Apart from this, one more factor is the rental price of VS. is lower. It is clearly that VS.
machines were much cheaper and simpler to manufacture (Owen, 2008), which was obviously an attractive element for companies in the market. Furthermore, C.V. followed a more open policy for their partners so that a big VS. “family” was built up.
Additionally, the efforts of supporting firms could not be ignored. They not only gave standard greater credibility to the VS. but also induced a faster pace of product improvement at crucial moment when the arrest was selecting between Bateman and VS. systems.Also, in the late sass, VS. obtained market share depending on a slight technological advantage over Bateman. Last but not least, taste change of customers. They preferred to watch prerecord movies than shows they record themselves.
In this way, VS. naturally became the most used format in stocking movies. Blue-ray and HAD-DVD are novo formats that competed to become the next generation high-definition DVD format to replace standard DVD (Media College, n.
D. ). The main features of both Blue-ray and HAD DVD provided the ability for higher definition video, and greater storage space.The shorter wavelength of the blue laser diode which sparked the two formats enabled more data to be fitted into a special sized disc. Furthermore, both these ;o formats featured the capacity for vastly superior video to standard DVD. In the aspect of data access speed, both of them exceeded standard DVD’s 1 1. 08 megabits per second due to Blue-ray and HAD DVD has respectively reach 53. 95 and 36.
55 per second. Additionally, in storage capacity, compared with standard DVD’s maximum 8. KGB of date, Blue-ray held minimum KGB of date hill HAD DVD has minimum KGB of data.
Also, Max resolutions of both formats were IPPP and their Compressions were MPEG-2, PVC MPEG-4 and PVC-I (Media College, n. D. ). However, there are some differences in construction. The data layer lay 0. 1 mm below the surface in Blue-ray Discs, while HAD DVD and standard DVD’s the data layers are normally 0. Mm below the surface.
Such proximate data layer to the surface Of Blue-ray Discs, which is a scratch-resistant surface, was required to minimize damage, but in HAD DVD’s and standard DVD’s it was not. In addition, each of them contains different advantages.Blue-ray clearly had much greater storage capacity, re- writable discs can record and playback at the same time while HAD DVD was the first format to the market. It was certainly cheaper to produce in short time (Media College, n. D. ). In economics and business, a network externalities is the effect that one user of a good or service has on the value of that product to other people. When network effect is present, the value of a product or service is dependent on the number of others using it.
From this perspective, the nature of high definition video market’s network externalities is that a good becomes more liable as more people use it.When network externalities are strong they can radically affect the way a market behaves, and they cannot be ignored. According to Park (2003), in the case of durable goods, consumers not only consider the current utility but also expected future utilities that are derived from the use of products. For this reason, when customers are certain of which of Blue-ray and HAD DVD, if any, will be the most dominating future format, an increase in sales could be expected (Wise, 2006). In an attempt to avoid a costly format war, the Blue-ray Disc Association andDVD Forum started to negotiate a compromise in early 2005. However, on August 22, 2005, the Blue-ray Disc Association and DVD Forum announced that the negotiations to unify their standards had failed. One of the problems was that Blue-ray’s supporters wanted to use a Java-based platform for interactivity, while the DVD Forum was promoting Microsoft “did” A much larger issue, though, was the physical formats of the discs themselves; the Blue-ray Disc Association ‘s member companies did not want to risk losing billions of dollars in royalties as they had done with standard DVD.
An agreement seemed close, but negotiations proceeded slowly. There are several reasons for Blue-ray’s victory’ in the war. The first reason is Blue-ray has the trump card of 40 percent more capacity which HAD DVD has nothing special to counter with. Next, a built-in Blue-ray drive of Palpitations boosted the actual uptake of Blue-ray. HAD DVD was supported by Oxbow but only with an optional extra drive which never attracted much support.
Furthermore, Buy-ray was clearly more attractive for computer users. Additionally, better studio backing is also a wining factor of Blue-ray.The final straw came when Warner Brose announced in January 2008 that it would be dropping HAD-DVD support.
The timing of this announcement, just before the influential International Consumer Electronics Show in Lass Vegas, was a bitter additional blow and the HAD-DVD forum cancelled a planned press conference at the show. Many commentators saw this as the turning point. Following the Warner Brose announcement, a number of high-profile retailers dropped HAD- DVD support. In one week alone, Wall-Mart and online rental company Nettling both announced plans to support Blue-ray exclusively.
By this stage the demise of HAD-DVD was inevitable. The current Sony strategy is to put all of its eggs in a giant basket called the Palpitation 3. By tying the Blue-Ray inextricably with the Palpitation 3, Sony is betting that sales of the gaming console will drive Blue-Rays popularity.
Conversely, Sony hopes that Blue-Rays high-definition features can help drive Palpitation 3 sales. The following paper will evaluate it by using Porter’s Five Forces Model: New Entrants Based on the standards of the market, both Blue-ray and HAD DVD have already dominated the high definition media market.As a result, the new standard is unlike to enter the market. Furthermore, both standards were easy to access websites allowing anyone to apply for a license. Thus may result in intensive price competition in the markets.
Buyer Bargaining Power Licensees, consumers and the major movie studios are three main buyers groups of Sony. However, major movies studios are the only one who has strongest bargaining power within these three groups. There are only 12 major studios and each of them support would mean millions of copies of movies released on Blue-Ray disc every year.In this way, they are in a great position to bargain with Sony over disc prices. Supplier Bargaining Power The only suppliers of Sony are raw materials, plastic, electronic parts and foundry companies who supply Sony with the parts it need (Hang et al. , n.
D. ). These parts are used in a Sony owned company called Sony-NECK Optical which produces Blue;Ray drives. These are used by Sony itself to produce Blue- Ray players and also sold to other companies wishing to make Blue-Ray players. As a result, supplier bargaining power will be quite low.
Substitute Products HAD DVD is certainly the obvious substitute product of Blue-ray.Although HAD DVD’s price and produce cost are cheaper, it offers less capacity. Apart from this, DVD is another main substitute of Blue-ray. Consumers who don’t own an HDTV and/or don’t feel HAD is worth the extra cost will probably go with normal DVD’s. From preliminary data, it seems that both Blue-Ray and HDTV are selling in comparable quantities making it unclear who will be the winner. As a result, exclusive support for either standard is dwindling. For example, Apple who was an exclusive supporter of Blue-Ray has announced support for HDTV.
Microsoft, who once supported only HDTV, has also announced support for Blue-Ray products.Rivalry On the licensing side of the market, there is little price competition over licenses. Blue-Ray player manufacturers will compete with not only HDTV player manufacturers but other Blue-Ray manufacturers as well. Similarly, Blue- Ray companies will also have to contend with DVD player manufacturers. The result is a very price competitive market where disc players and Blue-Ray media may be sold at cost or near cost. By dropping HAD DVD, Toshiba would likely save $450 million in sales and rumination and in restructuring its HAD DVD business, analysts told Reuters.The company was expected to lose $93 million in unloading excess inventory and scrapping assembly lines.
Those companies that dropped us port for the Toshiba-backed format said it was necessary to eliminate customer confusion over having to choose been two competing and incompatible technologies. Most consumers have shunned high-definition DVD’s and players to avoid being on the losing end of the format war, which was reminiscent of the battle between Bateman and VS. in the early days of videocassette recorders. VS. eventually won over Sony-backed Bateman.