"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, Toshiba's president and chief executive.

"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."

The battle was ultimately won thanks to the number of PlayStation 3 consoles sold throughout the world – all of them containing a Blu-ray player.

Despite HD DVD being first to market by a considerable way, Blu-ray players number 10 million throughout the world, while HD DVD only has one million fans.

Microsoft’s refusal to build the ability to play HD DVD discs into its Xbox 360 console could therefore be seen as the deciding factor in the war.

To cut the cost of its console, Microsoft offers a separate add-on drive that can play HD DVD.

Toshiba will now be in a position where it has to suffer the cost of winding down a dying format and also have to pay fees to create Blu-ray players.