Originally Posted by Reuters
By Mayumi Negishi and Kentaro Hamada
TOKYO (Reuters) - Toshiba Corp (6502.T: Quote, Profile, Research) 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: Quote, Profile, Research), 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: Quote, Profile, Research) 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: Quote, Profile, Research) 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: Quote, Profile, Research) and online video rental company Netflix Inc (NFLX.O: Quote, Profile, Research) also recently signed up to the Blu-ray camp.
The exclusive backing of Microsoft Corp (MSFT.O: Quote, Profile, Research) 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.
(Reporting by Mayumi Negishi, Kentaro Hamada and Nathan Layne, editing by Mike Peacock)
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