CES: Toshiba says HD DVD format isn't dead yet

It lost an important ally, Time Warner, in the hi-def format war

Two days after losing an important ally in the high-definition format battle, Toshiba Corp. put on a defiant face at the Consumer Electronics Show (CES) and declared that the HD DVD format is a long way from being dead.

"We remain firm in the belief that HD DVD is the format best suited to the wants and needs of consumers," said Akio Ozaka, head of Toshiba America Consumer Products, at a news conference. He said Toshiba was surprised by Warner Bros. Entertainment's announcement on Friday that it will release its high-definition DVD titles exclusively in the Blu-ray disc format beginning later this year.

"We are especially surprised that this decision was made in spite of the significant momentum that HD DVD has gained in the U.S. market and other regions," he said.

2008 International CES

View more stories from 2008 International CES. Warner was the only major Hollywood studio releasing movies on both formats, and its decision to go with Blu-ray Disc means that Toshiba has only two major studios, Paramount and Universal, backing its technology.

Warner's decision also left Toshiba with a potential public relations disaster, since it came just days before the CES, the annual North American gathering of the consumer electronics industry that kicks off officially here on Monday. In response to the Warner news, the HD DVD Promotion Group canceled its news conference, leaving some to conclude that backers of the format were ready to concede defeat.

"As you can imagine, this is a tough day for me," said Jodi Sally, vice president of marketing for digital audio and video products at Toshiba America Consumer Products. "It's difficult for me to read all the pundits declare that HD DVD is dead. Clearly the events of the last few days have led you to that conclusion but we've been declared dead before."

But Toshiba might have a hard time convincing the analysts and media that follow the battle closely that HD DVD is still in the race.

"It's interesting the CEO said he was surprised. I think that's an understatement. Devastated would probably be more accurate," said Peter King, an analyst at U.K.-based Strategy Analytics, who attended the Toshiba news conference.

"They really have an uphill battle," he said. "They are left with a couple of the smaller studios but there is no doubt the major studios have voted with their feet. It's hard to see now what they can do. Maybe focus on the PC market as a format, but they have a major struggle and that was very clear today."

King wasn't willing to call the battle over just yet but he said a lot would depend on comments made during CES by other industry leaders, like Microsoft founder Bill Gates, who is scheduled to speak in Las Vegas Sunday evening.

But if the battle is over then what's bad news for Toshiba will be good news for consumers and the consumer electronics industry, he said. "Everybody in the industry can get behind one format (and) start promoting. The message will be simple and clear, prices will come down and it's a good thing for the industry."

Toshiba said 1 million HD DVD players are currently in the market in North America.

In a statement Saturday, the company also expressed surprise over Warner's move "despite the fact that there are various contracts in place between our companies concerning the support of HD DVD." On Sunday, it didn't elaborate on those contracts or what its next move may be in the march to make HD DVD the de facto replacement for DVD for high-definition content.

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Copyright © 2008 IDG Communications, Inc.

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