The MSRP set on most HD DVDs is not that much above what's set for the SD version. It's the retailers who set the actual prices you pay, though, and they're much more likely to discount the SD versions than the HD ones.

One of the most general rules of business...The more you sell the cheaper you can price it (see also: Wal-Mart).

Disney will never go neutral unless the copy protection on Hd-dvd is changed. Disney is a fan of the region coding and BD+ protection that Blu-ray offers.

"Never" is a long time... but I will agree with you that Disney is solidly in the BD camp for now, despite what the head of the company said before the two formats launched last year.

While it has been reported that the manufacturing cost of Blu-ray Disc is higher than HD DVD, it would be a mistake to assume that manufacturing costs are directly reflected in selling prices. Selling prices are based on the studios' perception of what the market will bear.

Since there is a competition between BD and HD DVD, the studios have kept the prices for the two formats roughly the same, save for the extra cost of combos, which are viewed as having added value to consumers. (The fact that WB is now releasing many older combo titles on plain HD DVDs, indicates that the higher priced combos sold noticeably poorly compared to lower-priced regular HD DVDs and BDs).

The cost to manufacture a DVD is probably less than $1 nowadays; HD DVD is probably in a similar range. Even if it costs several dollars to manufacture a BD, it is a small part of the $15 or so that the studios get from the distributors. But manufacturing costs are a small part of the cost of releasing a title. For small volume titles, the cost of designing, coding, preparing the masters, etc., would be much greater than the cost of pressing the disc and packaging it. And it was suggested by the CTO of Paramount, Alan Bell, that these costs are also considerably less for HD DVD than for BD.

While I have seen no hard data, it seems likely that the vast majority of titles released in high def thus far have been money losers for the studios, due to tiny sales volumes. But the goal is to encourage the adoption of the formats now, in the hope that profits will be made when HD players have a much higher market penetration.

What all this means is that HD DVDs have a higher profit margin (or lower loss margin) than BDs for the studios. But it has little to do with the selling price of the discs, which depends on what we, the consumers, are willing to pay.

Consider, for example, the criticism that Fox has taken with their release of bare bones titles at high prices (back when they were still releasing, it remains to be seen what their newly announced releases will be like). Can there be any doubt that those titles will sell less well than lower, more feature packed, titles from other studios? For now, Fox may not care because they likely lose money on each disc. But, eventually, competition should force them to lower prices and/or add more features. However, the cost of producing the discs has little to do with what price Fox can charge for them. That is determined by the consumers and the competition.

You might suggest that since HD DVDs cost less to produce, the studios should set a lower MSRP for those titles. But it is likely that BD studios would just lower their prices, accepting the squeeze on margins rather than lose market share. Eventually, the lower cost of HD DVDs may make them more profitable for the studios than BDs (but the cost of producing BD titles can be expected to be reduced over time). This was a stated reason for Paramount deciding to go with HD DVD only, for now.

In short, don't confuse the price charged to the consumer with the cost of producing the product. Yes, it has an effect, but only on the margins.