Official: Toshiba drops HD-DVD

Dan Nysted and Matthew JC. Powell
20 February, 2008
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Toshiba will discontinue its HD DVD products, it said Tuesday, handing victory to rival high definition disc format Blu-ray Disc. The company will no longer develop, manufacture and market HD DVD players and recorders. It will reduce shipments of HD DVD players and recorders to retail markets and aims to cease the businesses altogether by the end of March. But the Japanese electronics giant pledged to provide full product support and after-sales service for owners of Toshiba HD DVD products.

Rumours of Toshiba’s pending action had been circulating for days beforehand, but it was only once Toshiba made an actual announcement that an official proclamation could be made: the HD format war is over, and Blu-ray Disc won.

Recent changes in the market prompted the decision, Toshiba said. Early this year, Warner Bros. said it would stop issuing movies on HD DVD in the coming months and rely exclusively on Blu-ray Disc. The Hollywood studio was one of three major studios remaining in the HD DVD camp, and its defection created widespread belief that the battle between HD DVD and Blu-ray Disc was over.

More recently, major US retail chain Wal-Mart announced it would phase out the sale of HD DVD products, moving to exclusivity with Blu-ray Disc. Electronics retailer Best Buy also said it would back Blu-ray Disc, but it did not say it would stop offering HD DVD.

Warner made its decision based on consumer confusion and indifference to high definition movies, an indifference that cost Hollywood in lost revenue, it said. Wal-Mart said US customers preferred Blu-ray Disc movies and hardware. Blu-ray Disc is the high definition disc format championed by Sony.

"This once again shows why incompatible and mutually exclusive formats should be avoided at all cost by the industry," said Carl Gressum, a senior analyst at Ovum. "It reduces profitability and delays customer adoption."

"The big question is, however, the impacts on Toshiba as an electronics company," he added. "It has after all bet its disc media business on HD DVD, as well as gone for HD DVD integration into some of its laptop PCs. The channel has inventory to clear, and demands from owners of HD DVD players."

Toshiba said its decision came after careful analysis of the long-term impact of continuing the format war, and said a swift decision was called for to help the high definition market develop. The company also pledged to remain a player in the high definition market. Developing HD DVD created many assets for Toshiba and its partners, which include Microsoft, Intel, HP, and Universal Studios, the company said. Toshiba plans to work with these companies to seek future business opportunities.

Microsoft, for its part, put out a release saying that it would continue to "be a player" in the high-definition marketplace, presumably referring to the 720p movies that XBox Live subscribers in the USA can download. It’s reduced the price of its optional HD-DVD player add-on for the XBox 360 and is now expected to phase the device out altogether.

A Microsoft spokesperson said that "games sell consoles, not movies" and that the death of HD-DVD would have no real impact on Microsoft. Sony’s rival PlayStation 3 includes a Blu-ray Disc player as standard, which has increased the cost of that console and probably cost it sales in the games market. At the same time the popularity of the PS3 is undoubtedly what put Blu-ray players into many people’s homes and thereby won the format war.

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