It seems that HD-DVD has been given a new lease of life behind the bamboo curtain where it has been predicted to kill off Blu-Ray within two years.

Toshiba has licensed its HD DVD to China Blue Hi-definition Disk (CBHD) where it is outselling Blu-Ray in China by 3-1. One of the reasons is that CBHD disks cost a quarter of Blu-ray. China has good reasons to support a home-grown HD format. First, the exorbitant Blu-ray royalties hurts Chinese manufacturers ability to compete on price.

CBHD means that the Chinese government saves billions in royalties; and a much cheaper, locally manufactured, luxury item for the restless masses. There is a bit of a risk that the Chinese industry might be able to export this technology and CBHD technology over seas too.

While the studios might have a crack at region encoding, English-language CBHDs will be popular. Shanghai vendors will happily sell CBHD players and disks on Ebay. After all it is flogging HD content at DVD prices. Toshiba gets close to collecting cash on the billion-dollar HD DVD investment, they’ll get incremental revenue and cash.

Ironically if Tosh had offered HD-DVD technology at that price in the first place it would have replaced DVDs and given Blu-Ray a good kicking.