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The recent announcement by Warner Bros. (TWX) that they are going to exclusively support Blu-Ray high definition DVDs from Sony Corp. (SNE) has pressured Toshiba Corp. to come out with a new strategy to combat the tipping of the scales in Blu-Ray's favor over their HD DVD product.

Toshiba is doing this because the battle over early adopters is over, and Blu-Ray has ended with a growing advantage in that arena, although they still have strength in them from Paramount Pictures (VIA-B), Dreamworks Animation SKG, Universal Home Video and Microsoft's Xbox 360 (MSFT), which uses only HD DVD.

Even so, the crack is in their armor here, and it would only take a shove to push everyone over to Blu-Ray.

The reason this is becoming more important to resolve in the eyes of media companies is because DVD sales slowed down for the first time this year, and they're counting on high-definition DVDs to keep this highly lucrative market going. A continual drop in DVD sales would be devastating to the industry.

So the battle over the format is going from early adopters to the mainstream consumer, as Toshiba executive Yoshi Uchiyama said in a statement: "While price is one of the consideration elements for the early adopter, it is a deal-breaker for the mainstream consumer."

The tool Toshiba has chosen to use in the next stage of the battle is pricing. They announced on Monday that the price of their players will be cut by 40 to 50 percent effective January 13. Prices will start at $149 for their low-end units, and go up to $399 for their high-end players.

With the line being drawn in the sand by media companies, Toshiba must go directly to the consumer now to survive.

Along with the price cuts will be an aggressive marketing push in combination with their media partners.

What they are hoping to do is sell so many units at a low price that the demand by consumers forces the media companies to include their HD DVD players in playing their video content.
 
This is a good move, and really the only move Toshiba could make. The response by mainstream consumers will determine the fate of the HD DVD. In the end, that's all they can hope for. In the hands of the media companies, even with their current partners, the handwriting is on the wall.

The next couple quarters should tell the story. One outside force that could make or break even their pricing strategy is if consumers decide to hold on to their money tighter in the face of economic uncertainty. Even so, it should take 3-6 months before we find out.

If this doesn't work for Toshiba, the HD DVD is probably over.