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Problem is once you go to blu-ray SD just doesn't have a chance. For me there is no longer any point in buying SD disks even if I have to wait for the blu-ray version at a decent price.
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I used to think this way until I changed my 42" plasma screen from a Panasonic to a Pioneer 4280.
Alot of screens don't do SD justice and this distorts peoples perception of the performance gap.
Don't get me wrong, I've invested heavily in top end home entertainment equipment so I want Blu-ray to gain momentum quickly.
At the moment though, the price differential for Joe Bloggs is madness for the incremental performance improvement.
However, I think prices will come down. It will take 1 brave manufucturer to start churning out full specced Blu-ray players in a big Supermarket chain for under £150 (and we're not too far off already with Samsung players available now for around £199) , then as the PS3 becomes a comparitively expensive option the market will open up and prices will nose dive.
I can see Blu-ray players being sold at Asda for £79.99 inside 3 years. They won't go as cheap as DVD players (under £15 for a full specced player these days is just silly) but at around £80 people will be prepared to replace broken DVD players with Blu-Ray.
Disc prices will come down too, the first DVD I ever bought cost £28 back in 1998. The likes of HMV and Zavvi are just (understandably) at the moment selling to a limited market who are not as price sensitive as Joe Bloggs.
As Joe Bloggs buys Blu-ray machines, HMV and Zavvi will want to sell them discs, so disc prices will fall eventually.
... I hope!