Toshiba swallows a billion dollars on HD DVD

There are spicy meatballs, and there are spicy meatballs -- and now there's a figure that will be tossed around for decades to come, one which will instantly represent the caution companies should take when embarking on another format war: a billion dollars. At least that's what Nikkei is reporting that Toshiba's losses on HD DVD totaled in 2007 alone: a ¥100b, or about $982m USD. It won't drive Toshiba under or anything, but you seriously have to ask yourself, was it really all worth it? [Warning: subscription req'd]

[Via Reuters]

[iH8Engadget @ Mar 12th 2008 10:27PM]

Guess the juice wasn't worth the "squeeze". Next on deck... HVD -VS- PCD (hologram/protein)

[CUBSWILLWIN @ Mar 12th 2008 10:41PM]

what's with your name?
It's a witch I tell ya'! Burn em' ! Burn em'!

[Flashpoint @ Mar 12th 2008 10:42PM]

Someone should call CSI because HDDVD GOT MURDERED !

[sw @ Mar 26th 2008 3:50AM]

Yep, bust out that shpunk torch and those q-tips, there's some bluray epithelials to be found!

[Aguiluz @ Mar 13th 2008 12:05AM]

Shame I can't read the article.

Even BugMeNot won't work on this one.
http://www.bugmenot.com/view/www.nni.nikkei.co.jp

But format wars mostly mean lower prices for us!

[Dr. Evil @ Mar 13th 2008 5:55PM]

I didn't authorize that picture.

engadget, you owe me ... ONE MILLION DOLLARS!

[marcin @ Mar 12th 2008 10:30PM]

of course it was worth it. they wanted the better format to win but it didnt work out. sony paid warner 600 million, the end.

[Luke @ Mar 12th 2008 10:36PM]

Well said

[Rob @ Mar 12th 2008 10:48PM]

How was it worth it exactly? They lost the war, a billion dollars, and wasted the money of everyone who bought an HD-DVD player.

[Andrew @ Mar 12th 2008 10:54PM]

You can't win if you don't try - simple as that.

Toshiba considered the best and worst case scenarios by launching a new format, and they accepted the risks associated with it.

Look at how many times a Sony backed format has failed, yet they still continue to create new ones. It can be very profitable!

[John @ Mar 12th 2008 11:15PM]

Too true. For all the joy that Sony has over Blu-Ray winning this war, think about how many times they've gotten it wrong:

- Betamax
- Minidisc
- UMD
- and whatever else I'm forgetting

Don't get me wrong. As a PS3 owner and Blu-Ray user, I couldn't be happier, but let's not forget the facts (and the history).

[MegaZone @ Mar 13th 2008 12:10AM]

1. Warner has denied a payoff, and I've never seen anyone show evidence of one other than 'rumors' which all seem to come from the same source.

2. It is known, and confirmed by the studios, that Toshiba paid Paramount & DreamWorks Animation to back HD DVD.

But neither one is a huge deal, since this is a multi-*billion* dollar market any payoff would be a drop in the bucket.

And you commit the same error as many others by equating Blu-ray with Sony.

[Willen @ Mar 13th 2008 8:32AM]

@ John

Well, they have had some successes:

3.5" Floppy Disk
Compact Disc
and now Blu-ray (although, until it sees widespread adoption by consumers, I'd hold off on counting it as a true success. Remember, MiniDisc went up against DCC and won , ending up with mild success in Japan.)

[andy @ Mar 13th 2008 9:57AM]

Megazone,


Warner also denied exclusivity rumors 3 weeks before they went exclusive.

Forgive me if I have trouble believing anything WB says.

[NumberXII @ Mar 12th 2008 10:42PM]

I Like How This Post Comes Right After A Post Regarding Blu Ray Players Getting More Expensive...Thanks For Rubbing It In Engadget! BTW It Was Worth It.

[Flashpoint @ Mar 12th 2008 10:48PM]

ARE YOU KIDDING?

The answer is a resounding NO !!!!

[NumberXII @ Mar 12th 2008 11:01PM]

IF I WANTED TO SCREAM I WOULD HAVE WROTE IN ALL CAPS

[Raheem @ Mar 12th 2008 11:05PM]

WRITTEN! YOU WOULD HAVE SCREAMED IT IF YOU HAD *WRITTEN* it all in caps. My throat hurts now.

[Dualboot @ Mar 12th 2008 11:04PM]

Whoever came up with Dr. Evil's picture for this article should win an HD DVD player in his honor...

[chris @ Mar 12th 2008 11:08PM]

ha ha ha ha ha

[kilikili @ Mar 12th 2008 11:30PM]

And now Blu Ray prices go up.

[browne.47 @ Mar 12th 2008 11:48PM]

That is still less money than Microsoft lost on making a faulty console, and we don't hear remarks about that anymore.

[Tony Rayo @ Mar 13th 2008 1:05AM]

Well this is current news because the number was just released. Anytime Microsoft screws up with the 360 it will be in the news again (just like that report, although I think it was a false error, of a machine showing the RROD at GDC).

[KC @ Mar 13th 2008 3:55AM]

On top of that, MS is still slashing xbox prices. I wonder how much profit/loss they will announce this year just on console sales.

[Scott @ Mar 13th 2008 12:18AM]

No biggie. They just need to build a couple more nuclear power plants and that's that paid for.

[Tony Rayo @ Mar 13th 2008 1:02AM]

Just fyi, from Firefox I right clicked the link to open it a new window and saw the full story without having to log in and I was not previously logged in (as I don't have an account, but if I needed one I'd use bugmenot.com anyway).

[mabhatter @ Mar 13th 2008 1:02AM]

Microsoft burned 5 billion on Xbox 1. They never made a profit off that, but they bought a second place victory in the marketplace. Xbox 2 locked out most of the Xbox 1 software and now is making a profit. They streamlined manufacturing, locked up the contracts to pay out less and got developers paying more.... The next one will make Microsoft big bucks.

