MASTERS OF BUSINESS ADMINISTRATION

Business Strategy

Course Work on
Blu-ray Vs HD-DVD
Betamax VS VHS
(Business Strategies)

Zahoor Soomro

Submission date: Thursday January 10th 2008.

Word count 4500

Please note, this course work is uploaded for the purpose of references only.
Please provide correct reference if you quote any of the direct wordings or
take ideas.
These Assignment questions are based on the case study ‘Blu-ray and HD
DVD ‘Format Wars’ Redux?’ previously distributed within the seminars. If you
do not have a copy of the case study, please obtain a copy from either Dr
Lumi Vasiu, Dr Greg Eglin or Robin Hunter Cottington.

Answer the following two questions:

Q1. Despite its early advantages the ‘Betamax’ format eventually lost out to the
‘VHS’ format. Identify and analyse the flaws in Sony’s strategy. What steps
might they have taken to achieve a more favourable outcome?

Q2. Compare and Contrast the rival strategies for the launch of ‘Blu-ray’ and
‘HD-DVD’. Which do you think will be successful and for what reasons?
Are there any circumstances in which neither strategy might succeed?

Please note;

 This is an individual assignment and as such should be your own work.

 Each Answer carries equal marks.
 Start each question on a new page
 The minimum length is 1,500 words the Maximum length is 2,000
words per question. Answers going outside these limits will be
penalised.
 Answers must be in typescript using one side of the paper only.
 The font size must be 12 point and the line spacing 1.5.

The marking scheme will look the following

 Structure and Narrative Style

 Quality and quantity of evidence
 Analysis and evaluation of evidence
 Synthesis and conclusions
 Ability to locate the answer in theory

Two copies of each question must be handed into the Business School office
by 6pm on Thursday January 10th 2008. Don’t forget to attach the
appropriate front sheet to your work.
Table of Contents
ABSTRACT ......................................................................................................................................... 1

Q1. Despite its early advantages the ‘Betamax’ format eventually lost out to the ‘VHS’ format.
Identify and analyse the flaws in Sony’s strategy. What steps might they have taken to achieve a
more favourable outcome?............................................................................................................... 2

INTRODUCTION................................................................................................................................. 3

Format War....................................................................................................................................... 3

Rent or Buy? ..................................................................................................................................... 4

Market Share .................................................................................................................................... 5

IDENTIFICATION OF FLAWS IN SONY’S STRATEGY & CRITICAL ANALYSIS ......................................... 6

Controversy ...................................................................................................................................... 8

End of Betamax................................................................................................................................. 8

War in Court ..................................................................................................................................... 8

Competitive factors .......................................................................................................................... 9

Conclusion: ..................................................................................................................................... 10

Q2. Compare and Contrast the rival strategies for the launch of ‘Blu-ray’ and ‘HD-DVD’. Which do
you think will be successful and for what reasons? Are there any circumstances in which neither
strategy might succeed? ................................................................................................................. 11

BLU-RAY.......................................................................................................................................... 12

HD DVD ........................................................................................................................................... 12

The Format war............................................................................................................................... 13

Comparison & Contrast ................................................................................................................... 15

Technological & Marketing Rival Strategies .................................................................................... 15

Today’s foes tomorrow’s friends..................................................................................................... 19

Recommendations .......................................................................................................................... 20

Conclusion ...................................................................................................................................... 22

Appendix ........................................................................................................................................ 23

References ...................................................................................................................................... 27
ABSTRACT

Developing a technological standards require significant strategic depth in the

planning and its implementation.

The policies and strategies always drive from the change. The ongoing process
of change, leads an organisation to the innovation. The changing technological
era with competition and increasing consumer expectations tend organisations
to tilt in the way where the market stream goes, and position itself on the point
where organisation could have competitive edge.

Technological innovation does not always produce business success . (Strategy

for Sustainable Business by Liz Crosbie and Ken Knight published by McGraw-Hill 1995 p.63)
The vital role rests with the development of strategies and its implementations.
It applied in the case of Sony’s Betamax VS JVC’s VHS format.

Sony Corporation is a Japanese multinational conglomerate corporation and

one of the world's largest media conglomerates with revenue of $70.303 billion
(as of 2007) based in Minato, Tokyo.
http://www.sony.net/SonyInfo/CorporateInfo/
Sony is one of the leading manufacturers of electronics, video, communications,
video game consoles and information technology products for the consumer
and professional markets.

Sony has historically been notable for creating its own in-house standards for
new recording and storage technologies instead of adopting those of other
manufacturers and standards bodies

This case study is an attempt to make critical analysis on the Sony’s and its
competitor’s rival strategies and the future predictions for its success.

1
‘‘We shall be as selective as possible in our products and will
welcome technological challenges. We shall focus on technologically
sophisticated products that are highly useful in society.
’’ Sony Corporation (1999) [1]

Q1. Despite its early advantages the ‘Betamax’ format

eventually lost out to the ‘VHS’ format. Identify and
analyse the flaws in Sony’s strategy. What steps might
they have taken to achieve a more favourable outcome?

