I was sitting in a movie theater the other day when an ad for The Matrix coming to HD-DVD came on screen. This made me realize something: almost all of the HD-DVD and Blu-ray discs in stores right now are very current films or new releases.

Fine, you might say the technologies are new, it takes some times to roll out the content for them. But my response to that would be that we’re in the middle of a very heated next-generation DVD war – you’d think that one side would want to gain the upper-hand as quickly as possible and release all of their most popular fare on the next-gen DVD format they are backing (some are backing both).

It’s also probably true that because of this format war some of the studios are wary of jumping fully in bed with one side just in case the other side wins – but I think something else is at play as well. I think it’s becoming clearer that a 3rd side might emerge a lot sooner than expected in the HD movie war – the downloadable movie.

The big limitations with downloadable films so far have been:
a) bandwidth
b) storage
c) Hollywood’s piracy concerns and
d) a way to play the files in your living room.

Well the bandwidth issue could be helped out big-time soon. Just today Comcast’s CEO showed off a 150 Mbps modem – 25 times faster than today’s breed. Now that may have just been a prototype, but recall the push for a 100 Mbps National Policy by 2010. These super high-speed rates are coming. Just image if you could get a high-def movie in minutes instead of hours – I’d say that would solve that problem.

High-capacity storage options are rapidly increasing as well. It’s commonplace now to open up a Sunday ad for Best Buy and see a 500 gigabyte external hard drive selling for under $150. With everyone rushing towards solid-state memory, the prices are falling so fast that a 1 terabyte external drive could be around $200-300 in the coming months. 1 terabyte could store a lot of HD movies…

As for Hollywood’s fear of digital, just read GigaOm’s post ‘Why Hollywood Suddenly Loves Tech‘ from a couple weeks ago. He says that stalled DVD sales are causing studios to panic and pushing them to sign with multiple digital distributors in an effort to quickly make up for losses – or rather profits not made.

And finally, both Microsoft and Apple are well on their way to moving the digital files into your living room with the Xbox 360 and Apple TV respectively. TiVo will be following suit with their own download service and look for services like Netflix to find their way into the living room very soon.

It really is becoming more of a possibility that neither HD-DVD nor Blu-ray will win their war – Digital HD Video Downloads could come seemingly out of nowhere and take the crown. Digital music downloads have been chopping away at CD sales for the past few years, but neither HD-DVD or Blu-ray has nearly the legs to stand on that the CD did. This is all coming together at just the right time…

So don’t expect huge back catalogs of films on HD-DVD or Blu-ray anytime soon. In fact we could be seeing them much sooner in digital format as various studios have already shown with iTunes just how easy it is to setup and distribute older films digitally.

Once the broadband gets just a little bit faster and the cost of storage drops just a little bit more, the fully-digital age may start a rapid ascent to the top of the movie mountain.