The recent decision by Warner Bros. to drop HD DVD support after March of 2008 and throw its lot in with Blu-ray rather obviously threw the HD DVD camp into disarray. In response to the move, the HD DVD consortium canceled its Sunday night CES presentation, but stated the following in its cancellation notice: "We are currently discussing the potential impact of this announcement with the other HD DVD partner companies and evaluating next steps. We believe the consumer continues to benefit from HD DVD's commitment to quality and affordability—a bar that is critical for the mainstream success of any format."

It's not clear where Toshiba and the other HD DVD backers plan to go from here. Multiple companies have invested a great deal of money in making the HD DVD standard a success—the cost of 'persuading' Paramount to go HD DVD-only is rumored at $150 million or more. Toshiba, in particular, has quite a bit to lose if HD DVD fails, given that it continues to manufacture and sell HD DVD players, and it includes HD DVD drives on some of its high-end laptops.

HD DVD's long-term future isn't looking particularly bright right now, but that doesn't necessarily mean a quick end to the current format war. If the HD DVD group collectively decides against capitulating to Blu-ray in favor of fighting the good fight, the battle between the two standards could still drag on for several more years. This type of maneuvering would almost certainly slow overall consumer uptake of HD players, but it would also give Toshiba time to build its own Blu-ray or combo players. Such a delay could also be useful to Microsoft, as it would give the company time to plan a Blu-ray or combo drive for the Xbox 360.