2
 Business Strategy

INTRODUCTION
The "Betamax" name came from a double meaning: beta being the Japanese
word used to describe the way signals were recorded onto the tape and from
the fact that when the tape ran through the transport it looked like the Greek
letter "Beta" (β). The suffix -max came from "maximum" to suggest
greatness.[2]

Early Advantages

In 1963, Sony introduced the first VTR system targeted to the Business and
airline, educational and medical fields. The system technologically upgraded
to the CV-2000 for home use and then introduced ‘U-Metic’ system, which
was world’s first commercial cassette format. The launch of VTR system
practically had started providing fruits to the Sony especially from business
users to the domestic users.[3]

Sony introduced Betamax on 16 April 1975. Actually, it was derived from U-

metic recording tape, which was launched earlier by Sony in 1969. The first
market place selected Japan and USA. [4] As it was the pioneer in home video
system therefore the Beta max format provided sort of monopoly to the
company, resultant high hypes and expectations from the company.

Format War

The time when Sony entered in the market place, it started to sign up several
large retailers to market its Betamax VCRs. In start it launched, Betamax SL-
6300 VCR in the US market priced at US$1300 as compare to US$1000, the
price of VHS, launched by JVC the potential rival of Sony.[5] In the very
beginning companies like Toshiba, Pioneer Corp, Aiwa, Zenith and Wega
Corporation signed up . As on the other side, JVC refused Sony to back

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Betamax as the home video standard, and released their own VHS system;
they were effectively declaring commercial war.

First of all the key issue was recording time, both for the convenience of
having a whole film on a single tape, and due to the high cost of tape.
Betamax was initially launched with a maximum of one hour (like VCR), so
VHS responded with two hour tapes. Beta fought off this attack with the
"extended play" Beta II; the VHS standard was modified to allow thinner tape
and three hour recording.
After a span of time the first Beta and VHS machines, offered the most
sophisticated timer [6]

Market share exhibited that by the year 1980, JVC's VHS format controlled
70% of the North American market. The large economy of scale allowed VHS
units to be introduced to the European market at a far lower cost than the
more-rare Betamax units. The actual defeat of Sony was proved when in the
year, 1984, around forty companies utilized the VHS format in comparison
with Beta's twelve. [7]

Rent or Buy?

As the Japanese formats arrived in this country, the Thorn-EMI group backed
VHS and flooded their many high-street TV rental shops with low-cost VHS
machines. Sony, meanwhile, were concentrating on quality, and so Beta
became a format to buy while VHS was the format to rent. Then the people
became kind of self-reinforcing, and felt much less confident to make a buying
decision rather they went for renting to minimize risks. By the year 1980, out
of an estimated 100,000 homes with VCRs, 70% were rented.

Another factor was simple availability. The high street shops could not keep
up with demand, and found that Beta machines were harder to get, and
sometimes came with conditions -- for example, they could only get VCRs

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from some suppliers if they also ordered TVs. So for a time there were simply
more VHS decks available.

Then there was the explosion of tape rental. Cine-film rental clubs had been
around for years, but were not particularly popular Accoring to the website
(http://www.totalrewind.org/sidebars/F_court_frame.htm)In, 1980 it was
estimated that there were only 100,000 (16mm) projectors in the UK, and a
film on this gauge cost around £200 to buy [2005: £570]) No-one could have
forseen how the public would take to video rental; by 1981 rental clubs had
appeared; within a few years there were rental shops in every neighbourhood,
and every corner shop had a rack of tapes. There were 25,000 shops selling
or renting tapes in 1982; there had been none in 1980. But the Betamax
suppliers were slow off the mark, and released fewer films on the format.
The VHS machines were also cheaper to repair, since parts cost less. One
survey (in which magazine) found that 59% of V2000 machines had been
returned for repair, compared with around 25% for the other two formats. [8]

Market Share

In early stages when home VCRs was growing to become popular in the UK,
the main issue was one of availability and price. Where as on the other hand
VHS machines were available through small stores in the high street rental
chains such as Radio Rentals and DER, while Betamax seen as the more
upmarket choice for people who wanted quality and were prepared to pay for
it. As it has mentioned earlier that renting business was in trend therefore, the
positive benefit derived from the market which was readily available on the
shops. The other main factor was the consumer’s concern regaring getting
technology obsoloete, which refelected their behaviours. As a resultant VHS
claimed 70% of the market. Which, certainly started chain reaction and every
one went on towards VHS. The picture of then market can be drawn through
the following story, As per the website (www.totalrewind.org) once, thieves

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raided an electronics warehouse in 1983 cleared out all the VHS and Beta
machines, but didn't take a single V2000 deck… [9]

The other entrants in the market took very active place as for instance in
continental Europe there were three choices by 1980, Philips introduced
Video 2000. It had a long development cycle, resultant cancelled in 1985, and
the first casualty of the format war.

