DMW’s CEO & Publisher provides a wrap-up of the top stories of the week. Who’s hot, who’s not and what’s the industry buzz?

It was a crazy week for all of us at DMW with much of our time spent on planning three major events we are producing in the coming weeks: Digital Music Forum East in New York City, February 26-27; The Millennials Canada in Toronto, March 5; and Future of Television West in Los Angeles, March 24-25. We have been producing the entertainment industry’s leading digital events for years, but developments over the past year have really increased the profile of our events, which now attract large (often standing room only) crowds and camera crews from leading media outlets, such as CNBC, CNN, PBS and the BBC. For anyone who hasn’t attended our events, it is an experience like no other, where industry insiders engage in high level discussions, show off the latest digital innovations and mingle and network at our first class venues. No doubt these are exciting times and we are thrilled to be in the thick of it.

The big story of the week: Toshiba announced that it will discontinue its next-generation HD DVD format, handing “victory” in the much-hyped "format war" to Sony's rival (NYSE: SNE) Blu-ray technology. The news had been expected for weeks following several high-profile withdrawals of support from retailers and movie studios, among them: Warner Bros. (NYSE: TWX), Wal-Mart (NYSE: WMT), Best Buy (NYSE: BBY) and Netflix (NASD: NFLX), who announced exclusive support for Blu-ray. Toshiba has said that it has already begun to stop shipments and marketing, and expects to completely wind down the business in March.

Analysis: While the news wasn’t much of a surprise, many of the reports seemed to miss an important point, declaring victory for Sony, consumers, and Hollywood studios, who see a potential new market for movies, games and other entertainment content, while neglecting to point out that the real battle for the digital home is just beginning. In the past ten years, the DVD business has been a savior for the movie industry as box office numbers have stagnated and production costs have gone through the roof, but how long will this continue? How long will it take before the Internet replaces physical product as the form of distribution? While Sony’s victory is not insignificant, most analysts expect a rough road for the company in terms of convincing consumers, who are generally satisfied with DVDs, to ditch their DVD players and upgrade to the high definition format. Consumers welcomed DVDs as a big quality improvement from VHS, but it is far less certain whether consumers with see Blu-ray as a substantial improvement over DVD. Moreover, as broadband penetration increases and Internet compatible screens and improved online distribution models emerge, it seems inevitable that savvy consumers will turn to the convenience of video downloads, just as they are doing with music, leaving the future of the DVD (high def or not) at risk.

So, the real question is: As the Internet emerges as the key distribution mode, who will be the winners and losers in the battle to control the market for the distribution of movies, games and entertainment? Some analysts believe that Microsoft and Apple may be in the best position. While Microsoft was in the HD DVD camp, it hedged its bet by adopting a strategy of selling HD DVD add-ons to the Xbox 360 console rather than incorporating the format directly into the console. As result, Microsoft never committed completely to the format focusing more on developing its Xbox Live marketplace, offering games, television shows, and movies for download in high-def. The strategy is very different from that of Sony, who incorporated the Blu-ray drive directly into its PlayStation 3 video game console. While the strategy has put Blu-ray players in homes of more than 8 million PS3 buyers worldwide, Sony has failed to gain much traction with its online offerings. As a result, Microsoft, while on the losing side of the HD DVD / Blu-ray battle, may have the upper hand if Sony struggles with Blu-ray adoption, while Microsoft continues to build out and grow its Xbox Live marketplace offering consumers direct online access to games and movie downloads through the Xbox. Stay tuned for more on this.

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