Hollywood Reporter: Toshiba to Drop HD-DVD

[diggity]

The net isnt going to be the main source of "downloading", VOD is.
I can buy a movie (some are free) and watch it like any other show, I can pause, ff, etc,
anytime in a 24hr period.
I don't see why people have trouble understanding this.
Already its very popular here in town.
Net downloading is still aways off, but who needs it with a hugh pipe called fiber optic?
Sir talky will tell you that these new systems are obsolete out of the box(guess thats why they spent several hundred mill on each one) but truth is that the space devoted to cablemodem is the space between ch 3 and 4!
In other words theres a hugh amount of capacity available.
Its not downloading mpeg4 off the net but it is HD and DD mostly, fine for casual rental

the only thing that worries me with downloads is the downloads... if that makes sense.
i shall elaborate. this may annoy you all but movies aren't made just for the benefit of americans, but the WHOLE world. for example, here in australia we haven't yet got to the standard of networking you have got there. much of our cabling is copper based and only major cities have optical even then only some suburbs. outback areas are literally just beginning to get off dial up 56k. we have only 5 free to air channels and still running analogue tv stations. we are in our fourth year of digital tv (still only 5 channels) and third year of hd tv channels, which is only 18-25 hours per week in 1080i, lucky to be 3 hours per week in 1080p. this is even before mentioning african and eastern bloc countries.

what i am saying is that for a technology to have any chance of succeeding it has to be accsessible to the majority of the viewing public with a relatively level playing field. something which solid media is and inernet/VOD isn't. go to 98% of houses anywhere in the world and you will see a dvd player, but how many will have top notch broadband for fast downloads of movies, a pc with a decent video card caopable of producing decent pic quality, or even a tv with a pc input? movie studios and manufacturing companies wont start contemplating d/oads VOD mass production until they are sure everyone has an even playing feild, not just usa veiwing public.

cheers: dazza

ps i am not trying to insult anyone who is american in this post. but i am trying to imply that although it may seem easy over there, not every country or person finds it this way. beleive it or not there are seven continents on this planet not just one and entertainment has to be available to all of them. no harm intended

[drseid]

I certainly do not believe for a second that Toshiba "knew all along" that HD DVD would lose the war and were developing exit strategies from the beginning while continuing to throw money at the format and its partners/former partners...

I *do* believe that almost immediately after the Warner decision happened despite Toshiba's public statements to the contrary, they had to know it was over for the format. I would not be surprised if they developed (or chose) an exit strategy about then. They may have had a rough plan in the background before that "just in case"... but after the Warner decision, I would think "just in case" became "now is the time."

The news of Toshiba's exit (now corraborated by many additional reliable sources) should not come as a surprise to anyone, IMO. Little availability of software coupled with no major rental outlets (after the Netflix move) and lack of retailer support equals the format becoming a major liability.

Too bad the format failed as I really felt it was the superior one, but I think HD DVD's main backer finally has decided the phoney hype of staying in the race the long haul, knowing they will not win or cause a long-term stalemate was not worth it to them financially or reputation-wise. I think Toshiba is making the right move for themselves and the industry at this point.

---Dave

[kexodusc]

I certainly do not believe for a second that Toshiba "knew all along" that HD DVD would lose the war and were developing exit strategies from the beginning while continuing to throw money at the format and its partners/former partners...

As crazy as it sounds, I can believe it. This isn't my industry at all, but the few financial analysts I've spoken with about this format war suggest, as has been said many times here and other web forums, that the decision to launch HD-DVD had more to do with delaying the transition from DVD to the new HD format than an honest attempt to win the HD war. In other words, Toshiba felt they would earn enough additional revenue from DVD license royalties attributable to DVD remaining dominant for 2 or 3 additional years to cover justify the development cost and marketing/loss leading efforts of HD-DVD.

The same people tell me Toshiba stands to gain more from selling hardware, (not necessarily finished electronics products, but the chips/processors, manufacturing facilities, etc) than their share of the royalty pie for DVD or HD-DVD as well, which is afterall one of their core business activities. Which means they've probably got BluRay players in development and will be happy to make money off them.

It becomes even more believable if we flashback 2-3 years ago when Sony and Toshiba were pressured by the industry to arrive at a universal format solution. At the time, BluRay "appeared" to be the superior format for no other reason than storage space and studio support. Toshiba could have ended this whole thing then and likely have saved a lot of money not supporting a doomed format that never held the lead over BluRay once it was launched. Instead they chose to fight the good fight. They had to know it would be years before HD-DVD could break even, especially if a drawn out format war emerged. But did the extended-life of th DVD cash cow make it all worthwhile? This makes a lot more sense than charging ahead with developing a movie format that didn't have the majority of movie-studio support from the start. Back then, one would think a disadvantaged format would be happy to compromise and minimize losses - turn a bad situation into a guaranteed positive. But unlike Sony, the decision to support a universal format didn't solely rely on the predicted fortunes of HD-DVD. Once they factored in the impact of the DVD franchise, maybe it made more sense to keep DVD on top as long as possible.