There were several crutial factors that affected its output such as longer
home-recording time (up to 10.6 hours on a T-210). From the consumer
perspective, buying a single 8-hour VHS tape for $5 is cheaper than buying
two 4-hour Betamax tapes for $10. Although Betamax initially owned 100% of
the market in 1975, the changing perception and experiences started to tilt
the target market favour to the VHS. In the year 1981, U.S. Betamax's sales
were observed to only 25% of all sales. [10]

In the UK market, Betamax share remained 7.5% by the year 1986 and the
trend went on and on..[11]
(See Exhibit A on page no: [27] for Market share of V2000, Betamax and VHS
from year 1980 to 1986)

IDENTIFICATION OF FLAWS IN SONY’S STRATEGY & CRITICAL ANALYSIS

 Sony, being the first producer to offer their technology, thought it would
establish Betamax as the leading format. This kind of lock-in and path
dependence is exactly what economists point out as the Betamax weak
link (Liebowitz, 1995).

 In 1988 Sony began to market their own VHS machines, and despite
claims that they were still backing Beta, it was clear that the format was
dead.

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 Sony believed that having better quality recordings was the key to success,
whereas it soon became clear that consumer desire was focused more
intently on recording time and compatibility for easy transfer of information
(Besen, 1994). The video recording market was an unknown when VCRs
first came on the market; as such, Sony and JVC were both developing
technologies that were unproven. As a result of the desire to get into the
marketplace faster. As matter of fact both the firms both spent less time
on research and development, and tried to save money by picking a
version of the technology they thought would do best without really
exploring all the options (Cowan, 1991). This is why there was more than
one format on the market and why they continued to reinvent them with
longer playing times and better quality. [12]

 The major concern was the marketing of a product. After a launch of

Betamax the Sony did not pursue the appropriate marketing strategies.

 The version of Betamax, called Betacam, could get only a small niche
market in the industry.[13]

 According to James Lardner's 1987 book, "Fast Forward: Hollywood, the

Japanese, and the Onslaught of the VCR," Sony,in early 1975, offered
JVC, Matsushita and RCA to seek to license their Betamax, as Matsushita
and Sony previously had co-operated in the development and marketing
of the "U" format videocassette, with Sony marketing under the U-Matic
brand. Sony laid their cards on the table and brought along a Betamax
prototype for Matsushita's engineers to evaluate. Sony at the time was
unaware of JVC's work. At a later meeting, Matsushita, with JVC
management in attendance, showed Sony a VHS prototype, and advised
them it was not too late to embrace VHS "for the good of the industry."
Sony management were too close to production (and, one could argue,
too proud and arrogant) to compromise, and felt their generosity had been
taken advantage of. Thus, the stage was set for a battle between Sony
and Matsushita in the arena of home video. [14]

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 Sony had no movie studios on its side. In fact the movie studios sued
Sony to remove the Betamax from the marketplace [15] as against of this
Sony could develop a better communication with the market specially the
movie industry.

Controversy

There are several controversies about porn industry being the reason of
Sony’s failuar. The research reveals that adult entertainment was readily
available. For example, Playboy Industries released their videos in a dual
format, both Betamax and VHS. According to Forbes.com, adult video income
is approximately $1 billion.[16]

End of Betamax

In year 1988, Betamax sales nearly finished and VHS emerged as the winner
of the format war. Over the years, directly or indirectly JVC and the Sony
Company benefited VHS. Therefore innovations such as high speed picture
search, Hi-Fi stereo sound and fast-load tape mechanisms provided positive
pace and surpassed betamax.

When it became clear that Betamax had lost the video format war,
controversy switched from which technology was better to why VHS had
[17]
triumphed so completely.

War in Court

The Walt Disney Corporation, and Universal Studios, decided to take Sony to
court, alleging that taping films and other programs off-air constituted
copyright infringement. This clearly threatened the whole basis of the home

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video revolution, as a ruling in favour of the studios could cause an outright

ban on VCR technology.[18]

After three years, in late 1979, the court ruled that taping for private, non-
commercial use was legal. The studios promptly appealed, and the appeal
court overturned the decision in October 1981. For a while it looked likely that
a huge levy would be forced on the manufacturers, to pay royalties for the
programs being taped by taxing the machines and blank tapes. But Sony took
the case to the Supreme Court, and finally, in 1984, home taping was legal
again. [18]

Competitive factors

 Pricing Strategy: Although there are several opinions regarding the pricing
strategy, however, after a careful consideration that is analysed that Sony
could play around favourably in the target market if the price of Betamax
was settled less than the price of VHS.
 Distribution: The Distribution channels were not effective, therefore it
caused to the shortage of the Betamax in the potential target markets. It
was not easily available in the market
 Licensing: After the Launch of Betamax Sony tried to license on heavy
prices.
 Sony did not allow the porn industry on Betamax format whereas VHS
facilitated them, resultant the market flooded with VHS format.
 Poor Marketing Strategy: Since the Sony was first company ever who
launched complete home video system, therefore the expectations of
target market from the company were high and a bit uncertain about the
new product. Importantly the effective marketing awareness was required
that could have build target market trust in the new technology and
company. On the account even Sony did not pursue well.

