My best "guesstimate" (which is all we're all doing now), is that we are just looking at another DVD+R vs DVD-R issue and that this will all play out the same way. Almost all DVD Readers and Writers for PC today are "multi format"; (DVD+R, DVD-R, DVD+RW, DVD-RW) the same is true for most "stand alone" home DVD players; most consumers today don't even know about the various DVD formats because it almost never matter, they almost always work. From time to time you will find a stand alone player that will only play +R or only -R the same is true for some old PC-based drives; only then does the consumer realize that there's a difference and then they either make sure to purchase the type of disk that that drive supports, or they ditch the old drive and buy another multi format drive. (If the consumer has a multi-format stand alone player, and a multi-format PC DVD drive, and they discover that their standalone player in their bedroom only supports DVD+R, they'll probably buy some DVD+Rs and burn movies in that format.
I don't see this situation being that much different. IF more manufactures jump on the multi format player bandwagon and they can get the prices down; J6P will be all over the multi format stand-alone player. If Joe Six Pack happens to have a laptop or XBOX 360 that they later find out only supports "HD-DVD", he'll take the time to figure out what that means, and will either not watch DVDs from that laptop or the 360 DVD player, he'll buy HD-DVDs only, or he'll just buy a new dual-format drive for his laptop/360 and chuck the old one in the trash. Same scenario if Joe Six Pack unwittingly buys his stand-alone Dual Format player (he doesn't even know it's dual format, it's just a "High Def CD Movie Player" to him; it's all they sell) and later finds out that his PS3 doesn't play some of his movies. He investigates why this could be (calls Sony all pissed off), finds out that he can only play "Blue Ray HD CD Movies" on his PS3 and he either makes the extra effort in the future to look for and buy Blue Ray movies only, or he ONLY plays games on his game console (because it's not dual-format) and plays movies on his stand-alone player that "just works"... (Or he buys the updated version of the PS3 that includes the Dual-format Player) (PS3.1 gets released after the PS3 gets mod chipped, people start running Linux on it, and the games are downloadable and burnable off of the internet; while Sony is releasing the PS3 anyway for the updated DRM, they release a dual format player. (With slighly reduced image quality/features for HD DVD to differentiate their superior BluRay disks from the competition.) (Same scenario completely feasible for 360.)
The studios don't care (Except Sony) which format their disk is released in, they WILL go where the $$ is and no one really knows where that is; it may be BluRay, it may be HD-DVD, it may be releasing for BOTH (with only one coding for both releases to reduce costs.) (Or the studios DO care and stay in their various camps; it doesn't matter too much to the average consumer except in the scenarios above, where it only matters a little bit...) The smartest thing that Sony could do would be to start investing HEAVILY in obtaining the best image and audio quality possible, and in providing lots of additional, worth-while features. They need to PROVE that they are providing more on their 50GB dual layer disks, than HD-DVDs can provide on their 30 GB dual layer disks. (They need to fill the disk, but not by just using ineffecient codecs (MPEG2); they need to find a way to fill the entire 50 GB disk with things that people want to establish themselves as the "high-end" HD DVD format.)
Like someone else said "typical HD movies get released on HD-DVD media; special editions of the movies get released on BluRay because they need the additional space" (Load the BluRay disks up with Extras and Interactive features, ratchet the bit rate way up with VC1 encoding, include a whole bunch of different high-quality audio options; cater to the Audiophile/Videophile that has more money, can see/hear the difference (or thinks they can), and that just wants these special versions for bragging rights. Heck if the studios start recording movies with high quality very high def cameras instead of film-based cameras; we will start having TRUE 30 or maybe even 60FPS movies; there would be NO JUTTER when coupled with an appropriate monitor; if you literally have 30 DIFFERENT or 60 DIFFERENT frames in the video per second the movies will take up more space, and there will actually be more data there, so even the compressed video will be bigger.
This should make everyone happy, including Sony, who will have a higher-priced disk format, they'll have their pride still intact (their format after all will be finally prove that it is superior and all the audio/video philes will laud it's capabilities), and the average consumer will have high quality, high definition disks that provides them with image and audio quality that they appreciate, but not more than they appreciate; the difference in $$ goes back into their pockets.
IF we continue to see more High Def Dual Format players from many manufactures and we can get the price down, it is good for the consumer; it's good for everyone. The High Def DVD market probably needs two different classes of product anyway. (Basic HD DVD for the average consumer, and a high-end newest everything format for the A/V fan.) (Heck Intel realized the benefit of having two classes of processors when they released the P2, they even artifically created their low-end brand by taking the P2s off of the assembly line and cutting half of the cache off with a laser (and took a hit or made 0 profit on them to do it); the current situation could automatically make HD-DVD a two class system; I don't think we could dream of a better situation. (Unless you're a format fanatic...)
Winners: J6P (no confusion), BluRay(BluRay can live, BluRay is still useful on PS3, make Sony a bunch of $$ and prove it's statistical superiority (whether they do it is up to them)), HD DVD (HD DVD survives the format war and can claim victory as they greatly outsell BluRay because of decreased costs (the actual production costs don't even matter; it's in both camp's best interests to keep HD DVD cheaper than BluRay to create the two class system)), The AV Enthusiast now that J6p has every reason to buy HighDef content there is an explosion in which content is available in high def; EVERYTHING is in HighDef (even, wheel of fortune seasons, OK?); and now that the "format war is over" a whole new war launches (like in audio today); the competition to produce the best image and audio quality possible),.... I could go on, and spin off some crazy tangent about how the biggest change here isn't even HD TV or HD DVD, it's changing from "analog TV" to "digital TV"/"Analogue video content" to "digital video content" and how this is a MUCH bigger deal and that it has the ability to produce MUCH more good than this stupid HD DVD format war, but I bought this crystal ball from Walmart, so odds are I'll be so far off I'm better to just stop typing now.... (Plus holy moly; I wrote wAAAAY too much already...)
(This was fun!)