Sony's redemption: the Blu-ray vs. HD-DVD standards war

• Published in: Prometheus (Saint Lucia, Brisbane, Qld.) Vol. 30; no. 4; pp. 377 - 394
• Main Authors: Cozzarin, Brian Paul, Lee, William, Koo, Bonwoo
• Format: Journal Article
• Language: English
• Published: Routledge 01-12-2012
• Subjects: Competition; Economic dominance; Evidence; Innovation; Marketing; Prices; Software; Sony Corporation; Technological change; Trade marks; VHS vs. Betamax format; Video equipment
• ISSN: 0810-9028; 1470-1030
• DOI: 10.1080/08109028.2012.743289

This paper examines the factors that affect market dominance in a standards competition by comparing the VHS-Beta war in the 1980s with that between Blu-ray and HD-DVD in the 2000s. We first look at the changing home video market in terms of technological development. Then we move on to discuss three main strategies in a standards war: first-mover advantage, indirect network effects and software provision, and strategic alliances of hardware firms. We find that technological innovation is essential. Being a first mover is helpful, but not sufficient, in building a dominant position in the market. Historical evidence shows that Sony created a network of complementary firms for Blu-ray. Consequently, an effective strategy to become a winner in a standards competition appears to be building a network of complementary products and subsequently an installed base.