There's been a lot of rumor and speculation in recent days that Circuit City is accepting returns of HD DVD players it sold, providing its customers with a credit toward the purchase of a Blu-ray player. This speculation seems rooted in fact, at least based on a report late Wednesday from Gizmodo:

According to a Circuit City employee in Chicago, the consumer electronics chain is trading in HD DVD players bought into their stores "within 3 months of the announcement," as opposed to their 30-day return policy. According to the internal memo announcing the demise of the format, they will either give customers a Blu-ray player —- paying the price difference, if any —- or a gift card. The trade-in, however, will not be widely promoted and it will be only made available if the customer asks for it.

Although the HD Disc Format War is ended, Blu-ray has a LONG way to go before it is embraced as the marketplace successor to the original DVD format. The fact that something less than 50% of households have an HDTV capable of fully exploiting the new format is a fundamental challenge, but it's also true that there's significant consumer inertia in favor of the original DVD format. Movie downloads are also poised to become more popular over time.

But it seems clear that the biggest near-term challenge and opportunity facing Blu-ray over the next year is to find a way to soothe the bruised feelings of the unlucky millions who put money into HD DVD players and discs. By definition, we're talking early adopters, and the best thing Blu-ray can do to build some immediate momentum among these opinion leaders is to turn them into Blu-ray owners/advocates.

While the actions of Circuit City are smart business and in line with similar "swap" programs reported earlier in Japan and Switzerland, it would be even smarter if Sony, as the Blu-ray group ringleader, adopted a similar, worldwide trade-in program, but also extended it to HD DVD-for BD disc swaps.

While it's crystal clear that Sony has no moral obligation to insulate HD DVD buyers from the inevitable format war fallout, the fact that the HD DVD population is relatively small and Blu-ray's success a long way from assured, makes this something close to a "no brainer."

After all, if it's good business to pour hundreds of millions of dollars into movie studio coffers to attract exclusive Blu-ray support, doesn't it make sense to follow through and make sure those investments pay off?

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