TOKYO Toshiba Corp (6502.T) 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
(6758.T), a company source said on Saturday.
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 U.S. retailing giant
Wal-Mart Stores Inc (WMT.N) 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.
No one answered the phone at Toshiba's public relations
office in Tokyo.
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 (TWX.N) 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 (BBY.N) and online video rental company Netflix Inc
(NFLX.O) also recently signed up to the Blu-ray camp.
The exclusive backing of Microsoft Corp (MSFT.O) 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
"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.
(Reporting by Mayumi Negishi, Kentaro Hamada and Nathan
Layne, editing by Mike Peacock)