Toshiba has lost its HD-DVD battle with Sony’s rival Blu-ray format.

Toshiba Corporation has announced that it will no longer produce HD DVD players and recorders, conceding defeat to Sony with its Blu-ray format.

The two-year battle over which technology will become the industry standard for the next generation of high-definition DVDs has finally come to its conclusion, as Toshiba has announced today that it will no longer develop, manufacture and market HD DVD players and recorders.

Recent announcements defecting to Sony’s Blu-ray format by retailer Wal-Mart and Warner Brothers, Hollywood’s largest player in the $24 billion (£12bn) home DVD market, have contributed to this decision by Toshiba.

Atsutoshi Nishida, President and CEO, said: “We carefully assessed the long-term impact of continuing the so-called ‘next-generation format war’ and concluded that a swift decision will best help the market develop.”

The Blu-ray win means consumers seeking sharper movies on high-definition DVDs will no longer have to choose between rival incompatible formats and run the risk of being stuck with a 21st century equivalent of Betamax – Sony’s videotape technology that lost out to VHS in the 1980s.

Toshiba will begin to reduce shipments of HD DVD players and recorders to retail channels, aiming for cessation of these businesses by the end of March 2008.

Toshiba also said that it intends to maintain collaborative relations with the companies who joined with Toshiba in working to build up the HD DVD market, including Universal Studios, Paramount Pictures, and DreamWorks Animation, as well as Microsoft, Intel, and HP. Toshiba will study possible collaboration with these companies for future business opportunities, utilising the many assets generated through the development of HD DVD.

Shares in Toshiba Corp jumped nearly 6% on Monday amid speculation of the announcement, while Sony Corp shares rose 1%.