 |   There is no way of winning the competition  Atsutoshi Nishida Toshiba president  |
Following a review of its business, Toshiba said it would stop production of HD DVD players and recorders.
The HD DVD format has suffered as major US film studios backed the Blu-ray format, which is being developed by electronics firm Sony and partners.
Analysts said the move would allow Toshiba to focus on other products.
"It was an agonising decision for me, but I thought if we kept running this business it would have grave ramifications for the management of our company," Toshiba president Atsutoshi Nishida said.
"We made a quick decision, judging that there is no way of winning the competition," he said.
Tipping point
Toshiba said the tipping point came last month when Warner Bros' followed a number of other film studios in deciding to release its movies only in the Blu-ray format.
"It shows what a highly competitive market it is. When it comes to video, it is the person with the most content that wins," Gartner analyst Paul O'Donovan said.
Warner Bros' decision means an estimated three quarters of new film releases will be available on Blu-ray discs. Other major studios backing Blu-ray include 20th Century Fox, Walt Disney and MGM.
Last week, Wal-Mart, the world's largest retailer, announced it would sell high-definition discs only in the Blu-ray format at its 4,000 US stores.
In the UK, DSGI, which owns the Currys chain, said it would stop selling HD DVD players after Toshiba's announcement.
Video rental firms Blockbusters and Netflix will also offer customers only Blu-ray.
Universal, Paramount and DreamWorks studios signed up to produce movies in HD DVD, but Toshiba's withdrawal is expected to significantly reduce the number of films available in the format.
Industry boost
The end of the battle is expected to give the industry a boost, as it removes uncertainty for consumers over which format to buy.
"The industry can now focus on getting the right product to the consumer, at the right price and in the volumes required," Paul O'Donovan said.
Toshiba will continue to supply retailers with HD DVD machines until the end of March this year.
After that, Toshiba will provide technical support to the estimated one million people worldwide who own HD DVD devices.
Microsoft offers an HD DVD drive with the Xbox 360 games console. The company told the BBC it did not believe the apparent end of the format would have an impact on Xbox sales.
"It is games that sell the consoles and the Xbox has the largest next-gen games library," a Microsoft spokesperson said.
Toshiba also makes HD DVD drives for PCs and laptop computers.
The HD DVD versus Blu-ray battle has been likened to the VHS versus Betamax war of the 1980s.
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