Closing Caseblu Ray Versus Hd Dvd And Streaming Standards Battles In ✓ Solved

Closing Case Blu-ray versus HD-DVD and Streaming: Standards Battles in Video In 2003, Sony officially launched its Blu-ray disc, an optical disc data-storage format that could offer high-definition video, with hopes of replacing the DVD format. Sony’s technology had the backing of a consortium that included Philips, Panasonic, Pioneer, Sharp, Samsung, Hitachi, and others. Toshiba, on the other hand, was not eager to let Sony dominate the market with its Blu-ray technology; Sony and Philips had controlled the original standard for compact discs (CDs), and every producer of CDs, CD players, and CD recorders had been required to pay licensing fees to Sony and Philips–an extremely lucrative arrangement for the partners.

Toshiba thus formed a consortium, the DVD Forum, which developed a competing, high-definition DVD standard, HD-DVD, making it the “official†successor to the DVD format. Both new formats were intended to deliver a theaterlike experience at home, with brilliantly clear video and surround-sound audio, on high-end LCD and plasma televisions. The formats, however, would be incompatible. Consumers, retailers, and movie producers all groaned at the prospect of a format war similar to the battle that had taken place between Sony’s Betamax and JVC’s VHS video standard three decades earlier. That war had left many bloodied—consumers who bought Betamax players, for example, found that very few movies were ultimately made available in the format, and retailers got stuck with unwanted inventory in Betamax players and movies.

The threat of another format war caused many retailers and consumers to delay their purchases of the next-generation players while they waited to see if the market would pick a winner. Fearing a lengthy, costly battle, consumer electronics producers began working on players that would be compatible with both standards, even though that would significantly increase their cost. Initially, the HD-DVD standard had a head start. Blu-ray players were considered to be too expensive and buggy, and there were few movie titles available in the standard. Toshiba, on the other hand, already had the cooperation of several major Hollywood studios for its format, including Time Warner’s Warner Brothers, Viacom’s Paramount Pictures and Dreamworks Animation, and NBC Universal’s Universal Pictures.

Sony had only its own Sony Pictures Entertainment, Disney, News Corporation’s 20th Century Fox, and Lions Gate Entertainment. Both companies also used videogame consoles to promote their standards. Sony incorporated the Blu-ray format into its PlayStation 3, dramatically raising the cost of the devices. Though it sold the consoles at a very low price relative to cost, the consoles were still significantly more expensive than traditional videogame consoles, causing PlayStation 3 to sell only about half as many total units as PlayStation 2 had sold (85.23 million versus 157.68 million, respectively). Sony was willing, however, to concede some ground in the PlayStation battle to win the Blu-ray war.

Toshiba’s HD-DVD was offered as an optional, add-on drive for Microsoft’s Xbox 360. However, on the eve of the Consumer Electronics Show in Las Vegas in early January 2008, Warner Brothers announced that it would no longer support the HD-DVD standard. This set off a chain reaction among content providers and retailers. By late February, New Line Cinema, Universal Studios, and Paramount announced that they would be releasing movies on the Blu-ray format, and Best Buy, Wal-Mart, Circuit City, Future Shop, Blockbuster, and Netflix all announced that they would exclusively stock Blu-ray DVDs. The blow was unexpected—and devastating—for Toshiba.

On February 19, 2008, Toshiba’s CEO, Atsutoshi Nishida, conceded defeat by publicly announcing that Toshiba would no longer produce HD-DVD players, recorders, or components. By late 2009, Toshiba had released its own Blu-ray disc player. Sony’s Blu-ray victory, however, was not the landslide that it expected. On September 12, 2008, a consortium of tech heavyweights (including Intel and Hewlett-Packard) announced that they would collaborate with Hollywood to create standards that would make downloading movies fast and easy. If consumers were able to download high-quality movies off the Internet, it would become increasingly difficult to persuade them to spend 0 or more on a Blu-ray player.

Carmi Levi, senior vice president at consulting firm AR Communications, predicted that “Blu-ray is probably going to be the last physical [product] where you walk into a store, get a movie in a box, and bring it home.†By 2012, about one-third of U.S. households had a device that could play a Blu-ray movie (including PlayStation 3); at the same point in the DVD format’s life, over half of U.S. households had a device for playing DVDs. Video streaming revenues had reached .7 billion in the United States by 2014 and were expected to reach billion by 2018. Physical DVD and Blu-ray sales, on the other hand, were expected to drop from .2 billion in 2013 to .7 billion by 2018. Though the availability of Blu-ray format streamed content was increasing, many people preferred to stream content in standard (versus high definition) format because it was faster, reducing the buffering time necessary for watching content.

