Tokyo (Japan) – HD DVD has been put on life support after Netflix, Best Buy and Wal-Mart dropped the format last week and it appears that even Toshiba has lost all confidence that it can win the format war, industry sources said on Saturday.

HD DVD players on Wal-Mart's shelves

Reuters reported Saturday that an official announcement from Toshiba confirming the victory of Blu-ray and its decision to cease production of HD DVD players could come as early as next week. "We have entered the final stage of planning to make our exit from the next generation DVD business," an industry source told Reuters.

Earlier, Japanese broadcaster NHK broke the news that Toshiba decided to cancel the development of further HD DVD technologies, but to manufacture current HD DVD players for some time. A production plant in northern Japan is already confirmed to be shut down.

Following announcements from Netflix and Best Buy to focus on Blu-ray immediately, TG Daily was first to report that Wal-Mart had entered a phase in which it was trimming its HD DVD player portfolio. Wal-Mart soon thereafter announced that it was dropping HD DVD completely. NHK said that almost 90 percent of the Japanese high-definition DVD market has been captured by Blu-ray.

Despite Toshiba is likely to lose hundreds of millions as a result of the lost format war, the company can easily transition to Blu-ray and will be able to roll out Blu-ray players within months, perhaps weeks. The company has covered its bases through Toshiba Samsung Storage Technologies (TSST), a joint venture with Samsung. Samsung has been focused on Blu-ray from the beginning and has access to the latest Blu-ray technologies. Toshiba holds 51% of the joint venture, Samsung the remaining 49%.  

If Toshiba withdraws, Microsoft will be under pressure as well. So far, the company has placed its bet only on HD DVD and has offered an external HD DVD drive for its Xbox 360 console. The company will also have to write-off potentially millions in losses and redirect its HD strategy towards Blu-ray. This move could be embarrassing for the software giant at the very least, as it will force the company to concede to Sony’s HD strategy and its competing Playstation 3 console.

On the content side, movie studios Universal, Dreamworks and Paramount – the major players among the remaining exclusive HD DVD supporters, are expected to make Blu-ray announcements within weeks. The HD DVD camp does not have any supporters which are exclusively selling HD DVD players or recorders in the PC market.

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