Toshiba's Latest Round of HD-DVD Woes

In what appears to be a double play on Toshiba this week, Reuters reported that Paramount has officially backed Blu-ray Disc (joining Apple, HP and Dell), while Toshiba found out it must pay nearly a half-beeeellion dollars to Lexmark in an intellectual property lawsuit.

Ouch. That's gotta hurt.

Jumping Ship - Paramount Endorses Blu-ray Disc

Let's examine the first issue... It's no surprise that last week held quite a bit of spin-doctoring from both parties, with Microsoft throwing it's intellectual weight behind the HD-DVD camp in defense of their spec and the apparent "vaporware" of some of Sony's Blu-ray disc storage claims. At the same time Paramount, a Viacom company, said it would release high-definition movies in the Blu-ray format (previously it had stated that it would release titles in the competing HD-DVD format). You can see how this apparent "jump-ship" would cause some concern for the Toshiba-backed camp. I mean, after all Paramount is no small studio and its willingness to embrace the competition is a pretty big hit. The question at this point is whether Paramount's goal is to release titles in both formats or if it is leaning more into the Sony-backed camp.

According to Reuters, in a statement released late Sunday, Paramount threw its weight strongly behind the Blu-ray camp but failed to mention HD-DVD at all. "After more detailed assessment and new data on cost, manufacturability and copy protection solutions, we have now made the decision to move ahead with the Blu-ray format," Thomas Lesinski, President of Paramount Pictures, said in the release.

Toshiba quickly scrambled to state that it "believes" Paramount continues to back HD-DVD, but that belief is based solely on prior comments made by Paramount officials in earlier press releases.

For what it's worth, the Sony Playstation 3 appeared to be one of the motivating factors behind Paramount's decision to board the Blu-ray bus. I guess that having a large initial launch of capable hardware is a compeling motivator for a studio looking to see that its investment in software has a sufficient launching platform.

Here's how the scorecard looks at present:

Blu-ray Disc

• Paramount
• Sony Pictures Entertainment
• The Walt Disney Co.
• Twentieth Century Fox

HD-DVD

• Universal Studios
• NBC Universal
• Warner Brothers

Keep in mind that neither Paramount, Disney, or Fox have ruled out the possibility of also releasing titles on HD-DVD as well.

Go Directly to Bank - Do Not Pass Go

Losing one of your exclusive HD-DVD supporters is bad enough... Getting slammed with a $465 million punitive damages fine is enough to make you want to... well, you get the idea. In March of this year, Toshiba was ordered to pay Lexar $465 million in punitive damages after a jury in California found Toshiba had stolen Lexar trade secrets related to SanDisk flash memory. Toshiba held some hope that an appeal would change that ruling, but last Friday a California judge ruled that the jury's verdict stands and Toshiba must cough up the almost half-billion dollars. Needless to say, shares of Lexar stock jumped almost 10%.

Will this string of disasters spell the end of HD-DVD? Not likely. In fact, as the technology gets close to release the competition will only heat up, as will the spin. Keep your eyes peeled for more flaming rhetoric and technical gymnastics as each format tries to get a leg up while decrying the failings of its opposition.

To quote Highlander: "There can be only one."

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