Toshiba didn't work out so well.. I'm sure Microsoft told them to hang in there.

[James @ Mar 13th 2008 1:21AM]

I guess its true that third time is the charm.

[ian9outof10 @ Mar 13th 2008 5:23AM]

"but you seriously have to ask yourself, was it really all worth it?"

HELL YES it was worth it. Anything that:

a) Attempts to offer a simple, cheap, interactive and high-quality high definition experience
b) Challenges the Sony end-to-end ownership of media, distribution, format etc
c) Costs Sony more money in 'bribes' to Warner Bros

is most certainly worth a measly billion dollars.

[Jimmy @ Mar 13th 2008 11:47AM]

"a) Attempts to offer a simple, cheap, interactive and high-quality high definition experience"

1. It cost them $1 Billion in 2007.
2. They sold a grand total of 1 Million units over a 2 year period.
3. This means they spent nearly $1,000 per unit that they sold!

Do you still believe that HD DVD was that much cheaper than Blu-ray? As many reports last year suggested, Toshiba was losing money on every machine sold.

[ian9outof10 @ Mar 14th 2008 6:59AM]

Do you think Sony is making a profit on the PS3?

The key is, it was cheaper for the consumer, offered nearly the same potential as Blu-ray and had significantly reduced pressing plant costs, especially for converting DVD lines to HD DVD ones.

I'm sure Tosh did lose a lot of cash, but I'm sure they could have turned a profit a bit quicker had Warner gone red not blue.

[Adrian G @ Mar 13th 2008 6:53AM]

They should have used a picture from the beginning of Elizabethtown (or would that have been too obscure?)

[andy @ Mar 13th 2008 10:02AM]

The problem is that much of that money was wasted.

Engineering players was genius. Finished spec, every bell and whistle, one time, done. They all worked properly as well.

Subsidizing players was genius. I bit at 100 bucks, and I still don't care. I'm buying up titles now. It's obviously going to be 2 years before we see blu ray in any kind of price parity to HDDVD.

Marketing was atrocious. 5 mail in movies that take 2 mos. Why? Just put 1 disc of planet earth in each box so that everyone has something to marvel at as soon as they open the player, and make them buy the rest. Take all that wasted money, and give some players away on radio in every market. Everyone hears that, it's cheap, and you'll gain install base. They lost it on marketing and nothing else.

[Ratteler @ Mar 13th 2008 10:45AM]

A billion dollars to screw the consumer by NEVER releasing a HD-DVD-R.

A reasonable priced HD-DVD-R would have totally turned this around.

[Edward @ Mar 13th 2008 11:51AM]

Willen,

Not quite right on the CD. The CD was Philips/Sony. Philips had optical media (video/audio) before the CD (laserdisc) on which research started in 1975 and which went to market in 1978. This was 5 years before Philips/Sony CD market intro in 1983.

[hugoliva @ Mar 13th 2008 12:01PM]

it would be interesting to know how much is Toshiba making back in the cell processor business so we can really know if they are swallowing a billion bucks.

[anthone @ Mar 13th 2008 2:09PM]

this is why a healthy competition is a must so prices are kept low for consumers.

Now you have to wait a few years for this format player to go down.

[Zach @ Mar 13th 2008 2:56PM]

I'd say yes. Yes, it was worth it. A billion dollar loss is not that bad considering they had a serious chance at becoming the next standard for multi-media storage and backup. Ebay lost more than that on Skype in a short period of time and they are doing just fine. They were no where near as large as Toshiba either.

[Iridium @ Mar 13th 2008 3:32PM]

This is what you get when you subsidise your product without ever becoming a market success. Even though Toshiba lost a billion dollars it didn't really make a dent because of the massive royalties thay have recieved from DVD.

Still Toshiba would have liked to spend the money and win but one billion for a chance at perhaps 20 billion over 10 years seemed to be an ok risk. They had the financial backing from other sectors to make up for it.

[asc99c @ Mar 13th 2008 4:47PM]

The Japanese companies have always been far more willing than US and Europeans to spend a huge amount of money researching things without any guarantee of payoff. Just look at Honda's Asimo robot. Half the stuff in there has no obvious relation to anything they might sell.

I think generally they are happy to run these projects out of their profits and see if anything useful comes out of it. When times get tough, they can often just abandon these things (as Sony did with Aibo / QRIO a couple of years back when their profits declined). Other than making obscene profits for rich shareholders, there is not much point earning billions of profits in a given year - might as well spend that on research which will allow you to continue profitability into the future.

[bw @ Mar 14th 2008 2:16AM]

Why did Toshiba throw in the towel so fast, they should have made like sony and include a free hddvd drive with every toshiba branded product, yes dump those suckers on us.

[First Guy @ May 28th 2008 10:35PM]

FIRST!

[chris @ Mar 12th 2008 10:36PM]

no your 3rd you FAIL!!!!

[Drew Scott @ Mar 12th 2008 10:37PM]

For being the "First Guy" ... you're not very good at actually being first.

[CUBSWILLWIN @ Mar 12th 2008 10:40PM]

Go and finish your 2 girls one cup marathon with your friends, idiot.

[Mr. Gremlin @ Mar 12th 2008 11:18PM]

... at least you amuse yourself ...

[phrozunsun @ Mar 12th 2008 11:41PM]

SECOND!

[AlphaTeam @ Mar 13th 2008 12:20PM]

Can we ban this guy?

[iH8Engadget @ Mar 13th 2008 9:04PM]

Dude you're so slow-witted, you couldn't even be the first loser (2nd place).... instead you came in third. I agree with AlphaTeam, we should ban yo ass.