Toshiba Axes HD DVD, Blu-Ray Wins Format War

Toshiba in a statement said it will no longer develop, manufacture and market HD DVD players and recorders by the end of March, leaving the market open to format rival Blu-ray and paving the way for hesitant consumers to finally purchase high-definition DVD players and movies.

Toshiba's decision comes as no surprise, following several major victories by the Blu-ray format and several reports that Toshiba was close to dropping the ax on HD DVD.

"We carefully assessed the long-term impact of continuing the so-called 'next-generation format war' and concluded that a swift decision will best help the market develop," said Atsutoshi Nishida, president and CEO of Toshiba, in the statement. "While we are disappointed for the company and more importantly, for the consumer, the real mass market opportunity for high definition content remains untapped and Toshiba is both able and determined to use our talent, technology and intellectual property to make digital convergence a reality."

HD DVD's fate was sealed in January when Warner Bros. Entertainment threw its weight behind Blu-ray. It was the last of the major studios to choose a side, joining Metro-Goldwyn-Mayer Studios, Sony Pictures, Twentieth Century Fox and Walt Disney. Only two major studios, Paramount Pictures and Universal Studios, have sided with HD DVD.

The Warner Bros. move threw the HD DVD camp into a tailspin, causing the cancellation of a press event scheduled at the Consumer Electronics Show.

Soon after, Toshiba tried to regroup by slashing prices on HD DVD players, but industry observers doubted the push would derail Blu-ray's growing momentum.

As it turned out, the Warner Bros. defection had widespread implications. Several major retailers took Warner Bros.' decision as a cue that Blu-ray was the horse to bet on in the high-def DVD format race. As a result, Wal-Mart, Best Buy and Netflix last week all came out backing Blu-ray.

Toshiba plans to begin reducing shipments of HD DVD players and recorders to retail channels, shutting down its HD DVD business by the end of March. The company will also end volume production of HD DVD disk drives for PCs and game consoles during the same timeframe. It will continue to assess whether there is enough demand to continue integrating HD DVD drives with notebook PCs, according to the statement.

The company will provide full product support and after-sales service for all owners of Toshiba HD DVD products. Toshiba also plans to continue to push technologies that will drive high-definition content, such as high-capacity NAND flash memory, small form factor hard disk drives, next-generation CPUs, visual processing, wireless and encryption technologies. The company will also continue its standard DVD player and recorder business.