Toshiba Kills HD DVD

Dave Zatz —  February 19, 2008

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With the exception of ~1 million owners, the HD DVD story pretty much concluded today when Toshiba pulled the plug:

Toshiba Corporation today announced that it has undertaken a thorough review of its overall strategy for HD DVD and has decided it will no longer develop, manufacture and market HD DVD players and recorders. 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 disk drives for such applications as PCs and games in the same timeframe

The tipping point came just prior to CES when Warner Brothers gave up on HD DVD. And it’s be all downhill for Toshiba ever since. However, we won’t see mass market adoption of Blu-ray until the hardware prices creep down. Not to mention that most folks are perfectly content with DVDs – they include surround sound, hold up well on HD sets, play on all modern computers and in minivans, plus they can be ripped. Having said that, industry will now focus on educating the consumer – moms don’t know what Blu-ray is. While digital downloads and expanded VOD/PPV offerings are gaining momentum, there’ll always be a retail market for optical video discs.

10 responses to Toshiba Kills HD DVD

  1. There’s been some speculation regarding Toshiba building their own Blu-ray players… Despite what was or was not said at todays press conference, I assure you they want a piece of the action and will be producing Blu-ray hardware well before the holidays. Which is why they killed HD DVD production as early as they did.

  2. Some might wait to jump on Blu-ray until there is another profile 2.0 player other than the PS3.

  3. I’m one of those people perfectly happy with standard DVD’s. I have a very large pile of DVD’s in a storage box hid away in the basement since many of them are ripped onto my HTPC and served up via SageTV. The quality is still darn good for my tastes.

    I guess eventually I could be swayed to follow the crowd if Blu-Ray acceptance hits the tipping point, but for now I’ll stay in my price range with the standard DVDs. Oh by the way, my Dad was very confused about the whole HD-DVD and Blu-Ray thing too. He was worried about the message he got from Netflix telling him they would no longer stock HD-DVD’s. I explained to him that he had the basic, standard DVD players anyway……

  4. Josh, the more tech savvy will be keeping an eye on that, though the mass market won’t know or probably care. Everytime I hear my Xbox spin up or feel the heat coming from it, the PS3 calls my name… though I’d hate to give up Xbox Live and achievements. (I’m only going to have room for one in the above-fireplace cubby when we move next month.)

    As far as parents and tech… I don’t know if my mom knows anything about Blu-ray (though her home page is set as ZNF), but I was surprised she understands the digital converter box: She asked over the weekend about getting one for the kitchen TV and knew she wouldn’t need one for the bedroom or living room where she has cable boxes. I told her to hold off for now and we’d see about replacing that TV next year.

  5. The next step is to only release on Blu-Ray – any idea when that day is coming?

    For how long did studios release both VHS and DVD versions? It seems like forever (I want to say 10 years +).

    I just need BD-R so I can start offloading some of my XVIDs onto discs for storage :)

  6. All I want is a decent, bug free Blu-ray player that has all of the audio options, doesn’t cost over $500 and takes up less than half my shelf space. Why is that so hard?

  7. I can’t see this really taking off until the costs come down. People have their DVD players, the quality is good and they don’t complain. Unlike VHS where you could watch a tape and see it’s quality go down hill you can’t see that with DVD. So, until the time the price hits that $99-199 price range I don’t see this catching on. The only other real big thing would be if X-box came out with a Blu-Ray dvd player like they had with the HD-Dvd player, then you would have quick access to all the 360 owners out there.

  8. The problem *I* see now … is that the Blu-Ray manufacturers only have each other to “compete” with. BR player prices were slowly trending down while HD DVD was lowering their prices. Now … I’m afraid we’re simply not going to see any “affordable” BR players for a long time to come … I fully expect them to milk the cash cow for everything it’s worth.

    I want to be wrong, but … Blu-Ray is the studio’s choice for a reason and it’s not because it’s best for you and I – the consumer. :(

    pat—-

    ps, I like the site redesign. quite nice!

  9. Pat – There’s no reason to believe that. VCRs, CD players, and DVD players all saw constant downward pricing trends due to brand competition and technology evolution. There is no reason to expect BD to be any different.

    Note that HD DVD players were only so cheap because Toshiba was selling them at huge losses – which is why their stock jumped today after they killed HD DVD. Investors were happy to hear Toshiba would stop the massive bleeding, even with the losses from ending the war. The BD players have been kept at profitable levels – but the prices have still come down dramatically in the past two years, and sub-$300 MSRP players have already been announced. We’ll probably have sub-$200 MSRP players in time for the holidays – especially if Toshiba jumps into the fray.

    Prices come down as each generation of technology improves. The blue laser diodes and optical pick-ups have dropped dramatically in price, and each generation gets cheaper. The chip vendors have produced successive generations of system-on-a-chip processors which integrate more of the functions into one chip, lowering the overall cost of the players. Those cost reductions contribute directly to pricing reductions.

    Big John – DVD only overtook VHS in 3Q2006, less than 18 months ago. It took a bit over 10 years from the introduction of DVD for it to overtake VHS in sales. But once the tipping point was reached VHS sales fell off dramatically and DVD pretty much controls the market today.

    Blu-ray has some things going for it and some things going aginst it compared to the VHS->DVD transition. Against it is that people need to own and HDTV to see any advantage, and DVD is pretty good already. With upscaling, DVDs can be solid performers on an HDTV for many users. Also the cost of going to BD is currently fairly high.

    In BDs favor is the time-price relationship. BD players also play DVD – while DVD players couldn’t play VHS (ignore the handful of combo decks). So you can buy a BD player and still have one player for all your media. So you can make the BD transition for new content, while keeping DVD for old content. Over time the costs of BD players will drop to sub-$100 levels (probably in 2009), at which point it becomes hard to justify buying a new DVD deck instead of a BD deck. Movie pricing will likely drop to DVD levels as well, as more production lines become available and the production wrinkles are ironed out, increasing yields – thereby lowering unit costs.

  10. Salesfolks should use MegaZone’s last point… might as well get a BD player now and start building a BD collection rather than continue to buy SD-DVD and pay bigger in the end (and have a bunch of worthless discs leftover). That is, unless they think the regular DVD is “warmer” and they don’t mind all the pops and scratches.