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Last month, I wrote that Sony was crazy to think Blu-ray sales would increase to half of the digital movie disc market by the end of the year — it’s a hard sell because many people are still perfectly content with their standard DVDs. Now research and sales figures appear to back that up, according to The New York Times.

Simply put, Blu-ray is not selling quickly at all. Many assumed that its win over rival format HD-DVD would pave the way for Blu-ray domination, but as we’ve noted there will be some road bumps.

The first is simply price. While many very good regular DVD players can be found for well under $100, most Blu-ray players still cost over $300. It’s obvious but still worth stating that when Blu-ray players come down in price, they will sell more units.

The second obstacle is convincing users to see a real difference in quality. While more and more people are getting HD television signals in their homes, most rightly note that it’s simply not that substantial a quality upgrade from DVD quality on their big screens. Most consumers do not realize it, but not all HD is created equal. Blu-ray actually is a much nicer high definition picture, but unless a consumer is at a store looking at a direction comparison between Blu-ray and DVD, it can be hard to tell.

The third problem is digital downloads. While this is still a relatively young market and most companies are still trying to gain a foothold for their living room devices, things are evolving rapidly. Earlier today, Apple announced that new films from almost all of the big studios would be available on the iTunes digital movie store the same day they are released on DVD. If Microsoft can pull off a deal with Netflix to get its movies streaming to the Xbox 360, that would be a big win for digital distribution as well.

All is not lost for Blu-ray, however. There is still a wild card out there, and it’s a big one: the Playstation 3, which is also a Blu-ray player. While the PS3 struggled to a third place finish in the gaming console wars last year, signs point to it overtaking the Xbox 360 in sales this year (it is likely to still trail Nintendo’s Wii). The Playstation 3 also happens to be the most advanced Blu-ray player — and one of the cheapest.

Its predecessor, the Playstation 2, sold well over 100 million units. If the PS3 can get anywhere close to that number, a lot of people will have Blu-ray players in their homes. And people with Blu-ray players tend to buy Blu-ray discs.

Blu-ray is also trying to come up with ways to partner with other hot technology.

The question is whether the transition from DVD to Blu-ray can happen quickly enough to hold off digital downloads for a few more years.

[photo: flickr/skippy13]

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