The first Blu-Ray disks issued by Sony started with MPEG2 content, because it’s the format with the lowest hardware requirements. Sony didn’t well – because MPEG2 isn’t only twice in size compared to H.264 or VC-1, but it also has a significantly lower quality (artifacts). At this time more VC-1 titles were available on HD-DVD, which led to the first impression, HD DVD has a much better video quality. In fact VC-1 is the most superior format and has the best compression ratio but has also the highest hardware requirements. But as all three formats are valid standards for HD DVD and Blu-Ray it’s only a matter of titles being published in a certain format or not. A movie published in VC-1 on Blu-Ray is de facto the same movie in VC-1 on HD-DVD.
VC-1 was developed by Microsoft and it is the open standard version of WMV3. The latter is proprietary and has digital right management (DRM) included. As far as I understood it, WMV3 is also known as WMV HD, and is the codec included in Microsoft’s Windows Media Player 9. [FIXME]. The importance of the WMV3 format from the Linux point of view is lower than e.g. VC-1 or MPEG-4/ACV (Opinion).
H.264 aka MPEG-4/AVC
The H.264 format, also known as MPEG-4/AVC is the most common standard, it’s not only the most used format in the sharing community for HD content (Matroska, .mkv), but is also the standard format for all new HD camcorders, like Canon HF10 or Panasonics HDC-SD100. AVCHD differs slightly from the standard, but new xine and mplayer can handle them all out of the box, and regognize them as a H.264 transport stream.
Mpeg Transport Stream (.ts, .mts, .m2ts ), is also the standard format for the new HD television, which is being broadcasted by satellit and cable. In Europe there are only a few free to air channels available (see list here), so it’s not the killer argument for H.264 yet in Europe. Not yet!
VC-1 is the most powerfull and most ressource hungry format, and it’s being used in almost half of all puplished Blu-Ray titles nowadays (wild ass guess! based on my own study of 25 famous German Blu-Ray titles in Feb.2009).
It even seems that more new titles are published in VC-1.
The day Linux gets its own Open Source Blu-Ray player (library), VC-1 hardware support becomes vital, because unlike H.264, VC-1 can’t be playback with software on current hardware.
The ridiculous and paradox fact, that only low budget cards support VC-1 right now, like 9300M mainboard cards, and standalone 8400GS and 9300GS makes it even more difficult to decide.
If you’re running a Media Center PC (HTPC) I would spend 30 bucks for a 8400GS, but If you are running a Desktop PC where OpenGL applications like Goole Earth 5 with its awesome 3D effects or if you are using the new and fancy Compiz desktop or other compositing engines like Kwin(KDE) or Metacity(Gnome) then you will probably need a more decent graphics adapter.
At the moment you can’t have both, performance and VC-1 support.