2. Agenda
Case summary
Key assets
framework
Case Question 1
Case Question 2
Case Question 3
Case Question 4
Case Question 5
Summary
Q&A

3. Case Summary
 Overview of the 5 year DVD format war between HD-
DVD and Blu-ray.
 The war was due to the the members of DVD forum
failing to unify their standards and reaching a
consensus on the next generation technology.

4. DVD Forum (2003)
Blu-ray Camp HD-DVD Camp
Film Studios Disney, Fox, MGM, Sony Universal
Pictures
Paramount and Time Warner Bros.
Video Game Console Sony Microsoft
Video Game Developers Electronic Arts, Vivendi N/A
Universal Games
Retailers Wal-Mart, Target, Best Buy
Movie Distributors e.g. Netflix, Blockbuster
PC Sony Toshiba
* Only covered for market leaders

5. DVD Forum (2008)
Blu-ray Camp HD-DVD Camp
Film Studios Disney, Fox, MGM, Sony Dreamworks, Universal,
Pictures, Time Warner Paramount
Bros.
Video Game Console Sony Microsoft
Video Game Developers Electronic Arts, Vivendi N/A
Universal Games
Retailers Wal-Mart, Target, Best
Buy
Movie Distributors e.g. Netflix, Blockbuster
PC Sony Toshiba (discontinued
production)
Result => Blu-ray won the battle

6. Competitive environment for the DVD
standards war
TOSHIBA HD-DVD STANDARDS
COMPATIBLE INCOMPATIBLE
COMPATIBLE
EVOLUTION
RIVAL
VERSUS
EVOLUTIONS
SONY REVOLUTION
BLU-RAY
STANDARDS
INCOMPATIBLE
REVOLUTION
RIVAL
VERSUS
REVOLUTIONS
EVOLUTION
Evolution technology: When the new technology is compatible with the old.
Revolution technology: When the new technology is incompatible with the old.

7. The organization key assets framework
Blu-Ray HD-DVD
CONTROL OVER In-house installed Dependence on
INSTALLED USER base of content outsourced installed
BASE consumers base
INTELLECTUAL Patent protection for the Patent protection for the
PROPERTY RIGHTS technology technology
ABILITY TO INNOVATE History of innovation History of innovation
FIRST-MOVER
Launched in 2006 Launched in 2006
ADVANTAGE
MANUFACTURING Strong manufacturing Strong manufacturing
CAPABILITIES base base
STRENGTH IN Content and technology Technology with Toshiba,
COMPLEMENTS within the same corp content outsourced
BRAND NAME AND
8850 Billion ¥ brand 7500 Billion ¥ brand
REPUTATION

8. Q1: Was it inevitable that only one DVD
technology could survive?
Why did it not work out for both formats? Could it have been different?
The • Consensus could have been
influence of reached by the DVD Forum
movie members regarding
studios on establishing standards for
the data- next generation discs
carrier
industry • A compatibility standard
should have been
introduced by Toshiba, NEC
and Microsoft (HD-DVD) to
satisfy Sony’s, Matsushita’s
Time needs on the Blu-ray Disc
Marketplace Warner’s side
dynamics as a decision to
industry no longer sell YES!
driver movies in
both formats

9. Q2a: Was the
outcome of the war No
predictable from the
beginning? HD-DVD had a good chance of
winning:
• Low manufacturing costs
• Cheaper products
• Flexibility to easily have HD and
conventional version on the same DVD
However, Blu-ray had a competitive
advantage:
• Better product quality
• Larger storage capacity
• Added security
• Higher availability

10. Q2b: When did Blu‐ray’s victory become inevitable?
Blu-ray’s victory was inevitable when
Time Warner announced that they
Best Buy, Netflix and Wal-Mart followed
would no longer sell movies in both
suit by dropping the HD-DVD format.
formats and instead focus exclusively on
Blu-ray.

11. Q3: What could Toshiba have done differently
and could it have won?
Add the HD-DVD
drive to the
console not just
as an accessory.
Do bundles: Make a deal with
hardware and Blockbuster Inc.
software instead Sony
More package
promotions:
• Retail stores
• Bank

12. Q4: To what extent was Sony a winner?
SONY was the hands down winner in this war
• Leveraging Blu-Ray technology through game console business
• Complementary hardware
• Multi media content producers
• Gain traction from competitors market share
• Emerged as a virtual monopoly platform

13. Q5: Did Sony’s ultimate victory justify its unwillingness to reach
a compromise with Toshiba during the first half of 2005?
Yes
Blu-Ray HD-DVD
It had a CONTROL OVER In-house installed base of Dependence on outsourced
Leading INSTALLED USER BASE content consumers installed base
competitive and
position in the
comparative INTELLECTUAL PROPERTY Patent protection for the Patent protection for the
framework RIGHTS technology technology
advantage
evaluation
versus Toshiba. ABILITY TO INNOVATE History of innovation History of innovation
FIRST-MOVER
Launched in 2006 Launched in 2006
ADVANTAGE
MANUFACTURING
Strong manufacturing base Strong manufacturing base
CAPABILITIES
STRENGTH IN Content and technology within the Technology with Toshiba, content
COMPLEMENTS same corp outsourced
BRAND NAME AND
8850 Billion ¥ brand 7500 Billion ¥ brand
REPUTATION

14. Thank you for your attention.
Team 1
Sheikha + Jacek + Pablo + Ashish

15. The underlying assets , competitive advantages score card
SONY 2- TOSHIBA 0
COMMERCIAL CINEMA SEGMENT- Between INHOUSE CONTENT DEVELOPMENT,
2003-2008, SONY PICTURES and COLUMBIA DEPLOYMENT AND DELIVERY-SONY
PICTURES Combine, by themselves produced PICTURES and COLUMBIA PICTURES combine
and released a string of block buster movie hits created and distributed content in house that
ensured footfalls and introduction to their
globally. They developed a strong fan following, technology format.
leveraging on the successes of these releases.
INHOUSE COMPLEMENTARY PLATFORMS-
Note-This was over and above the list of movies SONY electronics produced BLU-RAY players
released by production houses like Disney and internally and supported both the entertainment
FOX Studios. segment as well as the GAME CONSOLE
segment.
GAME CONSOLE SEGMENT- By 2008, SONY
SONY PICTURES and SONY ELETRONICS were
PSP had sold 50 million units worldwide, and both sister companies of the SONY
was leading MICROSOFT X-BOX, which was Conglomerate, and could therefore exercise
estimated to have sold 26 million units numerous flexible strategic options like transfer
worldwide. pricing, cross subsidization of costs, bundled
offers etc.
TOSHIBA lacked in having access to its own
TOSHIBA lacked the flexibility and
installed user base and was dependent on complementarities of SONY and was
its partners to deliver the installed base to therefore restricted in its strategic options to
them to roll out their business plan. out flank SONY in the standards war.