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Mole claims Toshiba to terminate HD DVD

Demise could be 'a matter of weeks' away

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Is Toshiba about to fall on its sword and announce the demise of HD DVD? That's certainly what one report citing an unnamed mole within the HD DVD camp is claiming, even though Toshiba itself is having none of it.

The source mentioned by US Home Media Magazine claims that Toshiba could declare HD DVD dead in "a matter of weeks".

The mag also spoke to a senior Toshiba staffer - Jodi Sally, VP of marketing for Toshiba America Consumer Products - who re-iterated the company's belief that HD DVD "is the best format for consumers".

However, she did admit that Toshiba is monitoring the market. "Toshiba will continue to study the market impact and the value proposition for consumers, particularly in light of our recent price reductions on all HD DVD players."

Reading between the lines, that could imply that Toshiba has envisaged the possibility that its favoured format will cease to offer value to buyers, almost certainly because of overwhelming momentum behind the rival format, Blu-ray Disc.

Certainly, Toshiba has been slashing the prices it charges for HD DVD players over the past three or four months in a bid to make the format more attractive that Blu-ray. But because the Sony PlayStation 3 has a built in Blu-ray drive, that format's been able to outstrip its rival's figures in terms of both disc sales and shipments of devices capable of playing them.

HD DVD may well have a higher 'quality' audience - in other words, punters who're buying it because they want a hi-def disc format, as opposed to happening to get it for free with a games console - but that hasn't delivered the numbers. That's the main reason why Warner decided to stop supporting both formats and go Blu-ray only from this coming May.

That's the killer, as it limits HD DVD to movies from Universal and Paramount who together account for roughly a quarter of the home video market in the US. Not being able to buy of the remaining 75 per cent of releases makes HD DVD a tough choice for consumers, and that's been seen in stuttering disc sales since Warner's early January announcement.

Recently, Toshiba began pitching its HD DVD players to DVD owners looking not for hi-def media but a good way to upscale their standard-definition discs for HD TV display. That was seen as something of a last ditch measure, but it's not hard to imagine Toshiba figuring that if it can increase hardware sales then it can counterbalance the pull of the studios.

But as is always the case with this kind of products, content is king. Very few mainstream buyers - there aren't enough 'early adopters' out there to make a difference - will buy hardware without content to play on it. Three-quarters of the home video market isn't going to suddenly shift to the same format as the remaining 25 per cent, but that quarter might well go the other way.

Indeed, it was claimed earlier this year that Paramount's arrangement with the HD DVD camp - which only runs for two years, in any case - could be revoked if Warner went exclusively Blu-ray. Which it did.

As we reported earlier today, here in Europe there are some 3.2m PS3s and 34,000 standalone Blu-ray players in consumers' homes, compared to around 55,000 HD DVD players and Xbox 360 add-on drives. Some 2.4m discs have been bought over here, and the format's outselling its rival 3:1. Sales of standalone BD players have grown by a far greater degrees than sales of HD DVD machines, despite a massive price advantage in HD DVD's favour.

Short of giving players away for free, it's hard to see what Toshiba can do right now to reverse that trend, and even then there's still the problem that so much content will only appear on the other format.

That's why last month UK retailer Woolworths signalled a shift to Blu-ray, and this week both Netflix and Best Buy did the same in the States.

Whether Toshiba's about to throw in the towel or not, the opposing forces are closing in on the bunker...

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