Blu-ray adoption is gradually killing HD DVD, or at least that’s how it appears. Retail advantages, bigger support base in Hollywood, and a slightly cheaper PlayStation 3 all suggest that the Sony-backed medium will ultimately prevail over Toshiba’s HD DVD.

“We are starting to see the pendulum swing slowly in [Blu-ray’s] direction,” says Chris Roden, analyst with Parks Associates. “Recent retail developments, support from major Hollywood studios, and inclusion of the format in the PlayStation 3 puts the Blu-ray format in the lead.”

Just today, Target announced it will exclusively sell Blu-ray players in lieu of HD DVD ones, at least through the holiday season. In June, Blockbuster said 85 percent of its stores would exclusively offer Blu-ray rentals as they significantly outpace HD DVD rentals the retailer said. HD DVD will still be offered at the other 15 percent of Blockbuster stores and by way of the company’s website.

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Sony unveiled a rather fugly PS3 camera yesterday coupled with a top-heavy noise-reducing microphone.

The press release promises the device “will enable gamers to enjoy their [PS3] like never before.” Will it? We won’t know for sure until its release this summer for an undisclosed price. But one thing’s for sure; we have seen something like this before. It was Sony’s marginally successful EyeToy for PS2, the Eye’s predecessor.

While the new video chat attachment eliminates the need for a headset, what happens to speech-recognition performance when playing games alongside a loud home audio system? And even though PlayStation Eye has double the video fidelity of Xbox’s Live Vision cam at 640×480 resolution (60 frames/second), it’s hardly enough to match Sony’s 1080p graphics.

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In addition to adding IM support to the Xbox 360 on Monday, Microsoft effectively flexed its “our digital video is better than your digital video” muscle to its competitors. The company will increase 360 video compression fidelity using H.264 and MPEG-4 Part 2 starting next month (full details here). If that’s too much codec talk for you, what it really means is that the 360 will be positioned as the superior media extender by the numbers when compared to Apple TV and the PS3.

The new firmware update allows 360 users to download and watch video content in full 1080p and High Profile H.264 support, the same advanced setting used in HD-DVD and Blu-ray discs. By comparison, Apple TV only supports 720p and the mainstream consumer H.264 profile, slightly inferior to High Profile. While the PS3 also supports 1080p, it does so at the Main H.264 Profile level as well when not playing Blu-ray movies.

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