Luckily, it never gained traction because BluRay and DTS Master Audio won that race and HD-DVD and it’s Dolby TrueHD lost out.
You only have the fragments of that story right. The above is one of the wrong parts.
I was on DVD Forum steering committee that voted for Dolby TrueHD and DTS-HD-MA lossless formats. The proposal for them was from the studios, with Warner taking the lead. The consumer electronics companies hated it as they don't want to give a cent to non-CE companies when it comes to technology. We backed the studios as we wanted to see a lossless format in there. Wound up with two lossless formats (Dolby and DTS) for political reasons.
Meanwhile the BDA was dead set against changing their format to include any lossless audio. Their format was based on Blu-ray recorders they had created for Japan market and did not want to break compatibility with them. Those recorders only accepted lossy Dolby and PCM.
The format war between Blu-ray and HD DVD raged on with HD DVD having the advantage on lossless audio. And support of studios who wanted it. This eventually resulted in BDA adopting Dolby TrueHD and DTS-MA-HD. They also took the lead from HD DVD, adopting VC-1 (developed in my team) and H.264 video codecs in addition to MPEG-2.
Put another way, if it were not for HD DVD, Blu-ray format would have had only an MPEG-2 video codec and lossy audio.
It is true that Dolby TrueHD is based on Meridian MLP technology. Meridian created it, Dolby used its might with the studios to get it adopted and is the licensing agent for it.
As an aside, both Dolby and DTS lost the licensing battle as apparently they had stipulated in their lossy codec licenses that follow on versions of the codecs would be free. So both TrueHD and DTS-HD-MA became free if the licensee already had a Dolby/DTS license. Screw up on both of their parts.
Dolby TrueHD is quite popular as an audio format in Blu-ray discs. So I don't know what you are saying as far as it going away. That is not remotely true. It is DTS-HD-MA that struggles to get parity with TrueHD. Here is a random example of a movie I just watched:
See, there is no DTS track in there. Just TrueHD.
Dolby is just so much stronger when it comes to working with studios to get adoption of its technology than DTS.