Toshiba Pulls the Plug on HD DVD

With the expectation that Internet video will eventually replace DVDs, many have viewed the battle to set a high definition standard as an anti-climactic, largely irrelevant, marketing experiment. To them it’s been a fire drill in an empty building. To the studios and hardware manufacturers standing to make billions in revenue in this intermediate period (which could last five, ten or fifteen years), it’s been anything but trivial. Now, it’s official. HD DVD will join Betamax and Laserdisc in the pantheon of displaced technologies. Blu Ray disc has won.

Toshiba (TOSBF.PK), HD DVD's primary, backer announced Tuesday they will officially, and deliberately, exit the market. Shipments of their hardware will decrease immediately with the aim to be out of the business by March. Quelling thoughts of the format living on as a computer storage medium, Toshiba is also planning to cease volume production of HD DVD enabled disc drives.

Toshiba’s CEO Atsutoshi Nishida made the announcement ahead of expectations. He said the company concluded “a swift decision would be best.” There’s little reason to sell a product that is doomed, and none to sell such hardware at a loss.

In his statement Nishida acknowledged Warner Brother’s decision to adopt Blu Ray just before the Consumer Electronics Show had a “tremendous” impact on the standards war. Without the studios' backing, they were left “no chance to win.”

For existing customers who previously bought an HD DVD player (approximately 1m people globally), Toshiba will continue to provide technical assistance.

Moving forward, Toshiba may look to adopt Blu Ray in defeat. Nishida noted that “while we are disappointed for the company, and more importantly, the consumer, the real mass market opportunity for high definition content remains untapped and Toshiba is both able and determined to use our talent, technology and intellectual property to make digital convergence a reality.”

Sony (SNE), in victory, has taken the high road and not made any official statements. Behind the scenes, analysts may be scurrying to adjust forecasts for Blu Ray unit sales. Also behind the scenes, Sony ought to be sending one expensive gift basket to Warner Brothers in gratitude for their role inflicting the mortal wound. The retailers, whose collective efforts amounted to unplugging life support, should get a token too.