HD DVD vs. Blu-ray: How Toshiba Lost $986 Million on the Wrong Disc

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HD DVD reached stores first, cost less to manufacture, had Microsoft behind it, and carried no region codes. It still ended with Toshiba abandoning the format and absorbing a loss of $986 million. This episode goes back to the problem both camps were trying to solve: high-definition televisions fed by 480p DVDs that topped out around eight and a half gigabytes. Shuji Nakamura's practical blue laser diode, with its 405 nanometer wavelength, made denser discs possible, and the DVD Forum promptly split over how to use it.

Sony and Philips pushed a radical new design that became Blu-ray. Toshiba and NEC proposed keeping the DVD's physical structure so that pressing plants could be modified instead of scrapped. Merger talks collapsed in 2005, partly over Java versus Microsoft's iHD for interactive menus. Toshiba launched in spring 2006 and fought on price, but capacity and studio alliances mattered more. A copy protection fiasco, confused shoppers, and one studio's decision brought the war to a sudden end in early 2008.

Blu-ray held 25 gigabytes on a single layer and 50 on a dual layer, against 15 and 30 for HD DVD.
In November 2006, Microsoft sold an HD DVD add-on drive for the Xbox 360 at $199, bundled with Peter Jackson's King Kong.
Hackers scraped an AACS processing key from computer memory, and the takedown notices that followed led users on Digg and Wikipedia to repost the code everywhere, even on T-shirts.
Warner Brothers announced it was going Blu-ray exclusive on January 4th, 2008, and Netflix, Best Buy, and Walmart quickly turned away from HD DVD.
Toshiba surrendered on February 19th, 2008, and Warner later let owners mail in sleeve art plus $4.95 for a Blu-ray replacement.

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