Despite the disappointing news this morning for over 1 million HD DVD player owners and another 300,000 with an HD DVD drive in their computer, they have little to worry about. Here's why.

Believe it or not, HD DVD is not obsolete

Although Blu-ray discs can store more data and support higher encoding rates for video and audio, they use the exact same codecs as HD DVD and side-by-side comparisons of movies have showed no real differences in quality. In addition, the Blu-ray specification is still being finalized, and Profile 2.0 players with Internet connections aren't expected to hit shelves until later this year.

In turn, there's no reason to re-purchase any movies in Blu-ray. In fact, it's likely that many titles currently available in both formats offer better features on HD DVD. For example, 300 in HD DVD lets viewers watch how the movie was made using Picture-in-Picture, while the Blu-ray version does not.

Taking advantage of low prices

HD DVD's primary draw has always been its affordability. The format was able to trump Blu-ray in standalone player sales with hardware hovering around $100 compared to over $300. Those who invested in an HD DVD player can continue to use it to playback the HD DVD movies they own and as a low-cost top-quality up-converting player for standard DVDs.

Prices will also likely fall on existing products and movies, which makes this a prime time to purchase. It may sound strange, but because all recent HD DVD releases have been Combo discs with standard DVD on one side, there is no reason to buy the regular DVD when you can get both for the same price. It might also be a good time to pick up a second HD DVD player for another room when prices drop well below $100.

There's absolutely no risk in buying Combo discs since they function exactly like the standard DVD, especially as prices fall.

Support will continue

Although HD DVD is being discontinued, Toshiba isn't going anywhere. The company says it will continue to provide full product support and after-sales service for all customers. Of course, the concern will be longer term for those who invested in a library of HD DVD movies, but that's where China comes in.

China could fill the HD DVD player void left by Toshiba

With published HD DVD attach rates for movies around 4, over four million HD DVD discs have been purchased by customers. Add that to the free movie deals, and over 10 million HD DVD movies are likely sitting in homes needing players.

China is preparing to launch its own next-generation optical disc standard called CH-DVD to coincide with the start of the 2008 Olympics in Beijing this summer. CH-DVD is very similar to HD DVD but was established separately for reasons of piracy and uses a different encryption standard. CH-DVD players will be able to play HD DVD discs.

As the format gets off the ground, Chinese and Taiwanese manufacturers who brought cheap DVD players to the United States could do the same for HD DVD. As long as there is a potential for revenue, products will be made available.

3:00 pm ET Februrary 19, 2008 - Toshiba issued the following statement to BetaNews regarding existing customers.

"Toshiba's products playback both standard and HD DVDs and still offer inherent value and quality. Consumers can still enjoy their current library of DVDs and watch them in near HD quality. Although Toshiba remains firm in the belief that HD DVD is best suited to the wants and needs of consumer, we have to make business decisions that reflect market reality. Regardless, we will continue to provide full product support and after-sales service for all owners of Toshiba HD DVD products and as inquiries from customers will increase, Toshiba is going to reinforce the support of the call center."

The statement continued: "It's also important to remember that approximately 1,000 HD DVD titles are available worldwide, and these titles can be used for the players and recorders. HD DVD player is compatible with the current DVD; moreover, it features up-converting function that enables the picture quality of DVD to near high-definition level that can be used as an up-grade version of current DVD player."