Toshiba’s price for losing the HD DVD war: $986 million?

When Toshiba pulled the plug on the HD DVD next-generation video format last month, a lot of people wondered why it was throwing in the towel so soon. The answer now appears evident as the Nikkei is reporting that Toshiba will take a loss of $986 million related to its decision to pull the plug. Toshiba hasn’t commented on the report yet.

The question at hand is how much does it cost to establish a standard format in consumer electronics and how much money should you spend to get it accepted. Toshiba clearly gave it a good try, paying a lot of money to DreamWorks Animation and Paramount to switch last fall. But Sony’s camp scored a series of victories, with Blockbuster, Warner Bros., Netflix and finally Wal-Mart all switching to Blu-ray because of stronger demand.

After Wal-Mart switched, there were still others saying that Toshiba should use its own cash hoard to win back some of the big players. Instead, it caved. Clearly, there was a lot of money at stake here. Apparently, a billion-dollar loss speaks louder than a loss of corporate face.

Microsoft, meanwhile, has been making it clear that it isn’t interesting in launching a Blu-ray player for the Xbox 360. Microsoft was a Toshiba backer and it offered a low-cost HD DVD movie player as an accessory to the Xbox 360. Here is Microsoft statement on rumors that it was in talks with Sony:

“Microsoft is not currently in talks with Sony or the Blu-ray Disc Association regarding integrating Blu-ray in to the Xbox 360 experience. Games are what are driving consumers to purchase game consoles and we remain focused on providing the largest library of blockbuster games available. For our customers who want a premium movie experience we 0ffer the largest library of on-demand HD content available and the ability to play back DVDs in high definition.”