End near in DVD format battle

Consumers and investors cheered an impending end to a format war for next-generation DVDs yesterday, with share gains for both Toshiba, on the verge of abandoning its HD DVD discs, and Sony, the leader of the rival Blu-ray camp.

Toshiba Corp shares jumped 6.3 percent as analysts praised its move to cut its losses, while Sony Corp, whose technology is set to become the industry standard for high-definition home DVDs, rose 2.1 percent.

"It doesn't make sense for Toshiba to continue putting effort into this," said Koichi Ogawa, a chief portfolio manager at Daiwa SB Investments. "It needs to cut its losses and focus its resources on promising businesses."

Both formats have the space to hold high-definition movies, but growing support from Hollywood and big US retailers such as Wal-Mart Stores has given Blu-ray a crushing lead.

However, overall sales so far have made up only a small portion of the $24 billion home DVD sector, as shoppers, faced with machines that played only one type of disc or the other, have held back.

"I was expecting Blu-ray to win but I was kind of waiting it out," said Masahiro Taniwaki, a 26-year-old systems engineer shopping at electronics retailer Bic Camera in Tokyo.

Toshiba said yesterday that no decisions had been made on HD DVD, but a company source told Reuters on Saturday that the company was in the final stage of planning its exit.

An end to the war means consumers can now be sure they won't be stuck with a 21st century equivalent of Betamax - Sony's videotape technology that lost out to VHS in the 1980s - and should help accelerate the shift to the new DVD.

"The two formats, though both were good, have confused consumers and prevented them from moving into the high-def future," said Stephanie Prange from Home Media Magazine.

The defection from HD DVD in January of Warner Brothers and its huge film library brought the tally of Hollywood movies in the Blu-ray camp to a commanding 70 percent.

Recent sales figures show many consumers had already written off HD DVD, which was also backed by Microsoft Corp.

Blu-ray accounted for 93 percent of next-generation DVD hardware sales in North America in the week after Warner's announcement in January, data from the NPD Group showed.

Blu-ray recorders from Sony, Matsushita and Sharp made up about 96 percent of the Japanese market in the last quarter of last year, researcher BCN said.

At the core of both formats are blue lasers, which have a shorter wavelength than red lasers used in current DVD equipment, enabling discs to hold up to five times as much data.

Toshiba had billed its format as less costly for the industry as it allowed some existing DVD-making equipment to be reused, but Blu-ray allowed for more content to be packed onto each disc.

Agencies

(China Daily 02/19/2008 page16)