COURSE: STRATEGIC MANAGEMENT - GMBA 799

LECTURER: PROF. MOSES ACQUAH

DATE: JUNE 13, 2014
CASE ANALYSIS: THE DVD WAR OF 2005-2008: BLU-RAY VS HD-DVD
(PREPARED BY GROUP 7)
STUDENT NAME INDEX NUMBER
SAMUEL MICKY OHENE 12021709
ANSAH GILBERT YIRENKYI 12021624
MORKLI ERNEST KOMLA 12021700
DAVID KUDJO BEDI 12021655
ENOCH WOBENU 1201977







SYNOPSIS OF THE CASE
The development of high definition DVD evolved from the emergence of high definition
television (HDTV) during the 1990s due to an industry-wide forum (the DVD forum) which
forced the proponents of different formats to agree on a common technological standard. This
was a major step towards universal standardization which is a very important tenet in the
technological industry. Instead of adopting a collaborative effort to build upon the existing
standard to define the next generation of video storage technologies, a stage was rather set for a
high risk battle between two new high definition (HD) formats, Blu-ray and HD-DVD. Thus the
war started due to the failure of the companies belonging to the DVD forum to settle on an
agreed standards and merge their objectives in respect of the future generation of technology.
This war had the exclusive and non-exclusive support from a number of major players in
industries such as consumer products, movie studios, video game manufacturers, software
creators and hardware manufacturers.
The 18 months war led by heavy two industry weights; Toshiba and Sony. The eventual
outcome of the war saw Toshiba conceding defeat in February 2008 after a number of the
influential film studios, consumer products and game manufacturers gave their endorsement to
and switched to Blu-ray. This paved way for Sonys blu ray to set the industry standard.
Though Toshiba had the cost advantage, Blu ray emerged as the victor mainly because it
offered superior memory capacity and was backed by a larger number of Suppliers
(complementors).
The table below shows the number of complementors and their respective sides they took from
the onset of the war:
BLU RAY GROUP HD DVD - GROUP
Hitachi, Panasonic, pioneer, Philips,
Samsung Sharp, Dell computers,
Mistsubishi and others mention in the case.
Microsoft, kenwood, Toshiba, NEC, intel,
Sanyo, Memory Tech, and Venture Electronics
Hewlett Packard, LG, Acer, Asus, Lite On, Onkyo, Meridian and Alpine. ( these companies
were members of both formats)
Film Studios Disney, Fox, Lions
Gate,Mam, Sony Pictures
Film
Studios
Universal
Paramount Pictures (with subsidiaries: Nickelodeon, MTV films, Dream works, Dream works
Animation) and Warner Brothers
Q1. Was it inevitable that only one DVD technology could survive?
In technology industry, standardization of product is a key factor for success. This will allow
industry players to leverage on a common standard to survive and meet the needs of their
customers. There could therefore be the possibility that both HD-DVD and Blu-ray could
survive if they had agreed on a common standard format for video storage. In the absence of a
common standard the two giants were bound to engage in a war with Cost, Memory capacity and
Support from Media giants (distribution channels) being the crux of the war.
Q2. Was the outcomes of the war predictable from the beginning? When did blu-rays
victory became inevitable?
From the onset of the war, the outcome was not predictable because both companies had their
strength that they were focusing on. Signals at the early stages of the battle indicated that HD
DVD was going to emerge as the eventual winner due the under listed market advantages:
Competitive innovation capabilities
.
The backing of technology giants such as intel and Microsoft, Warner Brothers and a
range of movie studios.
The compatibility of HD-DVD players with conventional low definition DVDs.
Low cost of converting existing DVD to HD-DVD format.
These competitive advantages was ultimately discounted by Sonys ability to make
available its product and offered additional quality and security which the customers
were ready to pay for.
(b) Blu=rays victory became evident when:
On Jan 7. 2007, Electronic Arts (the worlds largest games software) announced its
decision to use Blue- Ray DVD format
Warren Brothers and Woolworth who earlier had been in Toshibas camp both
decided to solely switch to Blue Ray
Universal Studio (an ardent advocate for HD-DVD) in February 2008 defected to the
use of Blue Ray.
Q3. What could Toshiba have done differently and could it have won?
Toshiba could have analyzed both the internal and external environment to determine the key
success factors that could make it survive. The following factors were at play in the market
which can be analyzed using the Porters 5 forces of competition.
The Power of the Supplier (Distribution Channel): Conquering the
distribution chain in this industry is a key strategic weapon to the survival.
Distribution strategy therefore remains as a critical component of innovation
launch planning.

Consumer Convenience/Degree of Substitute: Another strategy lesson from the
first war. Toshiba should have added HD-DVD as part of game consoles and not
just as an accessory. This defeated the philosophy of customer convenience and
caused consumers to look for an alternative.
Power of Suppliers Strategy: One key success factor in strategy is supplier
power. A correct positioning of the HD-DVD with the suppliers was a necessary
strategy Toshiba could have maximized. The suppliers in this case were the
content providers - the movie studios
Threat of New Entrants: this was a market with few industry players and a low
level of entry. However , Toshiba should have realized the danger of existing the
DVD format market if the right strategies to survive the competition
Rivalry: The interplay of the above factors were the forces at play during the 18
months war and serve as the determinant factor for survival. Thus, Blu-ray was
the better of the two at the end.






Summary of Porters five forces at play in the HD-DVD and Blu ray War.










Qth4.




Q4. To what extent was Sony a winner? Did its ultimate victory justify its unwillingness
to reach a compromise with Toshiba during the first half of 2005?
Capturing the market share seemed Blu-ray was the eventual winner, but the time spent in
this 18 months war could have been used to research and develop the next generation of
technology. However on the basis of the sales that could have been generated from faster and
higher volumes of DVD players had Sony and Toshiba been able to come to some
agreement, both firms have lost.
Threat Of Substitute Products Or Services
. An Industry that has goods considered to
be substitutes does not compete on price
alone, but product with superior quality.
Blue-Ray added quality won the market
Threat Of New Entrants: this was a
market with few industry players and a
low level of entry. However, Toshiba
should have realized the danger of
existing the DVD format market if the
right strategy to survive the
competition.


Bargaining Power Of Suppliers
Suppliers were the movie makers; video
games and those in the entertainment
industry. These were critical to the
determination of the success of DVD
market

Bargaining Power Of Buyers
Consumers were the final users of the
DVD format. They are ready to pay more
for superior quality and security. Their
preference of quality at a slightly high
price should have been exploited by
Toshiba.

Rivalry
Toshiba (HD-
DVD) & Sony
(Blu-Ray)