Toshiba has announced that it will no longer develop, manufacture and market HD DVD players and recorders. Tim Hoang reports.

Following news earlier this week that supermarket giant, Wal-Mart, the world’s largest retailer had announced that it would no longer stock Toshiba’s HD DVD titles, Toshiba has announced that it will no longer produce the technology.

Wal-Mart said that customers had shown a clear preference for Blu-ray, developed by Sony, and followed similar moves by film rental services Blockbuster and Netflix.

The increased storage capacity of the DVDs were expected to improve the picture quality and overall customer experience and contribute to revitalising the global DVD market, worth $24billion. But, like the Betamax-VHS battle in the 1980s, having two DVD standards has hindered the sales of both as consumers waited to see which format would come out on top. Toshiba’s initial reaction was to slash the price of HD DVD players, but this week the comapny conceded defeat and announced its intention to exit the race.

In a company statement, the Japanese electronics giant underlined how it would pull out because the format wars were detrimental to the development of the market.

"We carefully assessed the long-term impact of continuing the so-called ‘next-generation format war’ and concluded that a swift decision will best help the market develop," said Atsutoshi Nishida, President and CEO of Toshiba Corporation. "While we are disappointed for the company and more importantly, for 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."

Toshiba aims to halt the manufacture and distribution of all HD DVD players by March 2008, though hopes to continue playing a large role in the development of the DVD industry as a member of the DVD forum.

Ken Warren of Cryptography Research Inc. - which designed the Blu-ray’s disc security technology - believes that Toshiba’s announcement would have a positive effect on the high definition DVD industry.

"Such a quick decision/clarification can only be a good thing for the industry and for Toshiba. For Toshiba it is evidence of decisive decision making by senior management, recognising business realities and not lingering on emotional attachment to a technology it has invested in heavily.

"For Blu-ray it is obviously excellent news. However, for the industry as a whole, the clear benefit is that the format war is over - this will unblock the indecision for consumers who were delaying purchases in case they invested in the ‘loosing’ format. Equipment manufactures can now focus on a single format and should also result in better end user pricing as the market and competition matures," he said.

According to Warren, the positioning of Hollywood film studios has been a major driver in Blu-ray’s triumph.

"Perhaps the most significant factor has been the availability of the content, shaped by the positioning of the major Hollywood studios. The decision by Blu-ray to include CRI security technology to provide renewable security was, we believe, a very important factor for some of the most influential Hollywood players to back the Blu-ray format at an early stage and so shape the content availability landscape," he said.