The Sony Format Wars: Blu-ray for the Win

March 10, 2008

After a five-year battle against Toshiba, the Sony Corporation has won the high definition DVD format war. Through brand leveraging, its Blu-ray technology scored a victory over production studios and consumers alike. The previous video format war of the late ‘70s pitted Sony’s Betamax against JVC’s VHS. JVC was the conqueror at the end of that competition since the Betamax brand could not capture enough market shares to gain sufficient support.

Although Sony has presently solidified its image with its dominant high definition DVD format, the company must now leverage this successful brand against online video companies like Blockbuster.com, Netflix.com, and Apple TV, which bypass DVDs altogether and efficiently download videos for direct viewing on a computer or TV.

In order to gain market share over the online rental companies, it will be crucial for Sony to learn not only from its past mistakes with Betamax but also from its current success with Blu-ray. Just why did Betamax fail over VHS, and why did Blu-ray win over HD DVD? How will Blu-ray prevail over online competitors? Finding the answer to all three questions requires brand leveraging.

The Betamax brand had superior recording and playback quality that was compromised only with longer recording times. Once this weakness surfaced, JVC’s VHS tapes immediately attained superiority. The JVC brand capitalized on its marketing schemes and won support from U.S. consumers. By associating their product’s recording time to the length of football games and other sporting events, JVC found the perfect marketing method for attracting U.S. consumers. Sony ultimately learned that a better product could sometimes fail when confronted with superior marketing techniques.

When the high definition format war was launched, however, Sony was primed for triumph as it demonstrated how its Blu-ray technology matches HD DVD in recording quality. This time around, Sony had the superior recording time or, in this case, storage space at a 10 GB advantage, and capitalized on its brand supremacy. This focus on brand leveraging seduced the majority of the production studios into working exclusively with Sony.

Once the Big Six studios sided with Blu-ray, Toshiba conceded, which placed Sony’s Blu-ray brand in an enviable position. Consumers who were delaying the purchase of high definition DVD players until the technology war concluded will now be voraciously Blu-ray players and Blu-ray DVDs.

It is vital, however, that Sony does not rest smugly on its laurels. The market for online video downloads is growing annually at a tremendous rate and is taking chunks out of the industry’s market share. Sony will have to leverage its winning Blu-ray brand and entice consumers to invest in Blu-ray players and Blu-ray DVDs rather than to download high definition format movies directly onto their computers or TVs.

Although the high definition format war has been terminated, Sony’s Blu-ray brand must still wage a few more strategic battles before it can claim the title as the decisive high definition video format for consumers.

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