Aside from playing high definition DVD's, these drives to offer much greater storage than a typical DVD drive (about double the current 2GB DVD). However, the high definition specification as mandated by the MPAA also carries a lot of technical baggage, guarding against piracy and requiring a complicated encryption and key revocation system, which I won't get into here.
In the gamebox world, Sony's poorly received PlayStation 3 shipped with a built-in Blu-Ray drive, to which many attributed unit's high cost. Rival Microsoft's Xbox 360 ships with an optional HDDVD drive, which lead many to believe that Microsoft was firmly in the HDDVD camp. Until recently, the race was largely up in the air. Consumers have largely stayed away from the format war, perhaps reminded of the 1980's stalemate between VHS and BetaMax. Interesting theory, but that was nearly 30 years ago and I think most people have forgotten about that debacle.
Currently deciding between HDDVD and Blu-Ray was largely driven by the studios; if you wanted a Sony picture like SpiderMan 3, you went Blu-Ray. Want to see Peter Jackson's King Kong? That's on HDDVD. For most consumers, the difference between a high definition DVD and a regular DVD on a high quality, upsampling DVD player was not compelling enough for an upgrade, and given the high cost of the players and the ambiguity over which format would win, most people opted to do nothing. Last week, Warner Brothers, switched sides and declared its allegiance to Blu-Ray, supposedly because Sony paid them $500M to help make this decision. With all the major studios except Sony now behind Blu-Ray, including the Adult film industry (which sells more DVD's than all the major studios combined), it seems as though the format war is all but over.
Conspiracy theorists claim the reason Microsoft was funding HDDVD, the apparent loser in this battle, was to prolong the conflict and the indecision. By doing so, users of their nascent Xbox Live service, which allows users to download and rent HD-quality movies right on their Xbox 360, would leapfrog the format war altogether. Microsoft was definitely on to something, but the service was slow and costly and hasn't really taken off. Other providers such as Netflix offer video streaming, but not in HD and, honestly, who wants to sit in front of their PC and watch a movie? (And I mean literally a PC, as Macintosh is not supported).
Along comes Apple with Apple TV Take 2. Now they offer HD movies for almost instant download for a reasonable price, rented directly from your sofa. Who needs an HDDVD or Blu-Ray player in this model? No one, just a $225 AppleTV. By staying out of the format war and letting it linger, Apple may have emerged as itself the winner.