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Wednesday, Feb. 20, 2008

It's official: Toshiba pulls plug on HD DVD

Staff writer

Toshiba Corp. announced Tuesday it will completely shut down its HD DVD operations, ending a battle with Sony Corp.'s rival Blu-ray system to become the industry standard for next-generation DVDs.

The move means the Blu-ray format, also supported by major electronics makers Matsushita Electric Industrial Co. and Sharp Corp., will become the next-generation standard for DVD players.

Toshiba said the shutdown will be completed by around the end of March.

Toshiba President Atsutoshi Nishida said at a news conference that Warner Bros. Studios' abrupt decision in January that it would only release high-definition DVDs in the Blu-ray format forced Toshiba to pull the plug on HD DVD.

"Warner Bros.' decision was a bolt from the blue," he said. "This move prompted retailers to respond (by no longer stocking HD DVD products) and became the big reason for us to withdraw. We no longer had a chance of winning the competition," Nishida said.

Still, it was not an easy decision for Toshiba to make. Nishida hinted that some board members opposed the withdrawal, saying many opinions were exchanged at the board meeting held earlier in the day.

Asked if Toshiba will consider producing Blu-ray DVD players, Nishida said there is no such plan as yet.

Toshiba and Microsoft Corp. have so far sold about 1 million HD DVD players worldwide, mainly in North America, Toshiba said. Microsoft's Xbox 360 only works with HD DVD.

The move will reportedly cost Toshiba tens of billions of yen.

Koya Tabata, an analyst at Credit Suisse in Tokyo, said the announcement is good news for the next-generation DVD industry, which has failed to see a boost in sales as consumers took a wait-and-see approach while the two sides fought it out.

"Sony is expected to increase its profit" through its Blu-ray players, Tabata said.

Toshiba's decision may be good news for consumers who had been wavering over which format to purchase, but not for those who already bought HD DVD players.

Users of HD DVD players can play first-generation DVDs and HD DVDs but not Blu-ray DVDs, which are certain to increase in number from this point. Toshiba, with its HD DVD, and Sony, with its Blu-ray, had been battling over which format would become the industry standard for the past few years.

The Sony camp appeared to have taken the lead after Warner Brothers studio said it would only release high-definition DVDs in Blu-ray format. The Sony camp also has support from 20th Century Fox, Walt Disney Co. and Lions Gate Entertainment Corp.

The decisive blow may have been last week's announcement by U.S. retail giant Wal-Mart Stores Inc. that it would stock only Blu-ray DVDs and players. Wal-Mart's decision aced out Toshiba from selling its HD DVDs and players in one of the biggest retailers worldwide.

The battle between HD DVD and Blu-ray had been seen as analogous to the format war for videocassette players and recorders in the 1980s between Matsushita's VHS format and the Betamax format promoted by Sony.

However, the defeat of HD DVD is expected to have a much smaller impact than the defeat of Betamax as many consumers have yet to purchase a next-generation DVD player and are still using first-generation machines.

In 2005, Toshiba and Sony came close to reaching agreement on joint development of a common format. Information from Kyodo added

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The Japan Times

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