Sony Case Study PDF

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And the winner is Sony’s Blu-Ray: the high definition DVD format war

GE 5113 - New Product Development & Innovation Strategies

1. What does this case tell us about whether or not it is the best technology and/or being first in the market that determines the winner of these product format battles? The case study talks about few instances in history, which help understand the factors necessary to win the race for supremacy. Although the fist mover has an undeniable advantage, one cannot judge it being he only determinant of the winner of the product Format battles. There are several other factors at play. In the competition between Toshiba’s HD DVD and Sony’s Blu-ray, Blu-ray won although both had similar dimensions and standards. In February 2008 the format war came to an end. Similarly, Sony’s technically superior Betamax video format lost to JVC’s VHS. Another interesting instance would be when Sony lost the Video Cassette Recorder format war. Sony could leverage the first mover advantage by releasing its home use version Betamax. Ampex Corporation couldn’t commercialize their product first due to its expensive price tag. Betamax although a superior product and the first mover in the market, failed to win. As the history would have it, marketing, licensing, and strategic alliances also play a vital role in the market adaptation.

2. Illustrate some other business sectors where different formats coexist and some where a single format is preferred. The music industry is currently using currently using formats such as AAC, AIFF, Apple Lossless, MP3, WAV etc. These formats might be preferred differently based on the device of play. On the other hand, Google’s webM royalty free video format and H.264 are current industry standards which coexist. Another instance might be the use of lightning and USB-C connectors are two different data transfer technologies, which are currently being preferred iOS and Android users respectively.

3. Use the CIM (Figure 1.9) to illustrate the innovation process in this case. The Sony’s Blu-Ray case can be explained using the following CIM innovation Model. 1. Sony brought new products to the market to fill the existing market gaps. Due to Market Transitions Sony had to continuously innovate new products. Sony had to understand consumer behavioral changes and do its market research. 2. The new Blu-Ray DVD created new customer value, because it provided extra storage space and better quality of content. 3. Sony kept abreast of the new changes in the market and entered strategic alliances with influential partners in the industry and licensing to secure market.

And the winner is Sony’s Blu-Ray: the high definition DVD format war

4. Why was the PlayStation the first Blu-ray player and, subsequently, when Blu-ray players were launched, why did the PlayStation remain cheaper? Consider possible reasons for this. Sony was the primary developer of the Blu-ray format. It gave Sony the advantage to make PlayStation the first Blu-Ray player in the market which featured the ability to play Blu-ray disks. It also helped Sony retain a higher market share. In comparison to the PlayStation, the Blue-ray players in market lacked several features, particularly the ability to play games, increasing its sales with 10 million Blu ray units sold. The PlayStation had to stay cheaper when as compared to other contemporary Blu-Ray players because Sony wanted to build their market share. They wanted to be the preferred brand with the gamers. Potential entry strategy to the gaming industry. Arguably they could have also benefitted from the pricing strategy of Scaling up.

5. What additional factors helped Blu-ray win the battle? What role did licensing and networks play in the relative success of each format?

And the winner is Sony’s Blu-Ray: the high definition DVD format war 1. Sony acquired several film studios such as 20th Century Fox, Buena Vista Home Entertainment, Electronics Arts, and MGM studios amongst others before and after the launch of Blu-ray. Sony had way more has more acquisitions and alliances as compared to HD DVD 2. Sony allegedly paid some studios large sums of money to stick with its Blu-Ray format. 3. An extensive formal and informal network by Sony helped it to win the battle including listing of associate members of each board. 4. Partnerships with Adult Entertainment industry helped Sony propel it sales via Home Entertainment and Rental shops. 5. Sony’s licensing and strategic networking helped Blu-Ray to develop a market presence for its product and helped Blu-ray win the battle

6. What related industries contributed to the format war and how did they influence its outcome? 1. Electronics industry, production houses, Retail shops, (Walmart) Groceries chain, standards making bodies, pornography industry etc. are some of the related industries that contributed to the format war. 2. Market players such as Sony, Phillips and JVC depended on the superiority of their technologies over the other for their survival. Different formats coexisted in the market because of lack of a defined standard. 3. Sony’s insufficient licensing helped increase JVC’s market share. JVC was in licensing agreement with big consumer electronics companies like Zenith and RCA that had a significant market presence in the United States at the time. VHS machines were ubiquitous after this. 4. The adult entertainment industry’s decision to use VHS heavily influenced the outcome coupled with greater availability of VHS machines and increased availability of content. This had a strong impact on the format war due to its enormous market size. 7. With the increasing popularity and use of downloading films, what influence will the DVD format winner play in this related battle? 1. With the rise of digital streaming services, DVD format winners will once again compete with the increasing popularity of these new technologies. 2. DVD Format have set an expectation about the standard of media quality. Downloaded films have limitation on the quality, in that they depend on the speed of their internet providers. Today’s customer is already used to watching high definition Blu-ray content. 3. Blu-ray already had strategic alliances with the production companies. Streaming platforms such as Hulu, Amazon, Netflix are currently working with their content creation partners

8. What are the implications for innovation strategy, R&D expenditure and marketing for firms engaged in or likely to be engaged in a format war?

And the winner is Sony’s Blu-Ray: the high definition DVD format war Innovation Strategy, R&D expenditure and marketing can have the following implications for firms that decide to participate in a format war. 1. R&D Expenditures: The role of R&D expenditures is to support the development of the new product. Having said that, increasing expenditures does not necessarily lead to winning the competition, because there are other factors that must also be considered. 2. Innovation strategy: Innovation strategy dictates the direction a firm chose to follow after market research. It includes which projects to choose and which to scrape. These strategies will eventually make a firm successful or a failure. 3. Marketing: As seen in this case study, alliances and marketing strategies can make a product succeed or lose. The most important factor for Blu-ray’s success was its alliances with the production houses and partnership with Walmart. 9. List the key factors that seem to determine the eventual winner in industry format wars. Divide these into primary and secondary factors. 1. Primary Factors: Business Alliances with Bigger Industry players, Licensing Agreements, List of networks and Channel Partners, Marketing. 2. Secondary Factor: Technological adaptability, R&D expenditure....