Toshiba To Kill HD DVD – Finally

Posted on Sunday, February 17, 2008 by MegaZone

Both Japan’s NHK and Reuters are reporting that Toshiba is finally ready to concede the obvious and pull the plug on HD DVD, with an announcement to come as early as this week. Reuters cites an internal company source which told them that Toshiba is in the final stages of planning their exit from the HD DVD business and that the announcement would be made soon.

NHK reports that Toshiba plans to stop producing HD DVD players and recorders at its plant in Aomori Prefecture, northern Japan. And, of course, all future development of the format will cease. There is an extraordinary meeting of Toshiba’s board of directors early this week, and the exit plan is expected to be decided at that meeting. Toshiba will suffer a loss of tens of billions of yen, hundreds of millions of dollars, related to the termination of their HD DVD business.

Via EngadgetHD.

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MegaZone is the Editor of Gizmo Lovers and the chief contributor. He's been online since 1989 and active in several generations of 'social media' - mailing lists, USENet groups, web forums, and since 2003, blogging.    MegaZone has a presence on several social platforms: Google+ / Facebook / Twitter / LinkedIn / LiveJournal / Web.    You can also follow Gizmo Lovers on other sites: Blog / Google+ / Facebook / Twitter.
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  • Jack

    Does this mean that Toshiba will now switch gears and start producing Blu-Ray players? Maybe some affordable Blu-Ray players ;-) . Like they did with HD DVD.

  • MarkB

    I was thinking similarly – while one undisputed format is nice and all, the lack of competition will give the OEMs no incentive to lower prices on hardware.

    This is meaningless news to the masses who do not yet own an HDTV and have huge DVD collections. Upscaled DVDs look just fine on my 40″ LCD and I have no incentive to buy Blu-Ray movies anytime soon. I can rip DVDs and watch them on my iPod Touch and other mobile devices and for me that placeshifting aspect is a major part of my buying decision. Until I can pick up a $99 Blu-Ray player I have absolutely no interest.

    If the studios would start shifting combo packs – Blu-Ray and DVD together in a single package – then that might be a way to generate interest among the masses. HD DVD had the dual combo discs which was nice…

  • Ivan

    (1) Whomever says that upscaling DVDs are just fine, haven’t seen enough HD content. Even on my small-sih 720p set, upscaling DVDs don’t look nearly as good as HD content.

    (2) Whomever says that having only one format will remove incentive to lower price, doesn’t know their history. Just think think back to DVD and VHS and how prices tanked as more and more companies started to make them.

    (3) It’s likely that Toshiba will have to move into producing Blu-Ray to compete to on their home turf (over 90% of which is Blu-Ray). I’d not think they can afford to produce bargain-priced Blu-Ray players at first though. It’s commonly assumed that they have been subsidizing HD-DVD players (even now).

  • http://www.gizmolovers.com/ MegaZone

    Jack, as Ivan said, Toshiba will certainly produce Blu-ray players. They can’t just walk away from the next-generation optical disc format. They’re only options are to produce Blu-ray players, or to yield the market to everyone else – and they’re not going to do the latter. Even though they can’t make as much money off BD as HD DVD, since they don’t hold as much intellectual property (which is why they started the war in the first place), they can still make some money.

    However, it is known that they have been selling HD DVD players at a loss – a BIG loss since the price cuts last month. They’ve been subsidizing the player sales as part of their strategy in the war. They were hoping to artificially lower HD DVD player prices to ‘buy’ consumers. Once the format was established they could cut the subsidies – and either raise player prices or just hold them steady as product costs caught up, eventually making them profitable. The Blu-ray camp hasn’t been selling players at a loss – with the major exception of the Sony PS3 – which is why BD players have been more expensive. Prices have come down, fairly rapidly, through natural cost decreases as production has gone up and each new generation of player has cost less to produce. But BD couldn’t keep up with Toshiba selling players at a loss.

    When Toshiba gets into Blu-ray, I don’t expect them to sell players at the low prices they’ve been selling HD DVD at – because they have no reason to sell players at a loss. Sure, maybe it buys them some sales – but in the long run that doesn’t gain them anything. There is no bigger goal to win – no long term gain to offset the short term pain, which is what the HD DVD subsidies were about. They’ll probably be fairly competitive, and having Toshiba in the BD market should help drive prices down. Toshiba is good with product development, and if they put the same kind of energy into BD as they did HD DVD then they could produce some solid players.

    I also agree with Ivan on the other points. I have Blu-ray (PS3) as well as upscaled DVD capability (PS3 and a Philips deck). At this point I have pretty much stopped buying DVD, unless there is something I really want that isn’t on Blu-ray. (And I won’t buy any title that is on HD DVD – because I figure anything on HD DVD will be on Blu-ray within a year or so, so there is no point buying the DVD either.) Some content that may never see a high-def release, like anime produced in SD, etc, I may pick up on DVD. Or special content like Cinematic Titanic, which I’ll buy as they release them. But if it has a decent chance of seeing a high-def release, then I’ll hold off until it hits Blu-ray. I bought more Blu-ray discs last year than DVDs I think. There just isn’t any comparison between upscaled DVD and BD. BD blows it out of the water. I do have a 61″ 1080p DLP, so the size probably helps too.

    And having one format will not remove the competition to drive prices down. The format war may have sped up some price cuts, but even that’s arguable as the Blu-ray vendors opted to keep prices profitable and not sell at a loss, even in the face of Toshiba’s subsidized prices. Even without Toshiba there would be heavy competition between the BD players, primarily Sony, Samsung, and Sharp. But more players are entering the market – Funai, one of the ‘cheap Chinese vendors’, is bringing out BD decks this year. Toshiba, as I said above, will certainly join the BD fray. Just like DVD, CD, VHS, etc, competition amongst vendors will drive prices down while spurring product development. Remember that early DVD decks costs well over $1000, closer to $2000 in some cases, and now you can get some DVD decks for less than some *DVDs*. And those dirt cheap decks probably have more features than those pricey early models – which didn’t have progressive output or DTS support, let alone upscaling, HDMI, DivX, etc, that a lot of low-end decks have now.

    Sub-$300 BD decks have already been announced. We’ll have sub-$200 by late this year, if not sooner. And, while I won’t hold my breath, I think it is possible we’ll see decks selling for sub-$100 for the holidays.

  • h0mi

    “Toshiba has not made any announcement or decision. We are currently assessing our business strategies, but nothing has been decided at the moment.”

    So they haven’t decided to kill off HD-DVD. (yet).

  • http://www.gizmolovers.com/ MegaZone