Thursday, July 17, 2008
The format war between HD-DVD and Blu-ray for supremacy in the High Definition DVD market has produced a story with a lot of convoluted twists and turns. There have been a considerable number of extremely good strategies waged along with a considerable number of mistakes as well. One great example of this was the introduction of the Play Station 3 by Sony which is also able to function as a Blu-ray player. Sony recognized this opportunity and provided a free movie title on Blu-ray disc along with the first couple hundred thousand units purchased. The idea was that video gaming fans would by the Play Station 3 for its video gaming capabilities (which take advantage of HDTV technology and render incredibly realistic graphics) and then try out the movie that came with those units. The idea was that once the owners of those devices saw the movie, they would go out and buy more movie titles on Blu-ray disc to watch on their Play Station 3's. The sales of Blu-ray titles would increase, and therefore win more confidence from movie studios and other consumers. Once the consumers were won over, the format war would be won.
This strategy largely worked and the success of the strategy is reflected in the fact that Blu-ray discs have recently outsold HD-DVD discs by a margin of two to one, and there are now substantially more Blu-ray players (including Play Station 3's) in American homes than there are HD-DVD players.
The success of the Blu-ray format is even more impressive when you look at all of the bungles and mistakes that Sony has made in bringing the Play Station 3 to market. The first obvious mistake came with the fact that Sony priced its Blu-ray players so that they were almost twice the cost of Toshiba's HD-DVD players. Then, when the Play Station 3's were released, there weren't enough units to go around. This was a real misstep because of the fact that the Play Station 3, while expensive for a video gaming platform, is cheap for a Blu-ray player. This should have made it the obvious choice for anyone wanting a Blu-ray player. After all, why buy a Blu-ray player when you could get a video gaming platform that happens to play Blu-ray discs for substantially less than the Blu-ray player? Another bungle came from failing to make the public aware that new Play Station 3's were available when the supply caught up to the demand. (There's some debate about the veracity of this. The media were reporting that Play Station 3's were sitting on store shelves months ago, and Sony blasted the media for being quick to report the shortage and then slow to report the surplus. Then, only recently, Sony officials stated that the company would be able to catch up with demand for devices over the next few months. Clearly, someone is confused.)
Now though, despite all of these missteps and two campaigns from Toshiba to provide five free HD-DVD titles with the purchase of an HD-DVD player, Sony's Blu-ray format is poised to win the war. The real question is whether or not Sony will be able to heed the advice of analysts and take advantage of its current position to dominate the market.