The cookie appears to have disintegrated. Toshiba, the creators of HD-DVD, are pulling out of the high definition format war to leave the road fully open for the competing Blu-ray format, as reported by broadcaster NHK this morning.

Toshiba Corp. has been struggling with its format around the world, with support for Blu-ray spreading considerably in the United States. Blu-ray’s creators Sony, Panasonic and Hitachi made considerable ground in gaining the majority support of the Hollywood movie studios when Warner Bros. decided to exclusively support the format in January.

Further blows came from Wal-Mart announcing that they would abandon the format, adding to the already negative position Toshiba had found themselves in.

The Japanese broadcaster NHK reports that the company will continue to sell HD-DVD for a short time before finally stopping any further development. Meanwhile, Toshiba has said that its HD-DVD factories in Aomori Prefecture, northern Japan, will be closed.

The company is predicted to lose millions of dollars from the failed format, which won’t have the kind of back-up plan that Sony’s Betamax format found in the 1980’s when it was taken up by television broadcasters.

Toshiba has yet to make an official comment, but we will keep you posted on any further developments.

With their collective tail between their legs, Toshiba and the HD-DVD Group must be devastated. It’s easy to see why when the results of Warner’s move is in the form of a delicious red and blue pie.

Warner Bros. have officially painted themselves blu (missing the ‘e’, apparently for copyright reasons) and with them New Line Cinema, or so we’re led to believe. With this news the high-def format war is surely over. This isn’t a preference speaking, this is common sense.

When Paramount decided to back HD-DVD exclusively, apparently due to the cheaper price of HD-DVD players, no seeds of doubt were sown. Most expected Blu-ray would pull through, or at least both formats would continue undeterred. Blu-ray wasn’t going to die the death from this move.

This resolute stance for Blu-ray can be seen in three responses. Speilberg, who is under Paramount studios, stated that he would not support HD-DVD only, and actually preferred Blu-ray. In fact, even Paramount themselves appeared to prefer the larger capacity of Blu-ray discs.

Michael Bay, director of Paramount’s Transformers, was incensed by the decision, and has since announced on his forums that he’s pleased in Warner’s recent move:

Well another studio down. Maybe I was right? Blu-ray is just better. HD will die a slow death. It’s what I predicted a year ago. Now with Warner’s down for the count with Blu Ray. That makes it easier for Wal-Mart to push Blu Ray. And whatever Wal-Mart pushes – wins.

HD better start giving out those $120 million dollars checks to stay alive. Maybe they can give me some so I can give it to my Make-A-Wish charity, just to shut me up. Have faith people Transformers will come out in Blu-ray one day!

Thirdly, what showed Blu-ray’s non-movement in Paramount’s decision was the resolute response from the Blu-ray Group. They didn’t think their format was damaged in the slightest, calling out Paramount as being foolish. Sony even claimed that Paramount would be back soon enough:

Paramount switched allegiance. We understand that it was only for a set period of time. I think that if the progress of the Blu-ray format continues, Paramount will have to come back.

All in all the industry thought that Paramount was making a big mistake – stay neutral or choose the stronger side, don’t back the perceived loser as you’ll only prolong things.

The Blu-ray Group’s response to Paramount’s move contrasts strongly with Toshiba’s (creator of HD-DVDs) comments on Warner’s move:

Toshiba is quite surprised by Warner Bros.’ decision to abandon HD-DVD in favor of Blu-ray, despite the fact that there are various contracts in place between our companies concerning the support of HD-DVD.

We will assess the potential impact of this announcement with the other HD-DVD partner companies and evaluate potential next steps.

Tail between their legs, they have even postponed their event at the upcoming CES:

Based on the timing of the Warner Home Video announcement today, we have decided to postpone our CES 2008 press conference scheduled for Sunday, January 6th at 8:30 p.m. in the Wynn Hotel. We apologize for any inconvenience this may cause.

We are currently discussing the potential impact of this announcement with the other HD DVD partner companies and evaluating next steps.

Instead of standing strong, they appear to have already given up. And it’s easy to see why when you look at a graph showing the estimated size and presence of Hollywood studios and where their fingers lie in the High-Def Pie.

With only Universal and Paramount holding fort, it’s easy to see why Toshiba are wavering. It’s also very apparent that the war would be all but over if Paramount hadn’t gone over to the HD-DVD camp, showing they should have been in contact with other studios instead of accepting money hats.

It’s easy to see why Warner chose to go Blu when looking at this graph. If they had chosen to follow Paramount they would be splitting the cake right down the middle and prolonging a format war that was scaring away consumers from going HD.

Toshiba are most likely even more surprised,when it has been rumoured that they were in talks with both 20th Century Fox and Warner to exclusively support HD-DVD:

According to a trusted source that was close to the negotiations, Warner and Fox were working on a deal to go exclusive to HD-DVD as recent as last week. Our source tells us that Warner was only willing to go to HD-DVD if Fox would go with them. Their thinking was if they just went to HD-DVD by themselves, it would not end the format war.

With 20th Century Fox deciding to support Blu-ray exclusively, Warner’s only rational move was to paint themselves blu also. However, if both of these studios had decided to support HD-DVD only, things would look very different.

Blu-ray may have been able to continue, but it would be a precarious journey that was not likely to have seen them win, because when one sheep strolls on the rest will follow.

Toshiba, thus, after expecting an end to the format war, got just what they expected, but not in their favour.

Whether Fox and Warner were paid off is irrelevant. I suspect Fox received a nice $500 million pay packet, but Warner only had one choice. Go Blu or lose money. Continuing to support both formats would mean consumers would continue to buy neither.

When Blu-ray discs are already outselling HD-DVDs 4:1 in the US, 7:1 in Europe, and 9:1 in Japan, Toshiba only ever had cheaper HD-DVD players to support them. Even though greater sales of HD-DVD stand alone players was touted, they failed to take into account the Playstation 3.

With 8 million of these Blu-ray consoles around the world, it’s no wonder that sales look like they do. That’s a lot of consumers not buying HD-DVDs, even if they aren’t actively going out and buying Blu-ray’s

Whether Warner have put Toshiba out of their misery can be debated, but what’s clear is that Toshiba will be eating a nice chunk of blue humble pie.

With Warner Bros. announcing that they are exclusively supporting Blu-ray, one of their sister studios, New Line Cinema, was apparently not on the cards. However, it has been revealed that they will also follow.

When you think of New Line Cinema, certain films should come to mind; Lord of the Rings, Dumb and Dumber, Nightmare on Elm Street, Se7en, Austin Powers, and most recently The Golden Compass. Even though they are a part of Time Warner, this is not an insignificant studio.

Although Warner Bros. decided to move to Blu-ray, it was not known whether New Line Cinema would follow. Warner’s President, Kevin Tsujihara, stated that their announcement did not stretch to New Line, HBO, or the BBC (which Warner distributes in American). Tsujihara did, however, say that

They’ll be making whatever decision they’re going to make, I assume they’ll let people know very quickly.

Today Variety confirm that New Line Cinema are doing just that, and in reality this was the only rational move.

Warner sister company New Line confirmed it will shift allegiance to Blu-ray only as well.

HBO, another Time Warner company, has not yet revealed it’s direction, but we presume that they will fall in line.

Things aren’t looking great for Toshiba, Universal and Paramount. Expect this High Definition Format war to transpire towards a conclusion very soon.