acknowledging the inevitable

Well, I was wrong. Even if this news is denied by Toshiba, the mere fact of it getting leaked will only accelerate the inevitable:

While denying that a decision on the fate of HD DVD has been made, a Toshiba marketing exec left the door wide open. “Given the market developments in the past month, Toshiba will continue to study the market impact and the value proposition for consumers, particularly in light of our recent price reductions on all HD DVD players,” Jodi Sally, VP of marketing for Toshiba America Consumer Products, told The Hollywood Reporter.

At current price points—HD DVD players are available for as little as $119—Toshiba has to be taking a substantial loss on each player sold. If there was a realistic prospect that those loss-leader sales would result in a large installed base for future movie sales and resultant royalties, those losses would be eagerly embraced. That’s an all-but-impossible scenario at this point, however.

It’s time to concede that Blu-ray will win the format war. The economics of selling the players cheap no longer make sense.

Still, that puts me in a quandary. Given that I (and literally everyone else who watches TV) will be in the market for an HDTV soon, do I now have to budget an additional $400 for a blu-ray player? I wonder if buying a HD-DVD player still makes sense – you can pick one up at fire-sale prices and they are outstanding upscalers for your existing old-fashioned DVD library. In fact, I might not bother with a dedicated Blu-ray player ever, since the Playstation 3 is actually more future-proof and feature rich than any standalone. In fact, bundling the BD player with the PS3 in hindsight turns out to have been genius, not just for winning the format war, but also for another more subtle reason:

While HD DVD may have done a better job of future-proofing their players, the immaturity of the Blu-ray spec hasn’t proven to be an insurmountable obstacle. At CES, the Blu-ray Disc Association announced that 3.5 million Blu-ray players had been sold to date. Of those, 3 million were PlayStation 3s, the most future-proof Blu-ray player on the market. Still, this means that roughly 15 percent of the early adopters are going to be frozen out of the latest and greatest Blu-ray features with BD-Live. That’s bad news for current owners of stand-alone players, but with the price of the PlayStation 3 now down to $399.99 and the format wars shaping up nicely in Blu-ray’s favor, the system may actually be less expensive and more powerful than the latest-generation standalone players.

This is quite the odd turn of events: it was assumed when the PS3 launched that the gaming system would be the Trojan horse that brought Blu-ray into the homes of the mass market. Now? The inexpensive and future-proofed Blu-ray functions of the PS3, matched with the high-quality upscaling the system brings to normal DVDs, may be the Trojan horse bringing gaming to home theater enthusiasts.

Game, set, match to Sony. But if there are still HD-DVD players available for sale when I’m ready to go HD, I think that’s a better value proposition for DVD playback.

(UPDATE: Steven beat me to the punch)

UPDATE 2: confirmed, Toshiba is getting out:

TOKYO (Reuters) – Toshiba Corp (6502.T: Quote, Profile, Research) is planning to give up on its HD DVD format for high-definition video, conceding defeat to the competing Blu-Ray technology backed by Sony Corp (6758.T: Quote, Profile, Research), a company source said on Saturday.

Japanese public broadcaster NHK had earlier reported that Toshiba would suffer losses in the tens of billions of yen (hundreds of millions of dollars) as it scrapped production of HD DVD players and recorders and took other steps to exit the business.

The company source told Reuters that Toshiba was in the final stages of planning to exit the HD DVD business and that an official decision would be made soon.

It’s time to keep an eye on the price for the Toshiba HD-A30. It’s currently at $149, about $30 more expensive than the lowest-cost unit (HD-A3), but it’s 1080p instead of 1080i and comes with two HD-DVD movies included. Plus of course there’s the usual get 5 discs free offer. I’m going to wait to see if te price drops further but that’s not a bad deal at all.