The primary rival to Blu-ray Disc is HD DVD, championed by Toshiba, NEC Corporation and Microsoft. HD DVD has a lower disc capacity per layer (15 GB vs. 25 GB). However the vast majority of Blu-ray Disc titles released before 2007 are in the 25 GB single layer format while almost all HD DVD movies are in the 30 GB dual layer format. The first 50 GB release for Blu-ray Disc was not made until October 2006. The Blu-ray Disc version of the Adam Sandler movie Click was released on October 10, 2006, as the first ever dual-layer release. So far in 2007 approx 42% of the new releases for Blu-ray Disc movies were released in 25 GB Discs with the other 58% being released in 50 GB dual layer format.

In terms of audio/video compression, Blu-ray Disc and HD DVD are similar on the surface: both support MPEG-2, VC-1, and H.264 for video compression, and Dolby Digital (AC-3), PCM, and DTS for audio compression. The first generation of Blu-ray Disc movies released used MPEG-2 (the standard currently used in DVDs, although encoded at a much higher video resolution and a much higher bit rate than those used on conventional DVDs), while initial HD DVDs releases used the VC-1 codec. Due to greater total disc capacity, the Blu-ray Disc producers may choose in the future to utilize a higher maximum video bit rate, as well as potentially higher average bit rates. In terms of audio, there are some differences. Blu-ray Disc allows conventional AC-3 audiotracks at 640 kbit/s, which is higher than HD DVD's maximum of 504 kbit/s. Nevertheless, Dolby Digital Plus support is mandatory for standalone HD DVD players at a maximum of 3 Mbit/s, while optional for BD players with support at a bitrate of 1.736 Mbit/s.[49] Blu-ray also supports Dolby TrueHD lossless encoding of up to 8 channels of audio, DTS-HD High Resolution Audio and DTS-HD Master Audio, a lossless encoding of up to 8 channels of audio.

Both HD DVD and Blu-ray Disc support the 24p (traditional movie) frame rate, but technical implementations of this mode are different between the formats. Blu-ray Disc supports 24p with its native timing, while HD DVD uses 60i timing for 24p (encoded progressively, replacing missing fields with "repeat field flags"). Decoders can ignore the “flags” to output 24p.[51] There is no impact on picture resolution and minimal impact on storage space as a result of this, as the HD DVD format often uses the same encoded video—it simply adds notational overhead.