Sony’s Blu-ray technology was crowned winner in the multi-billion pound war between next-generation DVD formats today after Toshiba pulled out of the race.

The Japanese titan announced it will stop making and marketing its HD-DVD players, closing the business by the end of next month.

In a statement, Atsutoshi Nishida, the president of Toshiba, said: “We carefully assigned 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.”

He added that the decision had been “a very difficult decision to make” but insisted that the group had “absolutely no plans” to make or sell Blu-ray players.

The electronics conglomerate, which began sales of HD-DVD players in March 2006, said that it would continue to provide a service for all owners of the products. But its decision will leave millions of consumers who have acquired films on HD-DVD as disappointed backers of a dead format.

An estimated 50,000 HD-DVD players and 275,000 films have been sold in Britain. Blu-ray has sold more than 800,000 films.

Toshiba was insisting as late as yesterday that no decision had been taken on its technology, but the accumlation of a series of high profile backers for Sony’s format left the group with little choice.

The tide turned against Toshiba for good in January when Warner Brothers — one of Hollywood’s largest studios — announced that it was throwing its support exclusively behind Blu-ray.

Shares in Toshiba jumped nearly 6 per cent on Monday ahead of an expected pull-out. They pulled back 0.6 per cent today.

Analysts were relieved that the group had finally called time on its white elephant. It is thought to have invested more than $2 billion in the venture.

Ikuo Matsuhashi at Goldman Sachs said: “The potential losses are small compared to the savings. Nobody wants this format war to drag on.”

Toshiba said that it now expects bigger profits over next year. It said that it was still calculating how much shutting down the HD-DVD business would impact its earnings.

The decision will deal a heavy blow to the largest corporate backers of HD-DVD, including Microsoft. The software giant had been a staunch defender of the Toshiba format.

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