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Toshiba to take $986 million hit on HD DVD

by on18 March 2008


Writing off major losses

News is starting to surface that Toshiba will take a heavy hit on HD DVD’s surrender in the format war to the tune of almost $1 billion dollars. Well, $986 million is close enough to $1 billion, but who is counting? While the loss does strike a blow at Toshiba’s bottom line, they were diversified enough in other business lines that while the loss is painful, it should not spell the end for Toshiba as a company. Many other business units within Toshiba were profitable and showed growth, according to reports.

While Toshiba learned a hard lesson with the HD DVD, we are not sure what really the lesson was in the end. HD DVD enjoyed all of the benefits on the technology side to make it a winner, but more than anything else a lack of support in the tug-of-war between the movie studios seems to have decided the format war. While some continue to claim that Blu-ray was a better format and that might be true, Toshiba’s exit has led to prices that continue to be about the same or higher on the Blu-ray front, and this is to be expected while additional ramp up and production growth pains continue to be overcome.

The problem with the lack of shipping Profile 2.0 compatible players is also an issue, as HD DVD supported the vast majority of Profile 2.0 features in HD DVDi right out of the box. Toshiba for right now continues to say that they are not going to be releasing a Blu-ray player anytime soon and will continue to focus on standard DVD upconverting technology for the short term.

This is somewhat a disappointment, as many HD DVD buyers had hoped that Toshiba would release an affordable HD DVD/Blu-ray combo player to help ease the pain of their loss in the format war by HD DVD and to protect the investment that consumers made in buying movies on HD DVD. Given the amount of money Toshiba has lost on HD DVD it is understandable, but consumers are still feeling the sting. And they are not happy about it.

While it is obvious that Blu-ray has won the war, it is regrettable that Toshiba had to take such a hit. In the near term, however, we are not sure that having a single HD format is going to really increase sales all that much. Early adopters will buy that is a given, but after many of them were burned on HD DVD, we are not so sure that they are going to be ready to jump head long into Blu-ray until Profile 2.0 players are released and debugged enough for the general public. Right now, the only safe bet for Profile 2.0 compatibility for Blu-ray is to buy a Sony PlayStation 3, as Sony claims that it will support Profile 2.0 and should be upgradeable to support pretty much anything else beyond that, as well.

Last modified on 18 March 2008
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