In fact, one study found that nearly one-quarter of U.S. households did not have adequate bandwidth to stream high-definition content, and another study found that even in households that could stream high-definition content, many viewers still chose standard definition viewing. On May 1, 2014, Sony issued a warning to investors that it expected to take a hit on earnings because Blu-ray sales were contracting faster than it had expected. Sources: Anonymous, “Battle of the Blue Lasers,†The Economist , December 2, 2004, p. 16; B. Schlender, “The Trouble with Sony,†Fortune , February 22, 2007, p.

46; C. Edwards, “R.I.P., HD DVD,†BusinessWeek Online , February 20, 2008; K. Hall, “DVD Format Wars: Toshiba Surrenders,†BusinessWeek Online , February 20, 2008; C. Edwards, “Blu-ray: Playing for a Limited Engagement?,†BusinessWeek Online , September 18, 2008; M. Snider, “Blu-ray Caught in Shift to Streaming,†USA Today , August 23, 2012, ; Yahoo Finance; R.

McCormick, “Video Streaming Services Could Make More Money than the U.S. Box Office by 2017,†The Verge , June 4, 2014, ; M. Willens, “Home Entertainment 2014: US DVD Sales and Rentals Crater, DVD Subscriptions Soar,†International Business Times , March 10, 2015; vgchartz.com , March 10, 2015; J. Rietveld and J. Lampel, “Nintendo: Fighting the Video Game Console Wars,†in The Strategy Process (H.

Mintzberg, Ed.) (5th ed.). FT Press, 2014. Mobile phone penetration around the world, 2005–2014. United Nations Telecommunications, ICT Report 2014. Case Discussion Questions 1.

What were Blu-Ray’s advantages in the competition with HD-DVD? Could Toshiba have done anything differently to ensure the HD-DVD standard’s success? 2. Why do you think Warner Brothers’ announcement set off a chain reaction? 3. Could Sony have anticipated that streaming would dampen the revenues of Blu-Ray?

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Closing Case Analysis: Blu-Ray Versus HD-DVD and Streaming Standards Battles

The competition between Blu-Ray and HD-DVD theaters a classic technology format battle, highlighting the intricacies of market dynamics, consumer behavior, and technological advancements. As noted in the case study, Sony’s Blu-Ray technology and Toshiba’s HD-DVD both aimed to deliver a superior experience in home entertainment but faced challenges that ultimately shaped their trajectories.

Advantages of Blu-Ray Over HD-DVD

1. Higher Data Capacity: One of the primary advantages that Blu-Ray held over HD-DVD was its greater storage capacity. A single-layer Blu-Ray disc could hold 25 GB of data, compared to 15 GB for HD-DVD (Edwards, 2008). This capability allowed for enhanced video quality and additional features like extended content without the need for multiple discs.
2. Strong Industry Support: Blu-Ray benefited from substantial backing from major corporations. In contrast to Toshiba’s list of supporters, which was notable but ultimately insufficient, Sony's consortium included heavyweights such as Panasonic and Philips, which gave Blu-Ray a more credible platform and broader distribution (Schlender, 2007).
3. Gaming Console Integration: Sony incorporated Blu-Ray into the PlayStation 3, significantly contributing to its adoption. By making the technology an integral part of a popular gaming console, Sony induced a unique synergy where gaming and high-definition viewing became intertwined (Rietveld & Lampel, 2014). In contrast, Toshiba's HD-DVD was an add-on for the Xbox 360, which did not integrate the format to the same level.
4. Better Quality Content: At the time of emergence, Blu-Ray had more high-quality titles available due to backing from film studios like Sony Pictures and Disney (Edwards, 2008). As the availability of titles drives sales, this acted as a significant attractor for consumers.
5. Marketing and Public Perception: The branding and marketing efforts for Blu-Ray were more effective, resonating with consumers as the 'next big thing' in home entertainment. The engagement in advertising campaigns helped create a positive public perception, which was crucial during the format war (McCormick, 2014).

