Following the uphill climb and major setbacks that I talked about here, here and here, industry insiders say that Toshiba may be ready to pull the plug on the HD-DVD format in the coming weeks, according to an article published yesterday on the Hollywood Reporter web site. While Toshiba insists it's not going to dump the format, they say that recent market developments have caused them to rethink their strategy concerning HD-DVD.
Late yesterday, Wal-Mart, the largest retailer in the U.S., announced they would only stock Blu-Ray high-definition DVD's and hardware beginning this June. This is on the heels of an announcement earlier this week from both NetFlix and Best Buy that they would not be supporting the HD-DVD format any longer. Now that Wal-Mart has made their decision, industry analysts are predicting a quick end to the format wars between Toshiba's HD-DVD and Blu-Ray, backed by Sony.
Blu-Ray's top selling movie for the past week, "Across the Universe", sold three times more than the best selling HD-DVD release, "Elizabeth - The Golden Age". Industry watchdogs report that as of right now, Blu-Ray holds 81% of the high definition DVD market place.
On top of that, due to drastic price reductions in HD-DVD players over the past month, Toshiba is reportedly losing - possibly - several hundred dollars on each machine that is sold. I'm sure given the outlook on the dwindling support both from movie studios and retail outlets for HD-DVD, Toshiba may be looking to pull the plug and stop the bleeding.
As I said in my post earlier this week, it could be a win-lose situation for consumers. Now that there will only be one high definition format for DVD's, it will finally allow consumers who were on the fence in regard to buying into one format or the other to have a clear choice. However, at the same time, it could mean that prices on Blu-Ray units and movies, already high to begin with, probably won't go down in price, and possibly go up. The drawback with Blu-Ray was that manufacturing costs of a single DVD - due to the greater amount of content that can be placed on the disc - is much higher than the costs to make an HD-DVD disc.
There's no word as to the future of HD-DVD from two of the top six movie studios - Paramount and Universal - who continue to support the HD-DVD format. However, more independent movie studios and National Geographic have recently announced they'll go to Blu-Ray exclusively with future productions. I'm sure both Paramount and Universal are looking at the alternative option.
And Amazon.com has been sort of silent in all of this. The largest on-line retailer for DVD's does have a number of HD-DVD titles on sale at 50% off, but they've not made the decision to carry only Blu-Ray DVD's.
For those who bought HD-DVD players - like my company did for demonstration purposes at trade shows - it's probably money down the drain. Once Paramount and Universal announce they'll go to Blu-Ray, the war will be over. But not unless Toshiba announces they're surrendering first. And the Wal-Mart announcement may just be the final straw for HD-DVD.
(2-18-08 Post Script - Japan's government run NHK Network announced over the weekend that Toshiba has made the decision to halt all production of HD-DVD units. A formal announcement will be made later this week. According to the news release, Toshiba stands to lose hundreds of millions of dollars to scrap players and recorders as they exit the business. But financial analysts in Japan say the long term effects on Toshiba will be negligible, noting that the company was hemorrhaging money to keep HD-DVD afloat. Toshiba shares jumped 6% on the Nikkei Index on Monday.)