Marketing Planet

DVD marketing war: Sony’s Blu-Ray against Toshiba’s HD-DVD

A "déjà-vue" in marketing warfare

Remember about 30 years ago when the video cassette war was being fought? Well back then it was the Betamax format from Sony fighting its place against VHS format from JVC. Even if you don’t remember this – it has become a major classic in marketing case studies – you know that today the video-cassettes run on VHS.

The same case is applying today, in the market of the high-definition next generation DVD. The actors:

  • Sony, with the Blu-Ray
  • Toshiba, with the HD-DVD

You see that Sony, still renowned for its market research but in a less favourable position today then yesterday, is back on the stages. Its competitor has changed though from JVC into Toshiba. In today’s situation it is Sony that has most at stake: their profits have declined in the electronic and entertainment industries and they don’t want to loose again.

What went wrong before?

Sony lost the previous match with its Betamax, but what went wrong at that moment? On the market of video cassettes there were different players: Sony (Betamax), Philips (V2000), and JVC (VHS). All trying hard to impose their standard as the official one. Sony wanted to start alliances and proposed JVC, not aware that they were about to launch their own standard. Logically, JVC declined the offer. Philips’s V2000 declined first in the market, thus leaving the floor to Sony and JVC.

Though the Betamax was technically speaking a better product, people were not aware of this aspect and not necessarily seeking this. Sony was late in some crucial alliances and communication. During a moment, both standards lived together. But, Sony finally made a wrong move by having shorter tapes. The VHS tapes were weaker in quality of the tape but enabled a longer recording period. It seems to be this difference that helped JVC win the game.

Today’s situation – the lessons from the past

In today’s situation, both players have technical products that differ but have equal advantages. In the same time, both have signed major strategic alliances:

Technology: As mentioned, both products have a very good technical standard. Sony’s Blu-Ray is a leap forward in technology with high storage, super copyright protection and Java menu software [1]. Toshiba’s HD-DVD is rather an evolution, but this makes the product cheaper in production, whilst providing high quality images.

Alliances: Sony convinced FOX and Disney studios, as well as their own of course. Dell has also promised to use this standard for their PC’s. On the other hand, Toshiba says it has a partnership with Microsoft and Intel. Even Universal is to be said to have joined the HD-DVD clan.

Use: On the same side we see the use of the computer games: Xbox vs PlayStation, where both parties implement their standard. Voices say that Microsoft, in their war for the position of the Xbox, may also make theirs compatible to the Blu-Ray.

Lobbying: In the market for the DVD, no one wants to have to cope with 2 standards – having good memories of the Video cassette war. Currently, both are still in the preparation phase with commercial launching scheduled for spring 2006. Those who want to have good copyrights or those who prefer cheaper production cannot be together. As stated in an article from the magazine Fortune, ed. december 12, 2005, it is important to see what other big players will do such like HP and Apple, as well as what decisions might be taken for compatibility by Universal and Microsoft.

The Outcome?

The DVD market has grown very quickly in 2005, maybe consumers will want to have cheaper DVD’s, in which case the HD-DVD will win. But on the other hand, with the increase in copyright violation, the Blu-Ray will win points too. What will be the verdict? A special DVD-Forum is said to be created as to facilitate the outcome …. but this doesn’t withstand that everyone must first choose its camp.

And what if there is no "quick" outcome? As mentioned on the website www.consortiuminfo.org If that happens, according to Mr. Lieberfarb, the developer of the original DVD format, "everyone is a loser, particularly Hollywood studios, the retailer community and, most importantly, the consumer."

What counts in a marketing war?

  • It is not the technology that wins it in the end, even a product that is less performing in the end can win the battle.
  • Strategic alliances and lobbying are very important to position yourself.
  • Your product needs to be available: if your customer sees it everywhere he will think in the end that it must be the best.
  • Communication on the product must be done: the common public will not always read the technology papers and must be confronted with your products. Word-of-mouth is important. See also to point above.
  • It is not always the bigger player that wins, you can be small and play smart: sell the features that interests the customer.
Footnotes:

[1Fortune, Europe ed. Dec 12, 2005