Blu-ray vs. HD DVD - the war is over

TOKYO
By Yuri Kageyama, AP Business Writer

Toshiba said Tuesday it will no longer develop, make or market HD DVD players and recorders, handing a victory to rival Blu-ray disc technology in the format battle for next-generation video.

"We concluded that a swift decision would be best," Toshiba President Atsutoshi Nishida told reporters at his company's Tokyo offices.

The move would make Blu-ray backed by Sony Corp., Matsushita Electric Industrial Co., which makes Panasonic brand products, and five major Hollywood movie studios the winner in the battle over high-definition DVD formatting that began several years ago.

Nishida said last month's decision by Warner Bros. Entertainment to release movie discs only in the Blu-ray format made the move inevitable.

"That had tremendous impact," he said. "If we had continued, that would have created problems for consumers, and we simply had no chance to win."

Warner joined Sony Pictures, Walt Disney Co. and News Corp.'s Twentieth Century Fox in that move.

Nishida said his company had confidence in HD DVD as a technology and tried to assure the estimated 1 million people, including some 600,000 people in North America, who already bought HD DVD machines by promising that Toshiba will continue to provide product support for the technology.

Both HD DVD and Blu-ray deliver crisp, clear high-definition pictures and sound, which are more detailed and vivid than existing video technology. They are incompatible with each other, and neither plays on older DVD players. But both formats play on high-definition TVs.

HD DVD was touted as being cheaper because it was more similar to previous video technology, while Blu-ray boasted bigger recording capacity.

Only one video format has been expected to emerge as the victor, much like VHS trumped Sony's Betamax in the video format battle of the 1980s.

Nishida said it was still uncertain what will happen with the Hollywood studios that signed to produce HD DVD movies, including Universal Studios, Paramount Pictures and DreamWorks Animation.

Toshiba's pulling the plug on the technology is expected to reduce the number of new high-definition movies that people will be able to watch on HD DVD machines. Toshiba Corp. said shipments of HD DVD machines to retailers will be reduced and will stop by end of March.

Sales in Blu-ray gadgets are now likely to pick up as consumers had held off in investing in the latest recorders and players because they didn't know which format would emerge dominant.

Despite being a possible blow to Toshiba's pride, the exit will probably lessen the potential damage in losses in HD DVD operations. Goldman Sachs has said pulling out would improve Toshiba's profitability between 40 billion yen and 50 billion yen ($370 million-$460 million) a year.

The reasons behind Blu-ray's triumph over HD DVD are complex, as marketing, management maneuvers and other factors are believed to have played into the shift to Blu-ray's favor that became more decisive during the critical holiday shopping season.

Once the balance starts tilting in favor of one in a format battle, then the domination tends to grow and become final, said Kazuharu Miura, an analyst at Daiwa Institute of Research in Tokyo.

"The trend became decisive I think this year," he said. "When Warner made its decision, it was basically over."

With movie studios increasingly lining up behind Blu-ray, retailers also began to stock more Blu-ray products.

Friday's decision by Wal-Mart Stores Inc., the largest U.S. retailer, to sell only Blu-ray DVDs and hardware appeared to deal a final blow to the Toshiba format. Just five days earlier, Netflix Inc. said it will cease carrying rentals in HD DVD.

Several major American retailers had already made similar decisions, including Target Corp. and Blockbuster Inc.

Also adding to Blu-ray's momentum was the gradual increase in sales of Sony's PlayStation 3 home video-game console, which also works as a Blu-ray player. Sony has sold 10.5 million PS3 machines worldwide since the machine went on sale late 2006.

HD DVD supporters included Microsoft Corp., Intel Corp. and Japanese electronics maker NEC Corp.

Microsoft's Xbox 360 game machine can play HD DVD movies, but the drive had to be bought separately, and Nishida said about 300,000 people have those.

Worldwide sales of personal computers with HD DVD drives total about 300,000 worldwide, including 140,000 in North America and 130,000 in Europe, he said.

Recently, the Blu-ray disc format has been gaining market share, especially in Japan. A study on fourth quarter sales last year by market researcher BCN Inc. found that by unit volume, Blu-ray made up 96% of Japanese sales.

Sony said it did not have numbers on how many Blu-ray players had been sold globally.

Toshiba's stock slipped 0.6% Tuesday to 824 yen after jumping 5.7% Monday amid reports that a decision was imminent. Sony shares climbed 2.2% to 5,010 yen after rising 1% Monday.

Also Tuesday, Toshiba said it plans to spend more than 1.7 trillion yen ($15.7 billion) for two plants in Japan to produce sophisticated chips called NAND flash memory, which are used in portable music players and cellphones. Production there will start in 2010

Re: Blu-ray vs. HD DVD - the war is over

So glad we went with Bluray.

Re: Blu-ray vs. HD DVD - the war is over

So annoying.

Glad I didn't try to convert yet.

Re: Blu-ray vs. HD DVD - the war is over

Glad I didn't let the Circuit City guy talk me into HD DVD...

Re: Blu-ray vs. HD DVD - the war is over

So glad i let DH talk me into getting him the hd-dvd player for the xbox360 for christmas.

Now he wants a ps3 so he can have blu-ray. Yeah right.

Re: Blu-ray vs. HD DVD - the war is over

Re: Blu-ray vs. HD DVD - the war is over

Oh great, we just bought an HD DVD!

Re: Blu-ray vs. HD DVD - the war is over

I figured the war was over once Hole-Mart decided they were going to go with BluRay. The nail in the coffin was Warner Brothers jumping on the Blu bandwagon.

Re: Blu-ray vs. HD DVD - the war is over

I could see it heading that way over the last year, but it's good to see a final decision made. I think it is definitely in everyone's best interest to have a single format. Even Toshiba can make and sell Blu-Ray players, and it sounds like if they do that, they would actually make a better profit than sticking with the own format (the article mentions that they were losing money on HD-DVD).

Re: Blu-ray vs. HD DVD - the war is over

Re: Blu-ray vs. HD DVD - the war is over

I said this a over a year ago, lol. Right before the PS3 came out 80% of the movie company's decided to go with Bluray due to it's popularity. Last year, Universal, the last company in the states to make HD DVD stopped production.

Re: Blu-ray vs. HD DVD - the war is over

how bad is it that i have no clue what the difference is between Blu-ray vs. HD DVD

Re: Blu-ray vs. HD DVD - the war is over

I sent the article to DH. This is the response I got:

"that's lowest on the list of things to purchase....they are:

1. Plasma TV
2. Sound System for TV
3. Laptop for you.
4. can't remember what else you wanted to buy. (that figures)
5. Blu-ray DVD or Playstation 3 (uses Blu-ray technology)"

Are we a family with priorities or what? Its not like we are going to have any other major expenses coming up

Re: Blu-ray vs. HD DVD - the war is over

Yay, so happy, love blu-ray!