Toshiba to give up on HD DVD

Toshiba Corp 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,

a company source said.

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 US retailing giant Wal-Mart Stores 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.

Toshiba is planning to give up on its HD DVD format, conceding defeat to the competing Blu-Ray technology backed by Sony

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 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 and

online video rental company Netflix Inc also recently signed up to the Blu-ray

camp.

The exclusive backing of Microsoft Corp 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.