At first glance, this looks like a real threat to MiniDV, which uses somewhat pricier equipment and uses expensive, non-standard tapes that are still pretty hard to find. MiniDV's primary advantages are twofold: First, really cute tiny cameras like the Canon Elura are only possible with this smaller tape format. Second, near-broadcast quality cameras are available, such as the Sony VX-1000, Canon XL1, Sony TRV-900 and Canon GL1. Since Sony is introducing Digital8 as a consumer format, it seems unlikely that professional-quality cameras will become available for it. The pro-quality market is already quite well established in MiniDV.
But, if you want to shoot video and don't want to spend over $2,000 for whiz-bang professional equipment, it looks like Digital8 will serve you well. And if you have a sizable investment in the old 8mm tapes, you'll still be able to play them with the new camera. Note, however, that 8mm tapes are known for being delicate and you should probably transcribe them to a safer format as soon as you can. This may also be a deficiency in the Digital8 format; it's too early to tell at this point.
In my testing, which was admittedly brief, I found the Digital8 camcorder I sampled to be mediocre in quality. Sony has not fielded Digital8 units meant to rival, say, the three-chip Sony TRV-900. Unfortunately, at $ 999, the test unit was not much cheaper than low-end MiniDV. So, if you appreciate the potential of MiniDV, it's hard to give this new format much of a place in the sun; it's cheaper, but not much cheaper, and I think the camcorders are generally lower quality.
However, Victor G Barker was kind enough to send me his test results from a Sony 111E Pal unit bought in his native Australia. He found the VCR section "equal to pro equipment". While the horizontal resolution was a disappointing 430 lines, he has otherwise been delighted with the unit. "Colimetry was as good as any single ccd camera I have yet seen and the general performance so far exeeds the general run of the mill tvs that most improvements would not be detectable." In short, if you need a single chip camcorder and don't mind the larger size of 8mm tapes, you'll probably be happy with Digital8. For those of you who want details, here is a copy of his email.
The good news is that if you can't afford MiniDV now, but want to get a camera and editing system now, you can buy a Digital8 camera and editing system, and the editing system will work fine for MiniDV when you want to upgrade. Sony seems to be banking on sales of integrated camera + editing system packages to make the format a financial success.
Note that Digital8 cameras run at about double the speed of regular 8mm. This is not necessarily bad; PAL format is very close in speed, so the tape technology is proven. What this does mean, though, is that a 120 minute 8mm tape becomes a 60 minute Digital8 tape. 120 minute MiniDV tapes are now available, which makes it the longest-playing digital format.
Related issue: Thoughts on Sony computers