In ZDNet blogs there is an interesting entry by John Carrol discussing the differences of the emerging high definition formats. The article discusses manufacturing cost, video encoding, DVD compatible hybrid discs, interactivity and other in-depth issues. There is some good reading in this article, but it seems to be perhaps a bit biased towards HD-DVD. The writer has been working for Microsoft since 2005, so...

Regarding the decision to use MPEG-2 in early Blu-Ray titles versus newer compression standards such as H.264 or VC-1 (both of which are supported in Blu-Ray players), Parsons explained that this was to enable a real-time encode process. Most content studios are very familiar with MPEG-2, and had a pipeline oriented around the technology. Usage of MPEG-2 would, theoretically, accelerate the release of new titles, as MPEG-2 encoding is a well understood proces.

Interesting point, but as of today, there are more HD-DVD titles than Blu-Ray titles. Likewise, the early HD-DVD titles seem to have more mass appeal than the early Blu-Ray titles. Constantine and Bourne Identity (HD-DVD) vs. 5th Element and Basic Instinct 2 (Blu-Ray). Okay, I'm not being completely fair here, and besides, if Fox holds fast to its exclusive commitment to Blu-Ray, a few years down the road we're going to see a Blu-Ray Star Wars release.

Source: ZDNet