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 Economy’s of Scale: If Sony had put more efforts to boost the awareness
in the target market that could have triggered the demand for the product
and resultant price per unit could have reduced and achieved a optimal
economy’s of scale for the company.

Conclusion:
The sensitivity and the sensation of the target market made Sony realize that
the technological advancement could be the one factor of getting ahead but
there is even much more that actually fetch the consumer market. No
company can work in isolation. The bit of drop make an oceans and change
of a bit today will result in the change of thousands of kilometre in future, so
organizations should readily keep eye on the change and try to mould their
directions to follow that particular dot, that is the only secrete of organizational
success.

‘‘An ounce of prevention is worth a pound of cure.’’

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‘‘Sit and let people talk …this is where good ideas come from’’
Masaru Ibuka, Sony Co-founder

Q2. Compare and Contrast the rival strategies for the

launch of ‘Blu-ray’ and ‘HD-DVD’. Which do you think
will be successful and for what reasons? Are there any
circumstances in which neither strategy might
succeed?

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INTRODUCTION

BLU-RAY

The name Blu-ray is derived from the underlying technology, which utilizes a
blue-violet laser to read and write data.[1]

Blu-ray disc format is jointly developed by the Blu-ray Disc Association (BDA),
a group of the world's leading consumer electronics, personal computer and
media manufacturers (including Apple, Dell, Hitachi, HP, JVC, LG, Mitsubishi,
Panasonic, Pioneer, Philips, Samsung, Sharp, Sony, TDK and
Thomson).[2]Since the launch of the new format, continuous technical
developments are in furore. As, In January 2005, TDK announced that they
had developed a hard coating polymer for Blu-ray discs.[3]
The market place became more excited when The president of Sony Pictures
Home Entertainment (SPHE), Benjamin S, made the news public on January,
04.2006, ‘‘the initial slate of 20 titles will be released by SPHE and MGM
Home Entertainment this spring in conjunction with the launch of hardware
manufacturers' first Blu-ray Disc products at retail.’’[4]

HD DVD

HD DVD or High-Definition DVD is a high-density optical disc format designed

for the storage of data and high-definition video.[5]The format war after such
a long span of time had to begin. As Sony already entered in the market with
its high definition disc, the announcement by Toshiba made the war start. The
HD DVD was launched quietly, and became a partner to the format war.(By
Jennifer Netherby and Susanne Ault -- Video Business, 4/13/2006)
On March 31, 2006, Toshiba released their first HD DVD 1 player in Japan at
¥110,000 (US$934).[6].

1.The first HD DVD titles were released on April 18, 2006. They were The Last Samurai, Million Dollar Baby, and The
Phantom of the Opera by Warner Home Video and Serenity by Universal Studios.[]
http://www.videobusiness.com/article/CA6323662.html ,Uni delivers Serenity to HD DVD By Jennifer Netherby -- Video
Business, 4/10/2006 Page-12
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1
HD DVD was released in United States on April 18, 2006, with players
priced at $499 and $799. The Warner priced its titles similar to standard
DVDs, at $28.99.[7]
It was designed to be successor to the standard DVD format and is derived
from the same underlying technologies. As the ambition was to lead the
modern high definition market, but after critical eye on the facts and figures
one can easily analyse the story of the day and it could lead to different out
comes than what was presumed earlier.[8]

The Format war

The Blu-ray technology is expected to play a vital role in the high definition
era but there are many concerns in the mind of consumers which need to be
answered first, before purchasing a player or the format HD DVD.

The obvious careful thought comes in the consumer mind is that who will
sustain in the market place. In the present technological era things get
obsolete so quickly therefore target market may be reluctant to go for any of
the format with free mind.[9]

Some of the analysts are of the opinion that one of the deciding factors could
be contents. Are your favourite movies supported by Blu-ray, HD-DVD or both?
That's the big question and the format that will answer this question in the
best way will keep the minds and wallets of consumers.[10]Whereas other
side of analysts predict that one or both of the formats will be accepted into
the mainstream.

The other thing to consider is that high definition content will one day be
widely available for download via the net to your PC or media extender box
connected to your TV. But with HD films requiring lots and lots of data, most
people's broadband isn't yet equipped for the HD age. So the broad band
speed will matter![11]

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The battle for securing more TV Lounges of next generation, high-definition

DVD started in March of 2006 when Toshiba launched the first HD-DVD
player. On one side is the Toshiba-led HD-DVD format and on the other the
Sony-led Blu-ray. According to the British Video Association (BVA), by the
end of this year there will be 14 million sets of HDTV1 in Western Europe.[12]
Where as according to NPD forecast, there are more than 1 million next-
generation players will be sold and 400 movie titles released next year,
The one of rival strategy of HD DVD camp seems to believe that interactive
content, the ability to download trailers and extra behind the scenes footage,
will be the key differentiator, while Blu-ray harps on its superior picture and
sound quality.

