Toshiba Corp. on Tuesday said it had decided it will no longer develop, manufacture and market HD DVD players and recorders. This decision has been made following recent major changes in the market and is highly likely to prevent HD DVD from becoming the replacement for conventional DVD, leaving the consumer high-definition video market for competing Blu-ray disc (BD) standard.

“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. 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,” said Atsutoshi Nishida, president and chief executive officer of Toshiba Corp.

Recently Time Warner-owned major Hollywood studios, including Warner Bros. and New Line Cinema, said they would exclusively release new movies on Blu-ray discs after mid-2008 and will virtually cease creation of new HD DVD titles. After the announcements by Time Warner-controlled companies, popular U.S.-based rental service Netflix said it would cease to rent HD DVDs, whereas popular retail chains Best Buy and Wal Mart said they would give Blu-ray a priority.

Toshiba will begin to reduce shipments of HD DVD players and recorders to retail channels, aiming for cessation of these businesses by the end of March 2008. Toshiba also plans to end volume production of HD DVD disc drives for PCs and video game consoles in the same timeframe, yet will continue to make efforts to meet customer requirements. The company will continue to assess the position of notebook PCs with integrated HD DVD drives within the overall PC business relative to future market demand.

With no major manufacturer of hardware onboard, HD DVD-supporting hardware is likely to either cease to exist at all going forward, or will become extremely rare. As a consequence, HD DVD has all chances to vanish into oblivion.

This decision will not impact on Toshiba’s commitment to standard DVD, and the company will continue to market conventional DVD players and recorders. Toshiba did not reveal whether it has plans to manufacture Blu-ray disc supporting players despite of the fact that its currently available HD DVD players only need a new optical drive and firmware update to become high-quality Blu-ray profile 2.0 capable players with picture-in-picture support as well as Internet connectivity. At present there are no BD profile 2.0-supporting standalone players on the market.

Toshiba also intends to maintain collaborative relations with the companies who joined with Toshiba in working to build up the HD DVD market, including Universal Studios, Paramount Pictures, and DreamWorks Animation, major Japanese and European content providers on the entertainment side as well as leaders in the IT industry, including Microsoft, Intel, and HP. Toshiba will study possible collaboration with these companies for future business opportunities, utilizing the many assets generated through the development of HD DVD.

Blu-ray and HD DVD formats compete for replacing the DVD standard. HD DVD discs can store up to 15GB on a single layer and up to 30GB on two layers. Its competitor, Blu-ray, can store up to 25GB per single layer and up to 50GB on two layers, but Blu-ray discs are more expensive to produce. Traditional single-layer DVDs allow consumers to watch movies in 720x480 (NTSC) or 720x576 (PAL) resolution with Dolby Digital audio. The blue-laser discs will provide consumers 1920x1080 resolution as well as advanced DTS or Dolby Digital audio along with some additional interactive features.