Is HD-DVD dead?
TOKYO (AP) - February 18, 2008 Such a move would help consumers know which system to invest in
and would likely boost sales in Blu-ray gadgets, analysts say. But
it will disappoint the 1 million people around the world estimated
by Toshiba who have already bought HD DVD players.
Toshiba Corp. said Monday no decision has been made but
acknowledged it had started a review of its HD DVD strategy. The
comments follow a flurry of weekend Japanese media reports that the
company was close to pulling the plug on the business.
A company official, speaking on condition of anonymity because
she isn't authorized to speak on the matter, said a board meeting
could be held as soon as Tuesday, where a decision is likely.
HD DVD has been competing against Blu-ray disc technology,
backed by Sony Corp., Matsushita Electric Industrial Co., which
makes Panasonic brand products, five major Hollywood movie studios
and others.
Both formats deliver crisp, clear high-definition pictures and
sound, but they are incompatible with each other, and neither plays
on older DVD players. HD DVD was touted as being cheaper because it
was more similar to previous video technology, while Blu-ray
boasted bigger recording capacity. Both formats play on
high-definition TVs.
Only one video format has been expected to emerge as the victor,
much like VHS trumped Sony's Betamax in the video format battle of
the 1980s.
This time, however, it appears Sony will end up on the winning
side.
"If true, this will be good news for the next-generation DVD
industry in clearing up the confusion for consumers because of the
format competition that had curbed buying," said Koya Tabata,
electronics analyst at Credit Suisse in Tokyo. "This will work
toward a profit boost for Sony."
The reasons behind Blu-ray's apparent triumph over HD DVD are
complex, analysts said, as marketing, management maneuvers and
other factors are believed to have played into the shift to
Blu-ray's favor that became more decisive during the critical
holiday shopping season.
Recently, the Blu-ray disc format has been gaining market share,
especially in Japan. A study on fourth quarter sales last year by
market researcher BCN Inc. found that by unit volume, Blu-ray made
up 96 percent of Japanese sales.
American movie studios also were increasingly lining up behind
the Blu-ray standard.
Last month, Warner Bros. Entertainment decided to release movie
discs only in the Blu-ray format, joining Sony Pictures, Walt
Disney Co. and News Corp.'s Twentieth Century Fox. That left only
Viacom Inc.'s Paramount Pictures and General Electric Co.'s
Universal Pictures as exclusive supporters of HD DVD.
On Friday, Wal-Mart Stores Inc., the largest U.S. retailer, said
it will sell only Blu-ray DVDs and hardware. That announcement came
five days after Netflix Inc. said it will cease carrying rentals in
HD DVD.
Several major American retailers have made similar decisions,
including Target Corp. and Blockbuster Inc.
Despite the reports, Toshiba's stock soared 5.7 percent to 829
yen ($7.69) in Tokyo as investors cheered the likely decision as
lessening the potential damage in losses in the HD DVD operations,
despite the blow to Toshiba's prestige.
Sony shares rose 1.0 percent to 4,900 yen ($45.45). The
Tokyo-based manufacturer declined comment on the reports about HD
DVD. Sony also said it did not have numbers on how many Blu-ray
players had been sold globally, or a number for Sony brand Blu-ray
machines sold.
Adding to Blu-ray's momentum was the gradual increase in sales
of Sony's PlayStation 3 home video-game console, which also works
as a Blu-ray player. Sony has sold 10.5 million PS3 machines
worldwide since the machine went on sale late 2006.
But PS3 sales have trailed the blockbuster Wii machine from
Nintendo Co., and the game machine wasn't widely seen as that
critical to the video format battle.
Microsoft Corp.'s Xbox 360 game machine can play HD DVD movies,
but the drive had to be bought separately, and its proliferation is
believed to be limited. Toshiba said such players are included in
the overall tally of 1 million HD DVD players sold so far.
Kazuharu Miura, an analyst at Daiwa Institute of Research in
Tokyo, said the final holdout for HD DVD may come in personal
computers, if Microsoft decides to continue to push HD DVD. But
once the balance tilts in favor of one format, then the domination
tends to become final, he said.
"You've seen this happen before, as in Macintosh vs. Windows,"
he said. "The content makers are going to choose one format, and
the stores are going to want to stack their shelves with the
dominant format, too."
Toshiba is expected to focus its resources on its other
businesses, including computer chip production, such as
flash-memory, which are used in digital cameras and cell phones.
The Nikkei, Japan's top business newspaper, reported in its
Monday's editions that Toshiba plans to invest as much as 1.8
trillion yen ($16.7 billion) in two plants in Japan for its flash
memory business for fiscal 2008, starting April 1. Toshiba said no
decision has been made.