By YURI KAGEYAMA
AP Business Writer
TOKYO (AP) - 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
"We concluded that a swift decision would be best," Toshiba
President Atsutoshi Nishida told reporters at his company's Tokyo
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
"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
HD DVD was touted as being cheaper because it was more similar
to previous video technology, while Blu-ray boasted bigger
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
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
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 percent 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 percent Tuesday to 824 yen after
jumping 5.7 percent Monday amid reports that a decision was
imminent. Sony shares climbed 2.2 percent to 5,010 yen after rising
1 percent 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 cell phones. Production there will start
(Copyright 2008 by The Associated Press. All Rights Reserved.)