Maybe HD-DVD was nothing more than a part of DVD's exit strategy.

Don't get me wrong - I think they'd have been thrilled to win it all and fought hard for it, but was it only a secondary goal? The BluRay/HD-DVD license value was never going to be as lucrative as DVD's, so there was less incentive to win it. Maybe Wooch or some people here can provide some figures on how much license fees are worth. At one time they were charging each DVD player 3-4% licensing fees, but I think that's since been reduced to absolute US dollar amounts...and each disc manufactured fetches a few pennies as well - that all adds up when billions of these things are flying out of factoreis.

I've tried dissecting the annual reports to find the perceived value of the DVD license, but it's not disclosed that way, and googling tends to only yield 6 or 7 year old figures. So I could very well be wrong here, but it has a certain believabiltiy to it.

At the end of the day, I think Toshiba will still make more money focusing on hardware, selling BluRay players and DVD players than the license royalties would mean to them.

All this to say, HD-DVD, despite losing the format war, might very well have been big success from Toshiba's point of view.

Too bad the format failed as I really felt it was the superior one, but I think HD DVD's main backer finally has decided the phoney hype of staying in the race the long haul, knowing they will not win or cause a long-term stalemate was not worth it to them financially or reputation-wise. I think Toshiba is making the right move for themselves and the industry at this point.

Most analysts would agree with you here. Dropping a dying format is a really quick way to improve your earnings expectations.

[GMichael]

When do all the sales on HD-DVD's begin?

[L.J.]

When do all the sales on HD-DVD's begin?

http://www.deepdiscount.com/viewcate...count=#listtop

[Rich-n-Texas]

http://www.deepdiscount.com/viewcate...count=#listtop

I love how, at the top of the page they say: "Start Building your HD-DVD collection with these great titles on sale!"

John Q. Public is such a dumba$$ ya know?

[Sir Terrence the Terrible]

As crazy as it sounds, I can believe it. This isn't my industry at all, but the few financial analysts I've spoken with about this format war suggest, as has been said many times here and other web forums, that the decision to launch HD-DVD had more to do with delaying the transition from DVD to the new HD format than an honest attempt to win the HD war. In other words, Toshiba felt they would earn enough additional revenue from DVD license royalties attributable to DVD remaining dominant for 2 or 3 additional years to cover justify the development cost and marketing/loss leading efforts of HD-DVD.

There is some truth to this, but because the HD DVD format was born within the DVD forum, all liscensees stood to benefit, including Sony to a much lesser degree. Pioneer get major royalities from DVD, but they also got major royalties from Bluray, much more. HD DVD by the DVD forums standard would have been the sucessor to DVD.

The same people tell me Toshiba stands to gain more from selling hardware, (not necessarily finished electronics products, but the chips/processors, manufacturing facilities, etc) than their share of the royalty pie for DVD or HD-DVD as well, which is afterall one of their core business activities. Which means they've probably got BluRay players in development and will be happy to make money off them.

This is only true if the price of chips stay profitable. Lately they have not been so profitable for them, hence why they cannot continue to support losses in their HD DVD side.

It becomes even more believable if we flashback 2-3 years ago when Sony and Toshiba were pressured by the industry to arrive at a universal format solution. At the time, BluRay "appeared" to be the superior format for no other reason than storage space and studio support. Toshiba could have ended this whole thing then and likely have saved a lot of money not supporting a doomed format that never held the lead over BluRay once it was launched. Instead they chose to fight the good fight. They had to know it would be years before HD-DVD could break even, especially if a drawn out format war emerged. But did the extended-life of th DVD cash cow make it all worthwhile? This makes a lot more sense than charging ahead with developing a movie format that didn't have the majority of movie-studio support from the start. Back then, one would think a disadvantaged format would be happy to compromise and minimize losses - turn a bad situation into a guaranteed positive. But unlike Sony, the decision to support a universal format didn't solely rely on the predicted fortunes of HD-DVD. Once they factored in the impact of the DVD franchise, maybe it made more sense to keep DVD on top as long as possible.

