Toshiba Shares Fall After Warner Backs Sony's Blu-Ray (Update1)
By Mikako Nakajima and Yoshinori Eki
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Jan. 7 (Bloomberg) --
Toshiba Corp. shares fell to a nine- month low after Time Warner Inc., the world's largest publisher of DVD titles, abandoned the Japanese company's HD DVD format to adopt Sony Corp.'s Blu-ray technology.
Time Warner's decision may tip the balance in Sony's favor in the home theater industry's biggest format war since VHS beat Betamax two decades ago. Warner Bros. Entertainment, which had been releasing movies based on both technologies, said on Jan. 4 it will drop Toshiba's standard at the end of May.
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`It's a game-changing event, game over for HD DVD,'' Macquarie Securities Ltd. analyst David Gibson said in an e-mail today. ``Other studios will follow'' industry leader Warner, which distributes more than 300 million DVDs a year, Gibson said.
Toshiba, HD DVD's leading promoter, declined 2.3 percent to 783 yen, its lowest since March 28, at the close on the Tokyo Stock Exchange. Tokyo-based Sony, the world's second-largest consumer electronics maker, climbed 0.7 percent. The Nikkei 225 Stock Average fell 1.2 percent.
Toshiba is disappointed with Warner's decision, Keisuke Ohmori, a spokesman for the Tokyo-based company, said by telephone from Las Vegas today, reiterating comments in Toshiba's Jan. 4 statement.
``We will assess the potential impact of this announcement with the other HD DVD partner companies and evaluate potential next steps,'' he said.
HD DVD has six times the recording capacity of current DVDs, while Blu-ray has five times more storage, based on data from the Web sites for the two standards. Blu-ray disks outsold HD DVD by two to one in the first half of 2007, according to Home Media Research.
Joining Disney, Fox
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We think Warner prefers Blu-ray because consumers have clearly chosen BD as the next-generation DVD format,'' Masayo Endo, a spokeswoman for Sony, said by telephone from Tokyo. She declined to comment on the impact on sales of Blu-ray players in the U.S.
Warner Bros., the second-largest studio in U.S. box-office receipts last year, joins Walt Disney Co. and News Corp.'s Fox in backing Blu-ray. The top studio, Viacom Inc.'s Paramount Pictures, DreamWorks Animation SKG Inc. and General Electric Co.'s Universal Pictures endorse HD DVD.
The North American HD DVD Promotion Group, which promotes the Toshiba-backed format, canceled a press conference on Jan. 5 in the U.S. after Warner's announcement.
Warner's backing may also help sales of Sony's PlayStation 3 game consoles, which includes a built-in Blu-ray player.
Sony today said it sold 1.2 million PlayStation 3 machines in the U.S. during the year-end shopping season. That's more than double the 466,000 PlayStation 3s sold in the U.S. in November, according to data from Port Washington, New York-based NPD.
VHS vs. Betamax
The standoff revives memories of the format war during the 1980s, when the VHS videotape technology created by Victor Co. of Japan beat Sony's Betamax as the dominant standard.
``Content was always going to be the determinant of the winner of the formats as it was in VHS/Betamax,'' Macquarie's Gibson said.
To contact the reporter on this story: Mikako Nakajima in Tokyo at
mikako@bloomberg.net ; Yoshinori Eki in Tokyo at
yeki@bloomberg.net .
Last Updated: January 7, 2008 02:45 EST