At present, one of the major factors that hinder both the formats is broadband
infrastructure, which is not developed enough to offer quick or easy
downloads of high-definition content. Where as that factor will not remain
hamper for a long time because even the Broadband service providers are in
the process of advancement and competition in their own industry which will
certainly lead them to the better services.[13]

1. High-definition television (HDTV) is a digital television broadcasting system with greater

resolution than traditional television systems

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Comparison & Contrast

Technological & Marketing Rival Strategies

(See exhibit B)

Although both Blu-ray1 and HD-DVD are similar in many aspects, there are
some important differences between them.

The Loading Time

The loading time of Blu-ray ray is longer than conventional DVD3 players.
If that kind of concern will be rectified quickly, that will help Sony to retain
the consumers.[14]

Supporters
HD-DVD has fewer Supporters in the film studio world but some analysts
feel that the two technologies will achieve a stalemate, resulting in studios
supporting both formats.

Pricing Strategy
HD-DVD2 players are considerably cheaper than Blu-ray players - in some
cases less than half the price. As the technology guru says that the prices
will not matter in the long range. It is because once the appropriate level of
orders has started to gain momentum, that will reduce the cost per unit
and will provide economies of scale and it will likely to reduce prices. The
consumer will be able to buy both of the formats on marginalised prices
available in the markets. Where as Both formats are backwards
compatible. That factor will help rival companies to bring the target market
to the main stream.[15]

1.Blu-ray:high-density optical disc format for the storage of digital information, including high-definition video.
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2. HD DVD high-density optical disc format designed for the storage of data and high-definition video.
Course work Business Strategy
3. DVD (also known as "Digital Versatile Disc" or "Digital Video Disc" - see Etymology) is a popular optical disc storage
media format.
 Business Strategy

Formats support
The Blu-ray provides a range of formats support including ROM/R/RW.
[16]Moreover, Sony is also planning to bring advance features in Blu-ray
by making BD/DVD hybrid format, which combines Blu-ray and DVD3 on
the same disc so that it can be played in both Blu-ray players and DVD
players. Strategically, this will provide a massive acceptance to the Blu-ray
in the target market.[17]

Hard-Coating
The development of new low cost hard-coating1 technologies has made
the cartridge obsolete. Blu-ray will instead rely on hard-coating for
protection, which will make the discs even more resistant to scratches and
fingerprints than today's DVDs, while still preserving the same look and
feel. Blu-ray also adopts a new error correction system which is more
robust and efficient than the one used for DVDs.[18]

Compatible Optical Head

Blu ray has set strategy with several leading consumer electronics
companies (including Sony, Panasonic, Philips, Samsung, Pioneer, Sharp
and LG) that they should demonstrate products that can read/write CDs,
DVDs and Blu-ray discs using a BD/DVD/CD compatible optical head, so
that will provide competitive edge to the Blu-ray format. So the target
market will not to worry about its existing DVD collection becoming
obsolete.[19]

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1.Hard-coating TDK was the first company to develop a working scratch protection coating for Blu-ray discs.

Capacity
Blu-ray has a major competitive edge through differentiation of the
capacity. As its single-layer disc can hold 25GB and dual-layer disc can
hold 50GB.[20] That means Over 9 hours of high-definition (HD) video on
a 50GB disc. And about 23 hours of standard-definition (SD) video on a
50GB disc. This will certainly work in market place.[21]

Content
The Blu-ray format has received broad support from the major movie
studios as a successor to today's DVD format. Seven of the eight major
movie studios (Warner, Paramount, Fox, Disney, Sony, MGM and
Lionsgate) have released titles for Blu-ray, whereas HD-DVD only has
support from three major movie studios (Warner, Paramount and
Universal). This is an important difference because some of the studios
might only support one of the formats, so the mass segment of consumers
will not be able to get their favourite movies in the other format. Choosing
the format with the most content support minimizes this risk. But the
situation could go wrong if Sony's decision to stay away from pornography
remains unchanged.

It could have wide implications for Blu-ray Disc. Not only some companies
backing Sony's format will miss out on a lucrative market, but analysts say
it could eventually mean that Blu-ray loses out to HD DVD in the battle to
become the next-generation DVD format.[22]

Hardware support

The Blu-ray format has broad support from the world's leading consumer
electronics, personal computer and media manufacturers, including Sony,
Panasonic, Philips, Samsung, Pioneer, Sharp, JVC, Hitachi, Mitsubishi,

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TDK, Thomson, LG, Apple, HP and Dell. The Blu-ray format will also be
supported in the next-generation PlayStation 3 (PS3) video game
console.[23]

The rival HD-DVD technology is likely to survive as a PC standard, but Blu-

ray will dominate in the market for standalone players and recorders.[24]

