The DVD may have died this week.

Walmart is now selling Blu-Ray high-definition optical disk players for $68 in the U. S. Sure, plain old DVD players are cheaper still, but why would you buy one? Blu-Ray players can be used with your old DVD collection just fine and will line-double and up-shift your old disks a bit so they’ll look nice (but not as nice as 1080p Blu-Ray) on your new LCD or plasma TV. So unless the Blu-Ray can’t connect to your old TV for some reason, I can’t imagine why anyone would buy the old standard.

These things happen: Moore’s Law, remember? But in this case it feels to me like the transition is happening a little earlier than I expected it would. For that I blame the economy.

DVD sales have dropped 30 percent in the current recession, which was a big surprise to the major movie studios. They expected sales to go up because movies played at home (where the popcorn is cheaper and the butter is real) are supposed to be a bargain during a recession. In a sense it seemed a perfect time to introduce Blu-Ray and get people to upgrade their movie collections just as they had upgraded their VHS tape collections for DVDs a decade ago.

That VHS-to-DVD transition was the Golden Age of home video, when old flicks earned their weight in rhinestones all over again simply because people liked the prettier pictures and random access to slo-mo nude scenes offered by DVD. So everybody happily bought all their favorite movies all over again, home video revenue became bigger for the movie industry than box office revenue. And like all participants in an unsustainable economic bubble, the movie producers and backers told themselves it would go on forever.

It couldn’t last forever because eventually all the people who wanted to buy DVD’s of old movies had bought them and the industry could only bring out new movies at a certain rate — a rate that was nothing compared to that total library conversion. What was needed, they realized, was another VHS-to-DVD experience, though in this case to a high definition standard like Blu-Ray, or its competitor, HD-DVD.

Except it didn’t work out quite that way. Both Blue-Ray and HD-DVD were late. Like Betamax and VHS, they fought it out in the market, creating buyer confusion (and movie studio confusion too). By the time Sony and Blu-Ray had defeated Toshiba and HD-DVD the DVD business was in decline (movie-related game sales were, too) and there were signs of an impending recession, which brings us to today.

The movie studio fantasy was that we’d pay $20-$40 per Blu-Ray disk, but then Daddy was laid-off and that Blu-Ray copy of 8 Mile suddenly wasn’t THAT much better than the DVD version for half the price. Some people decided to wait while others gave up completely, leading to that $68 Blu-Ray player down at WalMart. Remember WalMart is the largest seller of DVD’s (and presumably Blu-Ray disks) in America and possibly the world. WalMart is such a Big Kahuna in the home video business that they can dictate prices pretty much to the rest of the market. I predict, therefore, that after Christmas Blu-Ray prices will crash to only marginally more than DVDs and maybe even the same.

This is — like short-selling your dream house – just an acceptance of reality by the major players. They missed their chance to make big money but are fairly confident we’ll all finally switch to Blu-Ray if the price difference isn’t very much.

Think about that. It means we’re going to buy all new disks yet again, Hollywood will return to normal, and again we’ll probably be happy about it.

Lucky us.