Blu-ray Victory May Hurt Xbox 360 and PS3 Dominance

• Posted: Thursday, February 21, 2008
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• Author: pradhana
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• Filed under: New Format

On Tuesday, February 19 2008, Toshiba has officially confirmed the end of the format war against Blu-ray and announced that it will no longer develop, manufacture or market HD-DVD players and recorders; it will end shipments into retail by the end of March and end production of HD-DVD disc drives for PCs.

The electronics giant also confirmed it will cease production of the add-on HD-DVD drive for Microsoft's Xbox 360 console by the end of March, opening the doors for Sony's PlayStation 3 as the only games system to support the winning Blu-ray high-definition platform.

With this statement, however, analysts already believe that the company may be facing increasing pressure from Sony as a result of the outcome of the format war.

Ralph Shackart, an analyst with William Blair, said that “Blu-ray's victory could drive market share gains for the PS3, as we believe consumers will now be more willing to pay up (versus 360) for the standard Blu-ray player.”

"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," said president and CEO of Toshiba, Atsutoshi Nishida.

"While we are disappointed for the company and more importantly, for the consumer, the real mass market opportunity for high definition content remains untapped and Toshiba is both able and determined to use our talent, technology and intellectual property to make digital convergence a reality."

On the other hand, Microsoft which originally announced in 2005 its decision to focus on HD DVD, but did not believe that HD DVD would be a long-term solution for high-def media, in January 2006, the company announced that it would offer an external HD DVD for the Xbox 360 – which was launched in November of that year.

Although Microsoft has always backed Toshiba's HD-DVD format, offering an HD-DVD add-on drive for its Xbox 360 console, the firm believes games are what really matter.

“We do not believe the recent reports about HD-DVD will have any material impact on the Xbox 360 platform or our position in the marketplace," a spokesperson for Microsoft told Next-Gen. "As we’ve long stated, we believe it is games that sell consoles and Xbox 360 continues to have the largest next-gen games library with the most exclusives and best selling games in the industry."

Despite the demise of the HD-DVD platform, Xbox 360 users can continue to access high-definition content by downloading from the Xbox Live Marketplace and by streaming content from a PC using Windows Media Center.

The CEO of Sony Computer Entertainment America, Jack Tretton, in an online interview, said the demise of HD-DVD was 'one more reason' to buy a Sony PlayStation 3 console. "The emergence of Blu-ray as the de facto high-definition standard is one more reason why PS3 is a great value to consumers," told Tretton.

"The combination of strong sales, Blu-ray dominance and widely-anticipated games all point to 2008 as a breakthrough year for PS3."

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