When you hear that Sony's Universal Media Disc is approaching its last days
as a movie disc format, you may be inclined to ask exactly what the UMD is. And that is probably the reason that many have put the project on “hiatus”.
Universal Studios Home Entertainment has completely stopped producing UMD movies, according to executives who asked not to be identified by name. Said one high-ranking exec: "It's awful. Sales are near zilch. It's another Sony bomb -- like Blu-ray."
Originally intended to be an easy way to carry movies around for viewing on a PSP, not even Paramount is so keen on keeping it around, and with competition like iPod Video and Sony trying to push BluRay, it's likely that UMD will soon become just a memory. There is an excellent Wiki article
explaining the history of the UMD if you want more information.