The HD-A3 isn’t the only player “affected” by the price cuts. The price for the HD-A30 was also halved, from $399.99 to $199.99, while the price on the high-end HD-A35 went from $499.99 to $299.99.

The Toshiba HD-A30 offers an output 1080p resolution (1920 x 1080p), the highest HD signal currently available and includes also  features "CE-Link" (HDMI-CEC), allowing two- way control between the HD DVD player and a TV through an HDMI connection.

The Toshiba HD-A35 includes all the features of HD-A30 and more. It has support for Deep Color via HDMI and offers 5.1 channel analog output and High Bit Rate Audio (up to 7.1 channel) via HDMI. With content encoded in 7.1ch, this advanced surround sound is achieved through the HDMI connection bypassing the player's internal audio processor and sending the signal to a 7.1 capable A/V receiver.

"While price is one of the consideration elements for the early adopter, it is a deal-breaker for the mainstream consumer," said Yoshi Uchiyama, group vice president of digital audio and video at Toshiba America Consumer Products.

Also, Toshiba says it plans to energize its ad campaign to help raise consumer awareness of HD-DVD.

Just before the CES, without any notice, Warner Bros. Entertainment has decided to favor Blu-Ray over HD DVD format.

Starting with May 2008, Warner Bros. Entertainment, one of the biggest media group in US will release its movies only in Blu-Ray format. Before this announcement, Warner Bros was releasing its movies in both formats. The Warner Bros. Entertainment decision is considered a big blow for the HD DVD format, which is losing the support of one of its biggest allies.

Warner Bros justified its option for Blu-Ray format by saying that the format confusion is blocking the adoption of the new DVD formats.

"Today's decision by Warner Bros. to distribute in a single format comes at the right time and is the best decision both for consumers and Time Warner", said Jeff Bewkes, President and Chief Executive Officer of Time Warner, the parent company of Warner Bros. Entertainment.

During the CES, Toshiba remained defiant, saying that it would continue to back its embattled format.

“We remain firm in the belief that HD-DVD is the format best suited to the wants and needs of consumers," said Akio Ozaka, head of Toshiba America Consumer Products, at a news conference. He said Toshiba was surprised by Warner's announcement.

"We are especially surprised that this decision was made in spite of the significant momentum that HD-DVD has gained in the US market and other regions," he said.

But the Blu Ray format enjoys a larger user installed base, thanks to the sales of PS3 gaming machines.

There were also rumors, that Universal Studios and Paramount the only two studios that are backing up the HD DVD format could also choose the Blu Ray way.