HD-DVD fallout: No cooling off, returns or refunds

Australian’s who jumped in early with Toshiba’s HD-DVD technology are left with an expensive upscaling device, CD/DVD burner and no future movies.

Was the writing on the wall?

In a statement at the announcement this week, Atsutoshi Nishida, Toshiba president and CEO said, "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.

Pundits believe that if Toshiba made a decision two years ago, consumers would not have been pulled into the mess.

Whittard agrees the format war could have been avoided, adding that Toshiba's view was that the DVD forum approved its HD-DVD format as the successor to DVD format.

"200 members participated in the vote," he said. "Blu-ray was developed outside of this, and was not brought back to the DVD Forum. So we had no reason to believe HD-DVD wouldn't succeed. The same [process] happened with the previous DVD format that we developed and that was adopted."

Gartner's O'Donovan argues that the DVD Forum is not a "standards" group as such and they have had disputes between its members before.

"In fact Sony and Philips had a big falling out with the DVD Forum over recordable DVDs," he notes. "The DVD Forum agreed the standard would be DVD-R and -RW whereas Sony and Philips decided to go with DVD+R and +RW."

"The fact that Toshiba had the DVD Forum's consensus never actually meant they were going to win. Indeed most of the forum backed Blu-ray, outside of the Forum."

O'Donovan's opinion is that Toshiba knew from the beginning it had an uphill struggle against Sony, especially after Sony announced the number of studios that were prepared to back its Blu-ray format as well as the number of equipment manufacturers on board, plus the very important fact that the new PS3 would have a Blu-ray drive as standard.

"The writing was really on the wall four years ago," he said.

While Toshiba ponders Warner's decision, O'Donovan believes for Warner it was the sheer volume of HD content coming out on Blu-ray and that in the highly competitive landscape of the movie industry, the volume of HD-DVD releases was dwarfed by the volume of Blu-ray content that forced its recent decision.

"I think the Warner announcement was very, very significant for HD-DVD. I was in Las Vegas for CES at the time and the HD-DVD group cancelled their press meetings and all of their 1-on-1 meetings with journalists and analysts," he said.

"It was clear this was a very upsetting announcement for the HD-DVD camp. The real nail in the coffin though was the BestBuy, Wal Mart and Netflix announcements which really forced Toshiba to make a decision."

What does the future hold?

Toshiba still sees the market opportunity for high-definition content and it makes HDTVs. Toshiba's Whittard says there are 'no specific plans' to bring a Blu-ray Disc player to market, saying that the company 'will be redirecting our resources to develop new high-definition DVD content'.

Toshiba has revealed that it has partnered with SanDisk to build a new flash memory chip factory; the companies will share the output from the factory. Toshiba is also launching another chip factory of its own for NAND flash memory.

"NAND flash memory is going great guns, and we are building two fabrication plants as well as being in the joint venture with SanDisk." Whittard said. "It is in rapid growth where it could become the core of a new strategy to drive content to customers. It's still in development at this stage."

For the punters – as well as the hardware manufacturers – O'Donovan says the completion is set to begin. Dual-format players such as those by LG will exit the market as soon as the inventories are reduced.

"Now the manufacturers know which format to go for they will all get on board to win as much of the lucrative high-definition pie as they can.

"But we really won't see this happen until next year. For now, everyone wants to milk the consumer for all they can up to Christmas, and then the competition will heat up afterwards."

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