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Toshiba quits HD DVD 'format war'

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TOKYO, Japan (CNN) -- Toshiba said Tuesday it will no longer manufacture HD DVDs, effectively ending the long-running battle with the rival Blu-ray for a dominant high-definition format.

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People watch a demonstration of HD DVD at the 2008 International Consumer Electronics Show in Las Vegas.

Toshiba said it made the decision to cease developing, manufacturing, and marketing HD DVDs after "recent major changes in the market." It promised to continue offering support and service for all existing Toshiba HD DVD products.

"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," Toshiba President and Chief Executive Atsutoshi Nishida said in a news release.

Toshiba's HD DVD business has been suffering recently with a string of major retailers and rental companies announcing their preference for Blu-ray, developed by Sony. Video Watch video on the battle of the formats »

Last week alone, Wal-Mart and online rental company Netflix said they would abandon HD in favor of Blu-ray. Last month, Warner Brothers Home Entertainment -- which had been the largest media company releasing videos in both formats -- announced it would offer DVDs solely in Blu-ray.

The DVD battle has been reminiscent of the VHS vs. Beta fight in the early 1980s. It has left many consumers confused and waiting to see which technology will emerge as the industry standard.

Sony's Blu-ray is backed by Disney, 20th Century Fox, MGM, Dell, Panasonic, and Philips. Toshiba's HD DVD is backed by Paramount, Universal Pictures, Microsoft, Sanyo, and NEC.

Toshiba said it would continue to work with those companies and study ways to collaborate with them in the future.

Tens of billions of dollars have been at stake as major movie studios battled for a dominant format. But rival game consoles have been part of the struggle, too -- Sony's Playstation 3 plays Blu-ray discs, while the Microsoft Xbox will play HD DVDs if users install an add-on component.

Both Blu-ray and HD are high-definition DVDs, the successor to ordinary DVDs which show pictures only in standard definition. But Blu-ray and HD involve different hardware and are not compatible with each other, meaning consumers have had to decide which system to invest in.

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Both formats have an excellent picture quality with a large storage space. But Toshiba has lost the battle because it lacks a retail presence in many markets, said Carl Gressum, a senior analyst at Ovum, a London technology consultancy.

"They didn't manage to bring on board some of the China vendors, they didn't bring (on board) the retailers, they've failed to develop in the European and Asian markets," Gressum told CNN.

Warner Brothers announced its decision to drop HD DVD right before last month's International Consumer Electronics Show in Las Vegas, a significant event for corporate buyers. Gressum said that led to an immediate drop in retail support for Toshiba's format.

Gressum said manufacturers of both formats have made things more difficult for retailers by forcing consumers to make a choice between the gradually-dominant Blu-ray and the much-cheaper HD.

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"They're losing money in many cases because of the price war between the two formats as Toshiba -- and also Microsoft, to a certain extent -- has been playing the price card for HD DVD players," he said.

Toshiba said the company would continue to market standard DVD players and recorders. E-mail to a friend E-mail to a friend

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