Toshiba can thank Microsoft by spitting in their face. Toshiba was ready to dump HD DVD before it released when they realized that the BDA had amassed a far larger support structure than they did. It was microsoft that encourage them to stay and fight, and I believe it was done to slow the PS3 down. If the PS3 had been released with a bluray drive unchallenge, Microsoft knew it would mean trouble for the XBOX franchise. Toshiba should be furious with Microsoft. Toshiba sent a rep out to Hollywood three times trying to court Warner, and a bluray exclusive studio Fox to make the switch. Microsoft refused to be in on the negotiations when Toshiba asked them to. I am not sure if Microsofts absence is what prevented the deal from being sealed, or the fact that Bluray was outselling HD DVD in both players and disc, but Fox refused to bite(they had asked for BD+ on HD DVD within the DVD forum, and it was refused) and then Warner backed away. One of the conditions that Warner set on Toshiba was to get another Bluray exclusive studio to support HD DVD or the format war would not be over. Warner wanted this over because they have the biggest stake in the disc market(and the largest film library as well), and their profits were plunging from the DVD. Without Warner, it was essentially curtains for the HD DVD format.

Maybe HD-DVD was nothing more than a part of DVD's exit strategy.

You are correct.

Don't get me wrong - I think they'd have been thrilled to win it all and fought hard for it, but was it only a secondary goal? The BluRay/HD-DVD license value was never going to be as lucrative as DVD's, so there was less incentive to win it. Maybe Wooch or some people here can provide some figures on how much license fees are worth. At one time they were charging each DVD player 3-4% licensing fees, but I think that's since been reduced to absolute US dollar amounts...and each disc manufactured fetches a few pennies as well - that all adds up when billions of these things are flying out of factoreis.

Actually Bluray liscenses are more lucrative than both DVD and to a lesser degree HD DVD because they are not sifted in value like DVD are. After the chinese manufacturers got into the game, the value of DVD royalites began to plunge, hence why HD DVD was so important to Toshiba. No manufacturer was making money off DVD players, the Chinese made sure of that. Disc profits were also plunging as the disc prices began to fall. Everyone NEEDED another format to lift profits on both sides of the equation.

I've tried dissecting the annual reports to find the perceived value of the DVD license, but it's not disclosed that way, and googling tends to only yield 6 or 7 year old figures. So I could very well be wrong here, but it has a certain believabiltiy to it.

You are closer than you think.

At the end of the day, I think Toshiba will still make more money focusing on hardware, selling BluRay players and DVD players than the license royalties would mean to them.

Had they not started the cost cutting from the beginning, they would have made off like a bandit with both royalites on disc and players, and make a profit on its own players as well. However, I think that Toshiba has so sullied its name amoung the Japanese CE community, I think they are going to make it very hard for Toshiba. And I mean VERY hard. One of the bluray insiders out of Japan says that most all of the CE companies in Japan are furious at Toshiba for de-valuing HDM on disc, and making it hard for them to recoup R&D because of Toshiba steep price cuts right out of the gate.

All this to say, HD-DVD, despite losing the format war, might very well have been big success from Toshiba's point of view.

I do not think so. Their investor had been telling them for month to walk away from HD DVD because of the losses. As of the end of last year, Toshiba had lost $450 million dollars supporting HD DVD. Since their chip manufacturing had been doing okay, these losses were pretty easy to absorb, but when losses in the chip side started happening, the losses on HD DVD look ominous.

Most analysts would agree with you here. Dropping a dying format is a really quick way to improve your earnings expectations.

It will take a while to sift through the ruins though. Toshiba is going to have to figure out what to do with all of the unsold and returned stock the retailers cannot unload. Amazon apparently has more returned players than new players sitting in their warehouses. That is going back to Toshiba. When they write down all of the losses then they will have a better idea of where to go next.

[Sir Terrence the Terrible]

I certainly do not believe for a second that Toshiba "knew all along" that HD DVD would lose the war and were developing exit strategies from the beginning while continuing to throw money at the format and its partners/former partners...

They didn't know, Pixelbrain does not know what he is talking about. He never does.

I *do* believe that almost immediately after the Warner decision happened despite Toshiba's public statements to the contrary, they had to know it was over for the format. I would not be surprised if they developed (or chose) an exit strategy about then. They may have had a rough plan in the background before that "just in case"... but after the Warner decision, I would think "just in case" became "now is the time."

You know, they didn't believe it was over until after the netflix/Walmart announcement. They believed that if they got enough players out in the market, the studios would change their mind unwilling to let this huge player base go unanswered. That is why they continued to cut the price, to get more players in the market to sway the studios. It didn't work, and it was a gamble that cost them a bundle.

The news of Toshiba's exit (now corraborated by many additional reliable sources) should not come as a surprise to anyone, IMO. Little availability of software coupled with no major rental outlets (after the Netflix move) and lack of retailer support equals the format becoming a major liability.

