Well, the key issue here is that the protection scheme under Blu-ray is very anti-consumer and there's not much visibility of that. The inconvenience is that the [movie] studios got too much protection at the expense consumers and it won't work well on PCs. You won't be able to play movies and do software in a flexible way.Ars has done an in-depth analysis of Microsoft's decision to back HD-DVD, and examined the copy-protection mechanisms both standards have in place. The bottom line (and a fact that's gotten surprisingly little press) is that the HD-DVD standard explicitly allows and protects limited copying, otherwise known as Managed Copy, while Blu-ray does not. Supporting the Managed Copy feature is a mandatory part of the HD-DVD spec; all HD-DVDs must allow at least one copy to be made, though studios will have the option to charge for it. It's possible that Blu-ray could include a similar feature, since the specification isn't complete, but none has been added to date.
It's not the physical format that we have the issue with, it's that the protection scheme on Blu is very anti-consumer. If [the Blu-ray group] would fix that one thing, you know, that'd be fine.
Gates' bluntness and identification of this feature as the overriding reason why Microsoft backs HD-DVD not only highlights the tremendous war going on between content creation and technological heavyweights, but also may signal Microsoft's desire to appear more consumer-friendly than it has in the past. By explicitly backing HD-DVD and its friendlier stance toward fair use, Microsoft may be hoping to assuage user concerns over the level of hardware-driven copy protection Vista will enable, while simultaneously including the stronger protection measures demanded by the movie and music industries.