Read the articles on Paramount and Dreamworks to catch up on the last news to hit this discussion.

This move by the studios can’t be any big surprise but let’s break down what is going on here. Studios only have a vested interest in the media delivery as so far as it makes them money. The real competition is between Toshiba and Sony – one format will have to win, or will it?

The quiet line in all this is that Toshiba supposedly made some type of multi-million payment to the studios to switch completely to HD DVD. Who cares? No one really -  because of the competing formats, most consumers are waiting to see which physical media will win out, Blu-Ray or HD DVD.

But I believe as the head of Dreamworks originally said: The delta between the current DVD format and the two new competing formats isn’t that big. The technology isn’t that much different to justify the upgrade. It isn’t the same as moving from an analog TV to HD TV. So what is really going on here, in between the lines?

If you look at the relationship in the family of corporations vested in this physical format game, Toshiba is in bed with HP and Microsoft. Microsoft needs HD DVD to work – they helped fund it and since it is a piece of the XBOX, they would seem to be invested to see that it succeeds.

Additionally, Dreamworks and Paramount claim they made this switch for other than money: they say it is superior for their delivery of their family initiatives. If that is true, that phrase translates to this: those studios (including daughter companies MTV and Nickelodeon) are now the opposite side of the fence to Disney, Fox, and all their family platforms – Shrek 3 and Transformers will be on HD DVD. Consumers are now going to have to choose which physical media delivers the best content to their family. This is how confusing and difficult this is becoming. Unfortunately no one is thinking about the customer.

Summary so far: HD DVD, powered by Toshiba and Microsoft dollars – competes against Sony and Disney. HD DVD is embedded in XBOX 360, Microsoft”s next gen platform – large investment locked in for Microsoft. The two studios received a payoff to go with HD DVD. All these sound logical and could be a good explanation by themselves on what is going on (financial commitment, payoff, bottom line, what is best for the company), but something seems missing. What if there is a larger reason?

Microsoft has always pitched the XBOX 360 as the next gen content delivery platform, but HD DVD could just be a distraction. What if all this posturing is a ruse? It could work. This move by the studios, orchestrated by Microsoft could prolong this fight between formats long enough to let the technology for home networking and downloading to take over – i.e. it could make consumers not adopt either format and turn to downloading digital short-form and long-form content. Maybe this move by payoff isn’t about the disc formats at all, but about Microsoft frustrating the consumer to get them to move to digital media delivery via online services, in one way delivered by the XBOX 360.

Feasible? Let’s think about this: Apple, Amazon, Netflix, and a few others offer limited use long-form content now. But it isn’t realistic for sustained home viewing: buying/renting, delivering one movie to all home players (set-top and mobile, like iPod) without DRM restrictions, bandwidth is limiting speed/quality, and drives aren’t quite big enough to handle a full library of movies, like that dusty DVD shelf you have.

But all this could change over the next year and a half.  If the format war between Blu-Ray and HD DVD is prolonged to a certain point, most consumers will not adopt, they will get frustrated and continue on the path that they are already on with music – downloading direct from the Internet, circumventing any physical media entirely.

Fantastical? I don’t think so. Everything is heading towards digital delivery. There soon won’t be a need for physical media. Microsoft could be leaving Toshiba out in the cold with this move (whether Toshiba is aware of it or not), but, then again, when has a competitive business been friendly? Toshiba will still build their hard drives. The studios are in a tougher spot and will have to adapt either way, but right now they are so caught up in physical format play, they can’t see the forest for the trees.

This is the waiting game, but let’s see how this intricate move plays out. Watch Microsoft’s marketing and watch them push forward – will it be HD DVD or download? As a side note, Apple has refused to meet their earlier promised deadlines for including either a Blu-Ray or HD DVD drive in computers, but Apple doesn’t drive the technology in this case. Who knows? Walmart or Netflix could take the lead and become the long-form content store of choice – right now it is up for grabs. Suffice to say: don’t buy a Blu-Ray or HD DVD player now. Probably won’t be worth the paper it is printed on in a year and a half.