Japan's Toshiba Corp waved the white flag in the high-definition home
movie war on Tuesday, giving up on its HD DVD format after losing the
support of key studios and retailers to the Blu-ray technology backed
by Sony Corp.
The decision by the electronics maker ends its battle with a consortium
led by Sony over who should set the standard for the next generation of
discs, a fight that confused shoppers and stalled a move to the new
technology in the $24 billion (12.3 billion pounds) home DVD market.
The Blu-ray win means consumers no longer have to choose between rival
incompatible formats and run the risk of being stuck with a 21st
century equivalent of Betamax -- Sony's videotape technology that lost
out to VHS in the 1980s.
Toshiba, which had hoped HD DVD would drive growth in its consumer
electronics business, said it would aim to end its HD DVD business by
the end of next month.
"This was a very difficult decision to make ... but when we thought
about the trouble we would cause to consumers and our partners, we
decided it was not right for us to keep going with such a small
presence," Toshiba Chief Executive Atsutoshi Nishida told a news
conference.
The company said it would continue to service existing HD DVD products,
and added it expected bigger profits over the next year as it will cut
spending earmarked to promote HD DVD.
The tide turned against HD DVD after the defection to Blu-ray by Time Warner Inc's Warner Bros studio last month.
Big U.S. retailers soon followed, including Wal-Mart Stores Inc, Best
Buy Co Inc and online video rental company Netflix Inc, and pundits
began writing obituaries for HD DVD.
CUTTING LOSSES
While Toshiba has lost the chance to be the leader in the next
generation of movie discs, investors welcomed its decision to cut its
losses on HD DVD early and invest in more promising businesses.
Toshiba's shares leapt nearly 6 percent on Monday, although they pulled
back 0.6 percent on Tuesday compared with a 0.9 percent rise in the
benchmark Nikkei average.
Toshiba twinned the HD DVD exit with an announcement that it and
partner SanDisk Corp would spend about 1.7 trillion yen ($15.7 billion)
on two new flash memory plants in a bid to catch up with industry
leader Samsung Electronics in the fast-growing market.
Investors are now waiting to see if and how Toshiba will get access to Blu-ray technology for its home electronics business.
"It's going to have to buy the technology from elsewhere or pay Sony or
Matsushita for the licences," said Tetsuro Miyachi, senior portfolio
manager at Franklin Templeton Investments Japan. "But the company saw
that this is still better than just continuing on with losses of tens
of billions of yen each year."
CEO Nishida said Toshiba has "absolutely no plans" to make or sell Blu-ray players.
Toshiba has HD DVD agreements with studios including NBC Universal's
Universal Pictures, Viacom Inc's Paramount Pictures and DreamWorks
Animation SKG Inc, which will now likely have to switch to Blu-ray.
Existing Blu-ray supporters included News Corp's 20th Century Fox, Walt
Disney Co and Lions Gate Entertainment Corp. Sony's PlayStation 3 game
console also plays Blu-ray films.
Toshiba, which began sales of HD DVD players in March 2006, has sold 1
million players and recorders, including sales of drives for another
supporter, Microsoft Corp, for its XBox 360 game console.
If Toshiba can clear hurdles to design software for Blu-ray, it could
use a joint venture with Samsung Electronics Co Ltd on optical discs to
make Blu-ray players, analysts said.
Toshiba could also procure Blu-ray products from Sony or Matsushita
Electric Industrial Co and sell them under its own brand, they said.
($1=108.13 Yen)
SOURCE: www.yahoo.co.uk
http://uk.news.yahoo.com/rtrs/20080219/tts-uk-dvd-a8bf950_1.html