Toshiba has officially conceded defeat in the high-definition format war.

The company said in a statement Tuesday that its decision to no longer develop, manufacture and market HD-DVD players and recorders was “made following recent major changes in the market”, referring to the defection of most of the major film studios and a number of retailers to Sony-backed Blu-ray.

"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," said Atsutoshi Nishida, president and CEO of Toshiba Corporation.

"While we are disappointed for the company and more importantly, for the consumer, the real mass market opportunity for high definition content remains untapped and Toshiba is both able and determined to use our talent, technology and intellectual property to make digital convergence a reality."

Toshiba said it will continue to focus on a number of high definition technologies, including “NAND flash memory, small form factor hard disk drives, next generation CPUs, visual processing, and wireless and encryption technologies”.

The company is preparing to reduce shipments of HD-DVD players and recorders to retail channels before halting the practice entirely by the end of March 2008.

“Toshiba will continue, however, to provide full product support and after-sales service for all owners of Toshiba HD DVD products,” read the company statement.

Microsoft said yesterday that the death of the HD-DVD movie format wouldn't affect an Xbox 360 strategy focused on games. It also said it would make a statement regarding the future of its Xbox 360 HD-DVD player in due course. Such a statement may or may not shed some light on rumors that it already has an Xbox 360 Blu-ray player in the works.