Sony's Blu-Ray set to win DVD battle

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Toshiba, which hoped its HD DVD would win over Sony's Blu-ray technology, said today it is planning to give up.

The new discs promise consumers high-definition movies and up to five times more space than previous DVDs, but the rival formats had put off shoppers, with players only able to use one or other type of disc.

This year HD DVD suffered a string of defections to Blu-ray by movie studios, such as Warner Bros as well as the big retailers.

Sony and Panasonic products maker Matsushita Electric fought it out in the VHS-Betamax battle. Sony lost that one, but the pair are on the same side this time round along with Philips.

Toshiba is teamed with NEC and Sanyo in pushing the HD DVD format. The final blow to their hopes came this month with Wal-Mart rallying behind Blu-ray.

Toshiba shares jumped 5% in Tokyo as analysts praised its decision to cut its losses, while Sony, whose technology is set to become the industry standard for the next generation of high-definition home movie DVDs, rose 2.7%.

"It doesn't make sense for Toshiba to continue putting effort into this," said Koichi Ogawa, a chief portfolio manager at Daiwa SB Investments.

"It needs to cut its losses and focus its resources on promising businesses."

The companies skirted a potential war over first-generation DVDs by agreeing in 1995 to unify the formats, but that broke down by 2003 when Sony launched its first Blu- ray- based machines. The Sony purchase of media group MGM a year later boosted the chances of Blu-ray, especially as Toshiba only began to roll out its system in 2006.

The HD DVD format got a boost when Microsoft decided to introduce it in its Xbox games console while Sony uses Blu-ray in its PlayStation. However, Microsoft said last month it would respond to demand and was prepared to roll out a Blu-ray version of the Xbox.

"It should be consumer choice; and if that's the way they vote, that's something we'll have to consider," Albert Penello, group marketing manager for Xbox hardware, said in January.