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What’s the latest development in the Blu-Ray vs. HD-DVD war? Blockbuster, the movie rental giant, has decided to offer Blu-Ray format exclusively to 1,700 stores in the United States. Blockbuster has about 8,000 stores worldwide.

The announcement by Blockbuster is a big blow to HD-DVD backers Toshiba, who already have slashed its target from 1.8 million to just 1 million units.

Blockbuster reasoning to stick with Blu-Ray format was due to a larger interest by customers with the Blu-Ray format. Netflix and Movie Gallery, Inc both offer Blu-Ray and HD-DVD formats online.

Blu-Ray’s backers are Sony, Philips, Matsushita, Apple and Dell. Blu-Ray may already have an edge since Playstation 3 comes with a built-in Blu-Ray player.

Apple is also a big player and its followers will carry weight in the ultimate decision to which player will emerge as the eventual winner.

Although the war is far from over, you can see where the wind is blowing. At this time, it looks like Blu-Ray is winning the war. Give it several more months.

Meanwhile, millions of customers in the US are staying on the sidelines, waiting, hoping and deferring purchase until a clear winner emerges from the dust.