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The Blu-Ray vs HD-DVD technology war
The document discusses the 5 year format war between Blu-ray and HD-DVD for the next generation DVD standard. It provides an overview of the key players in each camp during the war and how they evolved over time. It then analyzes the competitive environment and presents questions regarding whether the outcome was inevitable, what Toshiba could have done differently, the extent of Sony's victory, and whether Sony's unwillingness to compromise early on was justified given its ultimate victory.
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The Blu-Ray vs HD-DVD technology war
- 2. Agenda Case summary Key assets framework CaseQuestion 1 Case Question 2 Case Question 3 Case Question 4 Case Question 5 Summary Q&A
- 3. Case Summary Overviewof the 5 year DVD format war between HD- DVD and Blu-ray. The war was due to the the members of DVD forum failing to unify their standards and reaching a consensus on the next generation technology.
- 4. DVD Forum (2003) Blu-ray Camp HD-DVD Camp Film Studios Disney, Fox, MGM, Sony Universal Pictures Paramount and Time Warner Bros. Video Game Console Sony Microsoft Video Game Developers Electronic Arts, Vivendi N/A Universal Games Retailers Wal-Mart, Target, Best Buy Movie Distributors e.g. Netflix, Blockbuster PC Sony Toshiba * Only covered for market leaders
- 5. DVD Forum (2008) Blu-ray Camp HD-DVD Camp Film Studios Disney, Fox, MGM, Sony Dreamworks, Universal, Pictures, Time Warner Paramount Bros. Video Game Console Sony Microsoft Video Game Developers Electronic Arts, Vivendi N/A Universal Games Retailers Wal-Mart, Target, Best Buy Movie Distributors e.g. Netflix, Blockbuster PC Sony Toshiba (discontinued production) Result => Blu-ray won the battle
- 6. Competitive environment forthe DVD standards war TOSHIBA HD-DVD STANDARDS COMPATIBLE INCOMPATIBLE COMPATIBLE EVOLUTION RIVAL VERSUS EVOLUTIONS SONY REVOLUTION BLU-RAY STANDARDS INCOMPATIBLE REVOLUTION RIVAL VERSUS REVOLUTIONS EVOLUTION Evolution technology: When the new technology is compatible with the old. Revolution technology: When the new technology is incompatible with the old.
- 7. The organization keyassets framework Blu-Ray HD-DVD CONTROL OVER In-house installed Dependence on INSTALLED USER base of content outsourced installed BASE consumers base INTELLECTUAL Patent protection for the Patent protection for the PROPERTY RIGHTS technology technology ABILITY TO INNOVATE History of innovation History of innovation FIRST-MOVER Launched in 2006 Launched in 2006 ADVANTAGE MANUFACTURING Strong manufacturing Strong manufacturing CAPABILITIES base base STRENGTH IN Content and technology Technology with Toshiba, COMPLEMENTS within the same corp content outsourced BRAND NAME AND 8850 Billion ¥ brand 7500 Billion ¥ brand REPUTATION
- 8. Q1: Was itinevitable that only one DVD technology could survive? Why did it not work out for both formats? Could it have been different? The • Consensus could have been influence of reached by the DVD Forum movie members regarding studios on establishing standards for the data- next generation discs carrier industry • A compatibility standard should have been introduced by Toshiba, NEC and Microsoft (HD-DVD) to satisfy Sony’s, Matsushita’s Time needs on the Blu-ray Disc Marketplace Warner’s side dynamics as a decision to industry no longer sell YES! driver movies in both formats
- 9. Q2a: Was the outcomeof the war No predictable from the beginning? HD-DVD had a good chance of winning: • Low manufacturing costs • Cheaper products • Flexibility to easily have HD and conventional version on the same DVD However, Blu-ray had a competitive advantage: • Better product quality • Larger storage capacity • Added security • Higher availability
- 10. Q2b: When didBlu‐ray’s victory become inevitable? Blu-ray’s victory was inevitable when Time Warner announced that they Best Buy, Netflix and Wal-Mart followed would no longer sell movies in both suit by dropping the HD-DVD format. formats and instead focus exclusively on Blu-ray.
- 11. Q3: What couldToshiba have done differently and could it have won? Add the HD-DVD drive to the console not just as an accessory. Do bundles: Make a deal with hardware and Blockbuster Inc. software instead Sony More package promotions: • Retail stores • Bank
- 12. Q4: To whatextent was Sony a winner? SONY was the hands down winner in this war • Leveraging Blu-Ray technology through game console business • Complementary hardware • Multi media content producers • Gain traction from competitors market share • Emerged as a virtual monopoly platform
- 13. Q5: Did Sony’sultimate victory justify its unwillingness to reach a compromise with Toshiba during the first half of 2005? Yes Blu-Ray HD-DVD It had a CONTROL OVER In-house installed base of Dependence on outsourced Leading INSTALLED USER BASE content consumers installed base competitive and position in the comparative INTELLECTUAL PROPERTY Patent protection for the Patent protection for the framework RIGHTS technology technology advantage evaluation versus Toshiba. ABILITY TO INNOVATE History of innovation History of innovation FIRST-MOVER Launched in 2006 Launched in 2006 ADVANTAGE MANUFACTURING Strong manufacturing base Strong manufacturing base CAPABILITIES STRENGTH IN Content and technology within the Technology with Toshiba, content COMPLEMENTS same corp outsourced BRAND NAME AND 8850 Billion ¥ brand 7500 Billion ¥ brand REPUTATION
- 14. Thank you foryour attention. Team 1 Sheikha + Jacek + Pablo + Ashish
- 15. The underlying assets, competitive advantages score card SONY 2- TOSHIBA 0 COMMERCIAL CINEMA SEGMENT- Between INHOUSE CONTENT DEVELOPMENT, 2003-2008, SONY PICTURES and COLUMBIA DEPLOYMENT AND DELIVERY-SONY PICTURES Combine, by themselves produced PICTURES and COLUMBIA PICTURES combine and released a string of block buster movie hits created and distributed content in house that ensured footfalls and introduction to their globally. They developed a strong fan following, technology format. leveraging on the successes of these releases. INHOUSE COMPLEMENTARY PLATFORMS- Note-This was over and above the list of movies SONY electronics produced BLU-RAY players released by production houses like Disney and internally and supported both the entertainment FOX Studios. segment as well as the GAME CONSOLE segment. GAME CONSOLE SEGMENT- By 2008, SONY SONY PICTURES and SONY ELETRONICS were PSP had sold 50 million units worldwide, and both sister companies of the SONY was leading MICROSOFT X-BOX, which was Conglomerate, and could therefore exercise estimated to have sold 26 million units numerous flexible strategic options like transfer worldwide. pricing, cross subsidization of costs, bundled offers etc. TOSHIBA lacked in having access to its own TOSHIBA lacked the flexibility and installed user base and was dependent on complementarities of SONY and was its partners to deliver the installed base to therefore restricted in its strategic options to them to roll out their business plan. out flank SONY in the standards war.