Toshiba to give up on HD DVD, end format war

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TOKYO (Reuters) – Toshiba Corp (6502.T) is planning to give up on its HD DVD format for high-definition video, conceding defeat to the competing Blu-Ray technology backed by Sony Corp (6758.T), a company source said on Saturday.

Japanese public broadcaster NHK had earlier reported that Toshiba would suffer losses in the tens of billions of yen (hundreds of millions of dollars) as it scrapped production of HD DVD players and recorders and took other steps to exit the business.

The company source told Reuters that Toshiba was in the final stages of planning to exit the HD DVD business and that an official decision would be made soon.

(Reporting by Mayumi Negishi, Kentaro Hamada and Nathan Layne, editing by Mike Peacock)

It’s official as of February 17, 2008

Toshiba put HD-DVD out of its misery today. Reuters confirmed this afternoon that it will cease manufacturing HD-DVD equipment, following earlier reports from Japan’s NHK public broadcasting network.

This leaves Blu-Ray as the presumptive victor in the irrelevant optical disk format war. It now must face up to the real competition: the continuing success of DVD and the growing popularity of downloads, both on the internet and on-demand cable TV.

The end comes only a day after Wal-Mart announced it would no longer carry HD-DVD stuff. This will go a long way to confirming the view, long-held by cynics, that the mega-retailer always held the executioner’s axe to begin with, and was merely waiting until it was clear which format’s camp had the most densely-stuffed brown envelopes to throw at Hollywood.

The articles leading up to it

TOKYO (Reuters) – Toshiba Corp (6502.T: Quote, Profile, Research) is planning to give up on its HD DVD format for high definition DVDs, conceding defeat to the competing Blu-Ray technology backed by Sony Corp (6758.T: Quote, Profile, Research), a company source said on Saturday.

The move will likely put an end to a battle that has gone on for several years between consortiums led by Toshiba and Sony vying to set the standard for the next-generation DVD and compatible video equipment.

The format war, often compared to the Betamax-VHS battle in the 1980s, has confused consumers unsure of which DVD or player to buy, slowing the development what is expected to be a multibillion dollar high definition DVD industry.

Toshiba’s cause has suffered several setbacks in recent weeks including Friday’s announcement by U.S. retailing giant Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research) that it would abandon the HD DVD format and only stock its shelves with Blu-ray movies.

A source at Toshiba confirmed an earlier report by public broadcaster NHK that it was getting ready to pull the plug.

“We have entered the final stage of planning to make our exit from the next generation DVD business,” said the source, who asked not to be identified. He added that an official announcement could come as early as next week.

No one answered the phone at Toshiba’s public relations office in Tokyo.

NHK said Toshiba would suffer losses running to tens of billions of yen (hundreds of millions of dollars) to scrap production of HD DVD players and recorders and other steps to withdraw from the business.

Hollywood studios had initially split their alliances between the two camps, meaning only certain films would play on any one DVD machine.

The balance of power tipped decisively toward the Sony camp in January after Time Warner Inc’s (TWX.N: Quote, Profile, Research) Warner Bros studio said it would only release high-definition DVDs in Blu-ray format. With that, studios behind some three-quarters of DVDs are backing Blu-ray, although some release in both formats.

Toshiba responded by slashing prices of HD DVD players, but the loss of retail support has hurt.

In addition to Wal-Mart, consumer electronics chain Best Buy Co Inc (BBY.N: Quote, Profile, Research) and online video rental company Netflix Inc (NFLX.O: Quote, Profile, Research) also recently signed up to the Blu-ray camp.

The exclusive backing of Microsoft Corp (MSFT.O: Quote, Profile, Research) was also put in doubt when the software giant said in January that it could consider supporting Blu-ray technology for its Xbox 360 video game machine, which currently works only with HD DVD.

Sony has spent large sums of money to promote Blu-ray in tandem with its flat screen TVs and its PlayStation 3 game console, which can play Blu-ray movies.

The Toshiba source said the experience would not be a total loss for the sprawling conglomerate, whose products range from refrigerators to power plants, which would learn valuable lessons.

“Marketing was a weak point for Toshiba. We learned a lot from HD DVD. Strengthening marketing will continue to be an issue for us going forward,” the source said.

(Reporting by Mayumi Negishi, Kentaro Hamada and Nathan Layne, editing by Mike Peacock)

Another Article on this

Feb. 16 (Bloomberg) — Toshiba Corp. may scrap its HD DVD business after Warner Bros. Entertainment and Wal-Mart Stores Inc. abandoned the high-definition DVD technology, Kyodo news reported, citing unidentified industry officials.

Toshiba is reviewing whether to completely end HD DVD production, depending on factors such as demand from the U.S., Kyodo said today. Keisuke Ohmori, a spokesman for Tokyo-based Toshiba, said the company’s considering “various possibilities” over its HD DVD business and declined to comment further.

Sony Corp. will probably benefit as its Blu-ray format is likely to become the dominant high-definition DVD standard after Toshiba’s exit from the business, according to the report.

Time Warner Inc.’s Warner Bros., the world’s largest publisher of DVD titles, said in January that it would stop releasing movies in the HD DVD standard. Wal-Mart, the world’s largest retailer, said yesterday it will phase out sales of HD DVD players and only offer products based on the Blu-ray format.

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