-DVD to be the standard high-definition optical disc is going strong.

Recently, these battle lines encompassed the next generation of videogame consoles, which have the potential to be a major factor in how home entertainment networks evolve.

Sony said that its upcoming PlayStation 3 will feature Blu-ray Disc technology as its chosen format, repeating the company's pattern of incorporating whatever was the latest storage medium at the time; PlayStation 2 used DVD, for example, and its original PlayStation console used CD-ROM.

Microsoft so far is hedging its bets with its next-generation game console, Xbox 360. It will support high-definition television and movie playback from a connected Windows Media Center PC at its launch in November, and a Microsoft spokesman said the company was "looking at supporting additional formats."

Although Nintendo has said that its next-generation Revolution will play DVD movies through an external peripheral, the company will not make the jump to high-definition with Revolution, instead maintaining its traditional focus on the mass market consumer.

That leaves the battle for the entertainment hub in the family room squarely in the hands of Microsoft and Sony.

Analysts expect Sony's PS 3 to sell for $400-$500, with Microsoft's Xbox 360 expected to launch with a price of $300-$350. Given that consumers are beginning to purchase high-definition televisions, PS 3 could be a great value compared with the stand-alone Blu-ray players on the market that are predicted to retail for $1,000 or more at launch.

"Should Blu-ray become the universal standard for HD movies, we believe that Sony will have an enormous competitive advantage," said Michael Pachter, Wedbush Morgan director of equity research. "Should a competing format become the standard, Sony will likely have a competitive disadvantage, due to the incremental cost of the Blu-ray laser drive compared to the Xbox 360's DVD drive."

"We believe it is likely that Sony will move the PS 3 to a blended BR-D/HD-DVD drive if those two camps can reach unification this year," said P.J. McNealy, a videogame analyst at American Technology Research. "The later the agreement comes, we believe the more pressure it will place on Sony to deliver the PS 3 to spring 2006."

Analysts don't expect PS 3 to hit the U.S. until next fall, which will give Microsoft a full year to build on its Xbox 360 global-installed base. Microsoft is expected to ship 3 million Xbox 360s by year's end.

Billy Pidgeon, a videogame analyst at Go Play Research, said that most Xbox 360 users will not be tech savvy enough to use the HD functions on their PC. In contract, PS 3's use of the BR-D format as its game medium allows for a seamless transition from game console to entertainment player.