Analyst: Next Gen DVD Format to Determine Console War

Industry analyst at Wedbush Morgan Securities Michael Pachter believes the battle between the PS2 and the Xbox 360 will be determined by whether HD-DVD or Blu-ray wins the market.

“Notwithstanding the efforts of all three console manufacturers to deliver compelling exclusive content, we believe that the ultimate outcome of the console wars will be decided by the motion picture studios,” said Pachter.

“Should the studios embrace Sony’s Blu-ray standard for high definition DVDs, we think Sony will gain an insurmountable advantage over Microsoft; should the studios embrace Sony rival Toshiba’s HD-DVD format, we think that Microsoft can maintain its first mover advantage and will dominate software sales for years to come.”

Pachter went on to predict the Blu-Ray format will prevail, despite arriving second to the market. In the meantime, Pachter believes Microsoft will “enjoy a first mover advantage for the next two years, capturing approximately 42% of U.S. and European combined next generation hardware units sales through 2007.”

Pachter’s analyst crystal ball also had good news for the Nintendo Wii, saying it will thrive as a second console for consumers.