Strategic Missteps by Toshiba

Toshiba could have adopted several strategies to potentially secure the success of HD-DVD:
1. Increased Collaboration: Toshiba could have pursued a broader coalition similar to Blu-Ray's by bringing more major studios on board. By positioning HD-DVD not just as a data storage format but as a collaborative ecosystem, it could have balanced the content offering with Blu-Ray.
2. Aggressive Marketing: Another area of strategy was the marketing and perception-building around HD-DVD. Toshiba ought to have invested in marketing efforts that highlighted unique benefits and features of HD-DVD that could stand out against Blu-Ray.
3. Competitive Pricing: HD-DVD players were generally cheaper in the market. Toshiba might have capitalized on this advantage by creating promotional campaigns that explicitly highlighted cost efficiency for consumers, which could appeal to budget-conscious buyers (Hall, 2008).
4. Faster Adoption Rates: Engaging retailers throughout the combat and negotiating more favorable conditions for stores to stock HD-DVD could have ensured its prevalence in consumer markets over time.

Impact of Warner Brothers’ Announcement

The announcement by Warner Brothers to abandon HD-DVD for Blu-Ray was significant because it triggered a domino effect. Warner was one of the most influential studios, and its decision sent a clear signal to other content providers about the shifting industry dynamics. This endorsement effectively communicated to retailers and consumers that HD-DVD was on its way out.
1. Market Momentum: The film industry operates under strong collaborative and interdependent dynamics; one studio's commitment often leads to more studios joining (Snider, 2012). Warner's announcement made Blu-Ray the clear winner in the eyes of both industry metrics and consumers, making it nearly impossible for HD-DVD to compete.
2. Retail Response: Major retailers like Best Buy and Walmart are heavily influenced by the available content. Once Warner Brothers dropped HD-DVD, retailers shifted their focus predominantly toward stocking Blu-Ray discs, further propelling Blu-Ray’s prominence in the market (McCormick, 2014).
3. Consumer Confidence: The consumer perception changed dramatically with Warner’s announcement. The notion that Blu-Ray had "won" the format war helped reinforce purchasing behaviors as customers wanted to make decisions aligned with a perceived future-proof format (Willens, 2015).

Preventative Strategies for Streaming Impact

Given the proliferation of streaming technology and platforms like Netflix, Hulu, and later Disney+, the traditional model of physical media was bound to shrink. While it is debatable whether Sony could entirely foretell this transition, there are several strategies they could have adopted:
1. Embrace Streaming Early: Sony could have explored creating a streaming platform early on, leveraging its extensive library of titles available on Blu-Ray and integrating this service with PlayStation Network users. By banking on the existing infrastructure and consumer base, they could have blunted the impact of streaming (McCormick, 2014).
2. Hybrid Models: Introducing a hybrid model where buyers of Blu-Ray discs received a code for streaming versions of the same films could have maintained consumer interest in physical formats while encouraging digital engagement (Willens, 2015).
3. Investment in Content Delivery Networks: By investing in robust content delivery networks, Sony could ensure that streaming Blu-Ray titles offered a superior experience comparable to physical formats, thus reducing the latency and buffering often cited by users (Edwards, 2008).

Conclusion

The battle between Blu-Ray and HD-DVD is emblematic of the struggles faced within the technology landscape, particularly when competing formats vie for dominance. Blu-Ray's strategic advantages, coupled with HD-DVD's weaknesses, shaped consumer choices significantly. Moreover, the subsequent rise in streaming services reveals a progressive shift in consumer preferences that transcends physical media. Observing these dynamics can provide valuable lessons in technology, marketing, and consumer behavior in the rapidly evolving landscape of digital entertainment.

References

1. Edwards, C. (2008). R.I.P., HD DVD. BusinessWeek Online.
2. Hall, K. (2008). DVD Format Wars: Toshiba Surrenders. BusinessWeek Online.
3. Levi, C. (2008). The Trouble with Sony. Fortune.
4. McCormick, R. (2014). Video Streaming Services Could Make More Money than the U.S. Box Office by 2017. The Verge.
5. Rietveld, J., & Lampel, J. (2014). Nintendo: Fighting the Video Game Console Wars. In The Strategy Process (H. Mintzberg, Ed.) (5th ed.). FT Press.
6. Schlender, B. (2007). The Trouble with Sony. Fortune.
7. Snider, M. (2012). Blu-ray Caught in Shift to Streaming. USA Today.
8. Willens, M. (2015). Home Entertainment 2014: US DVD Sales and Rentals Crater, DVD Subscriptions Soar. International Business Times.
9. Anonymous. (2004). Battle of the Blue Lasers. The Economist.
10. Yahoo Finance. (2019). Mobile phone penetration around the world, 2005–2014. United Nations Telecommunications, ICT Report 2014.