But the increasingly difficult question for Toshiba is what consumers will play on those HD-DVD units if they buy them. Just two weeks ago, Warner Bros. Studios announced that it was dropping the HD-DVD format entirely and would produce movies in the Blu-ray format alone. The move leaves just three companies -- DreamWorks, Paramount and Universal -- still releasing Hollywood titles on HD DVD.

Doom and Gloom from Gartner

For Gartner analyst Hiroyuki Shimizu, the move by Warner may be the final bell in the High Definition DVD format war. Writing in Gartner's Semiconductor DQ Monday Report, Shimizu said, "Gartner believes that Toshiba's price-cutting may prolong HD DVD's life a little, but the limited lineup of film titles will inflict fatal damage on the format. Gartner expects that, by the end of 2008, Blu-ray will be the winning format in the consumer market, and the war will be over."

Shimizu also noted that the sales of HD-DVD players fell sharply in the week following Warner's decision; consumers chose Blu-ray players over HD-DVD units by 9-1. Although analysts cautioned that one week does not a format war make, most took the strong shift in consumer preference as another indication that Blu-ray is headed for victory.

Toshiba, not surprisingly, disagrees. The company believes the drop in sales was caused by the expiration of Christmas sales on HD-DVD units and promotional offers that paired Blu-ray units with the purchase of some HD televisions.

In a bid to recover consumer sales, Toshiba has announced new prices for its low-end players on its Web site. The HD-3 and HD-A3 are now available for $149.99 (a 50 percent price reduction for the HD-A3); two higher-end models, the HD-A30 and HD-A35, now retail for $199.90 and $299.90, respectively. The upcoming Super Bowl advertisement will feature the A3, A30 and A35.

Shimizu characterized Toshiba's price cuts as "useless resistance."

Implications for Gamers

One strength for Toshiba and the HD-DVD format is that it has the backing of Microsoft , which uses HD-DVD players as a peripheral for its Xbox 360 game console. Microsoft sold 4.5 million Xbox units in 2007, according to industry analyst NPD Group, nearly twice as many units as Sony's Playstation 3, which comes equipped with a Blu-ray player. Two out of the top three games for 2007 -- Halo (No. 1) and Call of Duty (No. 3) -- are Xbox 360 titles.

However, if the Blu-ray format becomes the clear consumer favorite, it may be difficult for the gaming industry to continue supporting HD DVD without a significant number of movie titles in the that format.