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The final specification of HD DVD high-definition video format was complete from day one in early 2006, when it was launched commercially. But Blu-ray disk (BD), which spec became final only two years later, eventually won the format war. The reason? Blu-ray support by Sony PlayStation 3 video game console as well as incentives provided to Hollywood movie studios.

HD DVD format, which was co-developed by Toshiba, NEC Electronics, Microsoft and some others, featured interactive on-screen menus, picture-in-picture function, downloadable content and other functionality, including high-definition video support, from the day it was launched. When Blu-ray was released several months later, it only provided high-def video and lacked any interactive functionality. Blu-ray players were also substantially more expensive compared to HD DVD-supporting devices. Moreover, HD DVD could be replicated on the same factories that make DVDs, whereas Blu-ray required new production lines as well as was generally more expensive to make. In addition, HD DVD did not feature one of the most questionable technologies of DVD – region coding – that was fully supported by BD.

But Blu-ray was not completely hopeless: it supported 50GB maximum capacity on a single dual-layer media, whereas HD DVD could only boast with 30GB on DL disc. Another advantage Blu-ray had was support from more consumer electronics manufacturers, in addition to Sony, it was also exclusively backed by companies like Panasonic, Philips, Sharp and others. Meanwhile, HD DVD was only supported by Toshiba, Sanyo and NEC.

But Sony, which co-developed Blu-ray disc format, integrated BD support into its latest PlayStation 3 game consoles. Owners of expensive video game consoles are hardly frequent watchers of movies, but since PS3 quickly gained user base, movie studios gained significant confidence in the future of the format. Moreover, Sony could persuade more major Hollywood studios to back BD by, it is widely believed, providing incentives.

Among major Hollywood studios HD DVD was exclusively supported by Universal Pictures, whereas Sony Pictures, Twentieth Century Fox and Walt Disney exclusively backed Blu-ray. Paramount Pictures and Warner Bros., as well as studios controlled by the two companies, remained format neutral and released both BD and HD DVD.

However, in mid-2007, after it transpired that HD DVD was winning the game in Europe, Paramount decided to become HD DVD exclusive (not for free, as they say), which provided a huge benefit to the format in the form of highly-popular “Transformers” movie. The war of incentives and formats was unleashed for real this time:

  • In September Walt Disney approves HD DVD 51GB disc specification at the DVD Forum.
  • Later on it transpires that Twentieth Century Fox was in talks with Toshiba and Microsoft regarding becoming HD DVD exclusive provided that Warner Bros. also becomes HD DVD exclusive.
  • In November Toshiba teams up with Wal Mart to sell entry-level HD DVD players for $99.

But while neither Toshiba nor Microsoft could provide enough incentives to both Fox and Warner, Sony and other Blu-ray backers could provide much more substantial incentives and in early 2008 Warner Bros. announced its intention to become Blu-ray exclusive starting May '08, which left Toshiba only with Paramount and Universal as the backers of the format. Several weeks after Warner’s announcement, Toshiba itself said it would cease manufacturing of HD DVD, which marked the end of the format war as well as HD DVD technology.

Transformers on HD DVD in 2007 and Transformers: Revenge of the Fallen on Blu-ray in 2009

In 2009 Toshiba unveiled its first Blu-ray disc players and BD-equipped notebooks.

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