Toshiba's decision to quit the format war on Tuesday allows developments in high definition video to progress, however, analysts say consumers are the ones that bear the brunt of the costs.

Toshiba, which began sales of HD DVD in March 2006 with the HD-A1 player, said it will terminate production of its HD-DVD next month, ending a two-year format battle with Sony's Blu-ray.

Consumers were subjected to the largest test marketing exercise in history and at least a million of them are very unhappy about that today... and left users with this bitter taste said Richard Doherty, principal of analyst firm Envisioneering.

But the real winners now are the studios, said Steve Wilson, ABI Research principal analyst.

Studios struggled with lower sales in the standard DVD format, while also battling over which format to use to release its high definition DVD's, making it hard for studios to drive a new product into the market.

People buy high definition DVD players to watch movies, and without the support of the studios, there was no way HD DVD could survive for long, said Serene Fong, analyst at ABI Research in a note.

A tug of war between studios emerged with Blu-ray winning the support of major Hollywood studios including Warner Bros, Twentieth Century Fox, and Walt Disney. Meanwhile, Toshiba had agreements with studios including NBC Universal's Universal Pictures, Viacom Inc's Paramount Pictures and DreamWorks Animation SKG Inc.

Major retailers such as Wal-Mart, Netflix, Target and Blockbuster also crossed over to earlier this year, raising the alarm for the HD DVD consortium.

Studios will still be faced with challenges, analysts say, including player cost, disc manufacturing cost, high definition disc pricing and player adoption.

Wilson noted that in spite of the challenges ahead for studios, at least the uncertainty over the market direction, is now eliminated.

In addition, analysts say consumers shouldn't expect to see Blu-ray player prices drop to HD DVD levels anytime soon. Blu-ray manufacturers which include Panasonic, Samsung, Pioneer, LG Electronics, Sharp, Dell, HP and Apple Computer, have not shown any hint of driving player adoption through lower prices expect for Sony.

Consumers are the losers in the short term, Wilson said.

Wilson noted that Taiwanese vendors entering the market will help push prices down but it will take another 12-18 months before the Blu-ray format reaches the maturity and value of that offered by HD DVD.

The end of the format battle means customers are not faced with the unnecessary confusion of choosing between two competing and incompatible technologies.

Most consumers have shunned high-definition DVDs and players to avoid being on the losing end of the format war, which was reminiscent of the battle between Betamax and VHS in the early days of videocassette recorder in the 1980's. VHS eventually won over Sony-backed Betamax.

Electronics