Joy swept through consumerville as the conclusion of the next generation DVD format war finally offered clarity on which single format would stare down the barrel of digital downloading for content dominance. Elsewhere, manufacturers who bet on HD-DVD, (Toshiba and Microsoft) and content owners who released movies on HD-DVD (Paramount and NBCU) wallowed. Despite their losses the biggest hit may be felt by retailers who not only had to stock multiple versions of the same film (HD-DVD, Blu-ray, DVD and a smattering of versions contained there-in such as Special Edition, Wide Screen, Pan and Scan, Director’s Cut Edition, Criterion Collection Edition, 10th Anniversary Edition - you get the point) and now must suffer more indignities and loss by generously offering rebates to early adopters to avoid looking like scrooge.

The decision to offer millions of dollars in rebates (Best Buy will offer up $50M) will hurt the bottom line of retailers already concerned about the recession and slowing DVD, HDTV, and MP3 player markets. From amid the rubble of the format war and the fallout now being cleaned up by retailers one can only think that the war which on its face appeared bad may in fact result in a positive conclusion if it emboldens retailers to more strongly flex their muscles in the future to prevent this situation from happening again.

The proliferation of connected devices (and competing formats for wireless HDMI, home automation, etc.)may result in less interoperability, not more in the future - the topic of a pending Yankee Group report.  While the CE industry tries to sort out which standardss work best and offer the nicest logo to affix to their products consumers are faced with decisions that have long term ramifications on their connected home today that will impact their future buying opportunities.

So, perhaps the $50 million giveback that Best Buy and other retailers (such as Circuit City) are engaged in will prove an expensive lesson today but a cheap one moving forward as retailers begin to serve as the stop-gap between a convoluted CE industry and consumers desiring interopeability, long term support for their products, and assurances of quality. Only time will tell if retailers have learned their lesson - (a lesson which would have been cheaper if only SACD and DVD-Audio had been more popular) preventing the next format war from taking place on their shelves.