Sony Corp. has finally exorcised the ghost of Betamax.
The Japanese company's Blu-ray format emerged the victor in the battle to set the standard for high-definition DVDs. Its victory over Toshiba Corp.'s rival HD DVD leaves behind its embarrassing loss to VHS in last century's battle for the home videocassette market.
Toshiba announced Tuesday it was abandoning its next-generation high-definition disc format, saying it would no longer make and market players and recorders. The announcement followed a series of defections, including Friday's decision by the nation's largest retailer, Wal-Mart Stores Inc., to stop selling HD DVD hardware and movies and devote its shelves exclusively to Blu-ray.
Toshiba Chief Executive Atsutoshi Nishida told a packed news conference at the company's Tokyo headquarters that continuing the fight for control of the high-definition home video market "would have created problems for consumers, and we simply had no chance to win. Although this is a bitter decision, there would have been a greater impact on our business if we had continued any longer," he said.
With that, Nishida ended a battle between rival formats that had confused consumers, split the Hollywood studios and retarded the growth of a potential new market for movies and the games and extras that go alongwith them.
Ironically, HD DVD appeared to have an edge over Blu-ray. Its players were cheaper and its movie discs less costly to manufacture. But Sony trumped Toshiba by building broad support for its Blu-ray format among consumer electronics manufacturers and Hollywood studios. It also pursued a risky strategy that paid off: incorporating a Blu-ray drive into its PlayStation 3 video game console.
That decision cost Sony money -- about $300 per console, according to researcher iSuppli. But it helped put more Blu-ray players in the homes of early technology adopters, more than 8 million of whom have bought PS3s worldwide.
By contrast, Toshiba said it had sold about 1 million HD DVD players worldwide.
"The PlayStation 3 was a Trojan Horse," said Walt Disney Studios Home Entertainment President Bob Chapek.
Now that Toshiba has waved the white flag, one question remains: How many consumers will ultimately embrace high-definition digital video discs? Although high-definition offers a sharper picture, the benefits are not as dramatic as the transition from videotape to DVD -- and most noticeable on big-screen TVs. Moreover, the DVD itself is under assault from myriad technologies vying to supplant it as a means for delivering movies into the home.
