A new contender has entered the next-generation format war, betting on the cost effectiveness of red laser video players to beat both HD DVD and Blu-ray. New Medium Enterprises is reportedly set to launch their 1080p set-top players which would support a new and cheaper format named HD VMD.

HD VMD discs are encoded with a maximum bit rate of 40 megabits per second; that's within halfway between HD DVD's 36 mpbs and Blu-ray's 48 mbps. The format uses MPEG-2 and VC1 video formats to encode at 1080p resolution for the time being, and will possibly move to the H.264 format in the future.
HD VMD uses the same red lasers found in today's DVD products but bumps up storage capacity by adding more layers to reach up to 30GB on a single sided disc - the same capacity as a dual layer HD DVD disc. Using current generation technology allows for cheaper players, which would sell for around $150 starting next month.

At launch, only 20 movies will be available, including many from Mel Gibson's Icon Entertainment International. Sure, it is nice to see a low-cost high-definition format alternative, but is it too late for HD VMD to enter the game? If New Medium Enterprises doesn't manage to convince major studios to sign on for HD VMD, the new format won't stand a chance against rival next-gen formats from giants Sony and Toshiba.