Blockbuster VP Matthew Smith said ‘‘the decision to go with Blu-ray, geared

from an overwhelming customer preference for those titles in the test markets,
accounting for over 70% of all HD discs rented. Interestingly enough, it seems
that content and not price was the deciding factor for consumers.’’[25]

1. Game Industry
The future strategies of Sony’s PS3 are all about the Blu-ray player and game
console. And its economic model will ultimately be built around licensing
revenue from the studios and gaming revenue or console sales.[26]

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Today’s foes tomorrow’s friends

It is possible that the both the companies may become ally of each other and
start working jointly. So there will be no point of success or failure for both
formats. The one of the reasons may be the launch of new technology that
will play both formats. Warner Brothers, which helped popularize the DVD
more than a decade ago, has announced a single videodisc that can play
films and television programs in both Blu-ray and HD-DVD, the rival DVD
technologies. New disc may sway consumers torn by DVD wars.[27]

Ryoji Chubachi, Sony's president said"Listening to the voice of the consumers,

having two rival formats is disappointing and we haven't totally given up on
the possibility of integration or compromise,".[28]

The other major technological breakthrough took place recently when Medion
has announced the Medion MD8828 that they describe a high-specification,
high performance media centre PC based on Intel VIIV technology and
featuring a multi-format, high definition HD DVD and Blu-Ray optical drive,
that will have definite effect on the on going war and will give strategic
openess for both of the companies. The Medion MD8828 will be available in
Aldi stores on Sunday 2nd December 2007 priced at £629.99. [29]

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Recommendations

After careful analysis it is recommended that the target market will stand by
the format that will provide them the following attractions, in an effective
manner; thus both of the formats will co-exist for many years to come. But
even then the consumers should not be taken for granted. [30]

1. contents
The alliance with movies industry will bring more contents and that will
be one of the deciding factors for the target market to
Choose any of the formats.

2. Technology
Target market will be fascinated if they will be provided with the
technological advancement like for instance, backward compatibility,
and the coating that resist more scratches on the high definition disc.
The consumer will go for the format that will provide more
technological option to the target market like for example, compatible
computers or the players that support
High Definition format. [32]

3. Availability(Distribution)
A proper factor of marketing mix will increase brand image and
Will help to retain the consumers for long time.[33]

4. prices
Competitive prices are very important factor to retain the target
market.[34]

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5. Promotion
A proper campaign of promotion should be run through to boost
consumer awareness regarding the new technology and to reduce
their concerns level if
there are any.[35]

6. Online support
If online support and adequate information regarding contents, new
developments, and downloads, will be provided to the target market,
help to retain consumers with the format.

7. Game Industry
Sony should concentrate on The PS3 with dual format and stand alone,
that has provided differentiation to the company and has captured the
target market in well manners.
8. Innovation
Sony needs to keep innovating to maintain brand loyalty.

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Conclusion

After critical Analysis, campararion and contrast of rival strategies, it is

concluded that both of the formats have some favourable factors and flaws.
Although Sony’s Blu-ray has competitive advantage as compare to Toshiba’s
HD DVD. However, the changing world’s technology will bring more
chanllanged ahead and the one who will cope up with those challenges will
carry the day.

(Please Note: Further down, The Analysis on Company’s policies are

supported by the theoretical models which are vitally used in Business
strategy subject.)

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Appendix

Suppliers
 Collaborations
 Polices
 Strategies
 Technology
 Distribution

Substitutes
Potential
Entrants Rivals  Rival format
 Changing Technology  JVC(Beramax vs (Either Blu-ray or
VHS) HD DVD)
 Brand Loyalty (barrier
for new comers in the high  Toshiba (Blu-ray  DVD (but less
definition market) vs HD DVD quality
 High Cost(barrier for new  CDs (Less Quality
comers in the high definition
market)  Online
Downloading(limit
ed users)

Buyers
 Gender (Male & Female)
 Age( every age group )
 Income( low to high)
 Permanent residence
 Tourists
 Companies/Institutions

Porter’s five Forces Diagram

Source: : Exploring corporate strategy by Gerry Johnson, Kevan scholes, Richchard Whittington,
7th ed, p. 73

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Technological Factors
Economic Factors
-Innovations (New features or technology)
-Target Market
-High Cost (Economies of scale or per unit cost)
-Market Growth (expected/potential)
-Research & Development ( changing -High Competition
preferences and Technological Advancement)
-Purchasing power
-Product life cycle( Betamax)
-Inflation rate
-Backward Compatible -Pricing Strategy
-Alliance(Economic cooperation)

Environmental Factors
Political & Legal
-Eco friendly Behaviours (To fetch more target
market, since every one seems concern for green
world)
-EU regulations

-Global warming -Taxation Systems

-Globalisation -Globalisation (New challenges)

(Increasing temperatures worldwide brings factor of
change to the companies to build the products that
can be used in high temperatures) Product should be
more global than local.