The lack of QUALITY releases both technically and content wise was killing them way before any of the latest announcement. They were quite simply out matched and out witted by the BDA as evidenced by the Transformers week where bluray had no releases in the week of Transformers release, and still beat HD DVD in disc sales that week.

Too bad the format failed as I really felt it was the superior one, but I think HD DVD's main backer finally has decided the phoney hype of staying in the race the long haul, knowing they will not win or cause a long-term stalemate was not worth it to them financially or reputation-wise. I think Toshiba is making the right move for themselves and the industry at this point.

---Dave

Dave, it is VERY open for debate whether as to HD DVD being superior. In many ways it was not. While it had well supported interactive features and PIP, bandwidth made it difficult to deploy all of this on a single disc along with DTHD. Transformers, Shrek, and King Kong are prime examples of this. All of these titles should have had DTHD tracks on them, but lack of disc space and bandwidth made it impossible. Secondly, the quality control on ALL HD DVD was seriously lacking. You had some folks with no problems, others with so many problems it was unbelieveable. I have had THREE HD DVD players, all coming in with various playback problems. The A1 after numorous firmware upgrades became the most stable player out of the bunch. The XA-2 could not be used in the 1080p 24fps mode because of lip sync issues that have not been addressed yet. The A-35 I got for Christmas has still yet to make it through a single HD DVD, but it plays DVD's beautifully. My PS3 has yet to have a single hiccup with any of my blurays. The bluray format has used just about every video codec out there, HD DVD basically just one, they are were too plugged in with microsoft products(VC-1 and HDi). Lossless audio makes up about 2/3 of all bluray releases, and HD DVD had it on a little less than a third of its titles. HD DVD has proven you cannot sell a format based on interactivity. More people(at least the early adopter) wanted the best PQ and SQ, not superior interactive experience.

Toshiba killed itself, and has nobody to blame but itself. They new they were outsupported and out gunned, and they allowed Microsoft to talk them into getting into this fray in the first place. A foolish move indeed.

[pixelthis]

the only thing that worries me with downloads is the downloads... if that makes sense.
i shall elaborate. this may annoy you all but movies aren't made just for the benefit of americans, but the WHOLE world. for example, here in australia we haven't yet got to the standard of networking you have got there. much of our cabling is copper based and only major cities have optical even then only some suburbs. outback areas are literally just beginning to get off dial up 56k. we have only 5 free to air channels and still running analogue tv stations. we are in our fourth year of digital tv (still only 5 channels) and third year of hd tv channels, which is only 18-25 hours per week in 1080i, lucky to be 3 hours per week in 1080p. this is even before mentioning african and eastern bloc countries.

what i am saying is that for a technology to have any chance of succeeding it has to be accsessible to the majority of the viewing public with a relatively level playing field. something which solid media is and inernet/VOD isn't. go to 98% of houses anywhere in the world and you will see a dvd player, but how many will have top notch broadband for fast downloads of movies, a pc with a decent video card caopable of producing decent pic quality, or even a tv with a pc input? movie studios and manufacturing companies wont start contemplating d/oads VOD mass production until they are sure everyone has an even playing feild, not just usa veiwing public.

cheers: dazza

ps i am not trying to insult anyone who is american in this post. but i am trying to imply that although it may seem easy over there, not every country or person finds it this way. beleive it or not there are seven continents on this planet not just one and entertainment has to be available to all of them. no harm intended

of course not.
Sorry if this disscusion is a bit Amero-centric but we Americans tend to be a bit self centered.
Truth is if I lived in such a beautiful country as Aussieland I probably wouldn't watch as much TV, and I am not kissin your butt, my neice went there on a field trip and loved the place.
But you guys are in even a better place than we yanks probably.
We have a ton of infrastructure that needs replacing, you guys can start from scratch.
AND BEING AS CLOSE as you are to the "future" (asia) its probably going to be cheaper.
and there is a certain charm to being a little "undeveloped".
To live more "real "life than the fantasies spun by a bunch of outoftouchwithreality
Hollywood writers

[GMichael]

It's a tough crowd today ladies and gentlemen. Please stay behind the Plexiglas walls for your own safety.

[pixelthis]

It's a tough crowd today ladies and gentlemen. Please stay behind the Plexiglas walls for your own safety.

Not tough at all, just sir talky rewriting history again.
Someone needs to get him a decent bottle of wiskey do he doesnt have to drink
hair tonic

[GMichael]

Not tough at all, just sir talky rewriting history again.
Someone needs to get him a decent bottle of wiskey do he doesnt have to drink
hair tonic

Is that English?

[Sir Terrence the Terrible]

Is that English?

No G, It's hick. His is a back woods dialect. The only other to use it was bigfoot.