It would be nice if a winner became clear this summer or this year. I don't think the internet will completely, or even largely, replace discs. Not everyone has broadband, and not everyone wants to watch it on their computer or fool with hooking it up to their TV. And it's easier to just shove a disc into a player.
The "cheaper" argument for HD-DVD is limited in it's effect. When you spread the added costs of the more expensive BD plants and discs over tens of millions of players and hundreds of millions of titles over many years, there simply isn't going to be much difference to the consumer. Cheaper players are a factor. But let's see- the manufacturer can build 2 head assemblies- one with slightly less precision for the HD-DVD, and one that's more precise in tracking for BD. Or they can just build the one, that works for both, and save inventory, tracking and setup costs etc. No cost difference there. We're down to software & licensing cost differences now. The players need not have large price differences, once the early price subsidizing ends and production ramps up. Until then, cheaper players have an edge, for as long as that lasts.
Capacity matters. There are estimates of up to 200GB BD discs. Just like some software is sold today, we will buy a movie on disc that may have another 1, 2 or 3 movies on it, that will be "unlocked" with payment of a fee. Cover art and info can be included for all movies on the disc, as an incentive to pay the unlock fee. Now talk about cost per movie.
I've read that early on it was considered possible to put a DVD and BD on the same disc, maybe it was by flipping it over. I don't have the link but I'll look for it. No one does that today, but perhaps they will.
BD replicators are reluctant to pump out porn, but it seems at least one will. We'll see if Vivid gets their BD title out in March or April as planned. If the market shifts to BD, more will, or maybe a replicator will arise who specializes in porn.
The BD camp still has another, unused, security feature called BD+. And they have watermarking.
On the other hand, HD-DVD has a head start and may get really cheap players out before BD, if they last that long. Also, Sony has a way of snatching defeat from the jaws of victory. They are arrogant and do stupid things, like the root kit and this tentative censorship move. They should be making it at least as easy to put porn or any content on BD as it is with HD-DVD. If they successfully discourage porn, what's next? Political statements? Historical products that mention the rape of Nanking? Mentions of their competitor's products?
If Sony can hold their studio camp together, and really does start outselling HD-DVD titles by some multiple (not just 30% or 40%), and gets GOOD players out (like with ethernet connections for upgrades of firmware) near in price to HD-DVD players, keep PQ and ease of use equal to HD-DVD, and maybe even maintain a capacity lead, then they'll probably win. The BD exclusive titles coming out this summer will be a factor, especially by next Xmas.
On the other hand, if they blow this, and I think there's an excellent chance they will, then HD-DVD can certainly win. And I can then gladly continue my dislike of Sony undiluted. I still think BD has an edge and will likely win. But it's no sure thing.
Okay, now that today's grammar lesson is over let's move on to the real stuff 