Ethical
Sociological factors -Positive Competition (No Dumping, or selling
less than cost just to beat the competitor e.g. Cola
-Target Market (Age groups preferences) war)

-Brand Loyalty (High standards) -Organisational Culture

-Customer Care
-All in one’ Shopping image -Fair treatment to employees
-Protecting environment
-Work Ethics (organisation) leads to --customer
satisfaction.

PESTEL ANALYSIS
Source: Exploring corporate strategy by Gerry Johnson, Kevan scholes, Richchard Whittington, 7th ed, p 68
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Source: http://www.totalrewind.org/sidebars/F_data_frame.htm
Rise and fall

(Exhibit ‘A’ for Market share of V2000, Betamax and VHS from year 1980 to
1986)

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What is the difference between Blu-ray and HD-DVD?

Parameters Blu-ray HD-DVD

Storage capacity 25GB (single-layer) 15GB (single-layer)

50GB (dual-layer) 30GB (dual-layer)
Laser wavelength 405nm (blue laser) 405nm (blue laser)
Numerical aperture (NA) 0.85 0.65
Disc diameter 120mm 120mm
Disc thickness 1.2mm 1.2mm
Protection layer 0.1mm 0.6mm
Hard coating Yes No
Track pitch 0.32µm 0.40µm
Data transfer rate (data) 36.0Mbps (1x) 36.55Mbps (1x)
Data transfer rate (video/audio)54.0Mbps (1.5x) 36.55Mbps (1x)
Video resolution (max) 1920×1080 (1080p) 1920×1080 (1080p)
Video bit rate (max) 40.0Mbps 28.0Mbps
Video codecs MPEG-2 MPEG-2
MPEG-4 AVC MPEG-4 AVC
SMPTE VC-1 SMPTE VC-1
Audio codecs Linear PCM Linear PCM
Dolby Digital Dolby Digital
Dolby Digital Plus Dolby Digital Plus
Dolby TrueHD Dolby TrueHD
DTS Digital Surround DTS Digital Surround
DTS-HD DTS-HD
Interactivity BD-J HDi

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References

References to Question one

1. The Research report from, Sony Corporation (1999)
2. http://en.wikipedia.org/wiki/Betamax
3. http://en.wikipedia.org/wiki/Betamax
4. http://en.wikipedia.org/wiki/Betamax
5. ICFAI Blu-ray and HD DVD Betamax-VHS ‘Format Wars’Redux? Case
Study Refrence no 306-562-1 p.4
6. http://www.totalrewind.org/fmt_war.htm
The Great Format War of the early 1980
7. http://tafkac.org/products/beta_vs_vhs.html
beta vs vhs,( From: hsm@unislc.slc.unisys.com (Helge Moulding)
Subject: AFU Whitepaper: The Decline and Fall of Betamax (Long)
Date: Wed, 8 May 1996 19:34:04 GMT)
8. http://www.totalrewind.org/sidebars/F_court_frame.htm Rent or Buy
9. www.totalrewind.org/
10. http://tafkac.org/products/beta_vs_vhs.html
beta vs vhs, Decline and fall of betamax
11. http://en.wikipedia.org/wiki/Videotape_format_war
12. http://www.theregister.co.uk/2005/05/26/toshiba_sony_bluelaser/
Toshiba, Sony fail to agree - again
13. http://www.cbw.cz/phprs/2007110502.html
New video formats make slow progress on Czech front
14. http://www.videointerchange.com/video_history.htm
Video history
15. http://www.business-strategy-innovation.com/2007/10/sonys-big-bet-
on-blu-ray.html
Monday, October 22, 2007, Sony's Big Bet on Blu-ray
16. http://www.forbes.com/fdc/welcome_mjx.shtml
How big is porn
17. http://tafkac.org/products/beta_vs_vhs.html (Beta Vs VHS)
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18. http://www.museum.tv/archives/etv/B/htmlB/betamaxcase/betamaxcas
e.htm
written by Tino Balio (US legal Decision), betamax case filed against
sony
19. http://www.totalrewind.org/mainhall.htm

References to Question two

1. http://www.blu-ray.com/faq/#bluray
2. http://www.blu-ray.com/info/
3. http://www.physorg.com/news2615.html
Published: 03:43 EST, January 09, 2005,Exclusive TDK Durabis Coating Technology
Makes Cartridge-Free, Ultra-Durable Blu-Ray Discs a Reality
4. http://www.gamedaily.com/articles/features/first-blu-ray-disc-titles-
announced/68392/?biz=1
First Blu-ray Disc Titles Announced, Posted by James Brightman on Wednesday,
January 04, 2006
5. http://en.wikipedia.org/wiki/HD_DVD
HD DVD
6. http://digital-lifestyles.info/2006/03/31/toshiba-hd-dvd-player-first-release-in-japan
Posted by Simon Perry on 31 March 2006 at 4:11 pm | Tagged as: Platforms, HDTV,
DVD
7. http://www.videobusiness.com/article/CA6324750.html
8. http://www.dvdforum.org/images/Forum_HD_DVD_Universal_24.pdf
HD DVD A technical introduction. November 2005 Author; Bob Auger Newmerique,
Version u_24r p.1
9. Strategy for Sustainable Business by Liz Crosbie and Ken Knight published by
McGrawhill 1995 p.12
10. http://news.bbc.co.uk/2/hi/technology/6069478.stm
By Darren Waters, Technology editor, BBC News website
Last Updated: Friday, 20 October 2006, 12:07 GMT 13:07 UK
11. http://news.bbc.co.uk/2/hi/technology/6069478.stm
By Darren Waters,Technology editor, BBC News website
Last Updated: Friday, 20 October 2006, 12:07 GMT 13:07 UK
12. http://news.bbc.co.uk/1/hi/technology/5168944.stm
Jonathan Fildes, Science and technology reporter, BBC News
Last Updated: Wednesday, 12 July 2006, 09:20 GMT 10:20 UK

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13. http://news.zdnet.com/2100-9584_22-6212782.html
Blu-ray vs. HD DVD: War without end, By Erica Ogg, News.com
Published on ZDNet News: Oct 10, 2007 1:37:00 PM
14. http://news.bbc.co.uk/2/hi/technology/6069478.stm
By Darren Waters, Technology editor, BBC News website
Last Updated: Friday, 20 October 2006, 12:07 GMT 13:07 UK
15. http://news.bbc.co.uk/2/hi/technology/6069478.stm
By Darren Waters, Technology editor, BBC News website
Last Updated: Friday, 20 October 2006, 12:07 GMT 13:07 UK
16. http://www.blu-ray.com/faq/#bluray
Blu-ray
17. http://www.blu-ray.com/faq/#bluray
What Blu-ray formats are planned?
18. http://www.blu-ray.com/faq/#bluray
Will Blu-ray discs require a cartridge?
19. http://www.blu-ray.com/faq/#bluray
Will Blu-ray be backwards compatible with DVD?
20. http://www.blu-ray.com/faq/#bluray
How much data can you fit on a Blu-ray disc?
21. http://www.blu-ray.com/faq/#bluray
How much video can you fit on a Blu-ray disc?

22. http://www.infoworld.com/article/07/01/19/HNnopornonbluray_1.html
Sony says 'no' to porn on Blu-ray Disc,

By Dan Nystedt and Martyn Williams, IDG News Service,January 19, 2007
23. http://www.blu-ray.com/faq/#bluray
What benefits does Blu-ray offer compared to HD-DVD?
24. http://www.eventdv.net/Articles/ReadArticle.aspx?CategoryID=241&ArticleID=38632
Strategy Analytics: Blu-ray Disc/HD-DVD Battle Highlights Digital Home Fault Lines,
Posted Nov 13, 2005
25. http://www.engadget.com/2007/06/17/blockbuster-chooses-blu-ray-is-the-war-over/
Blockbuster chooses Blu-ray: is the war over?, Posted Jun 17th 2007 6:51PM by
Evan Blass, Filed under: HDTV Market Side of Blu-ray VS HD DVD
26. http://www.informationarbitrage.com/2007/10/thinking-deep-t.html
October 31, 2007
27. http://www.iht.com/articles/2007/01/04/business/dvd.php
Herald Tribune Business, By Richard Siklos Published: January 4, 2007
28. http://www.pcworld.com/article/id,120161-page,1/article.html

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Sony May Unite Blu-ray Disc, HD-DVD, Top exec says the two competing formats
may come together.Paul Kallender, IDG News Service, Thursday, March 24, 2005
9:00 AM PST
29. http://www.pocket-lint.co.uk/news/news.phtml/11466/12490/medion-md8828-media-
centre-pc.phtml
Medion launches HD DVD and Blu-ray multimedia PC, by Amy-Mae Elliott
30. http://news.bbc.co.uk/2/hi/technology/6069478.stm
By Darren Waters, Technology editor, BBC News website, Last Updated: Friday, 20
October 2006, 12:07 GMT 13:07 UK
31. http://www.informationarbitrage.com/2007/10/thinking-deep-t.html
October 31, 2007, Comments Posted by: drewfus , November 01, 2007 at 08:11 PM

Please refer to the followings books for detailed readings on the thoughts
applied in the Case Study,
32. Product Strategy for high technology Companies by Michael E McGrath Aligning
Technology Trends/strategy Published 2000 by McGraw-Hill p.44
33. Strategy for Sustainable Business by Liz Crosbie and Ken Knight published by
McGraw-Hill 1995 p.136
34. Strategy for Sustainable Business by Liz Crosbie and Ken Knight published by
McGraw-Hill 1995 p.135
35. Strategy for Sustainable Business by Liz Crosbie and Ken Knight published by
McGraw-Hill 1995 p.137
36. Exploring Corporate Strategy by Gerry Johnson, Kevan Scholes, Richard Whittington
7th Edition 2.4 Competitors and markets p.89
37. Strategic Management by Fred R. David, fifth edition, Marketing Issues p.274

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