VHS vs Betamax in the Video Technology Race and Blu-Ray vs HDVD in the DVD Technology Race - Case Study Example

Introduction “The only thing that doesn’t change is the change itself” is a famous adage. True to this the world has come to this stage mainly due to the number of innovations that has acted as a wheel for the change. Starting from the safety pin to the bullet train, a number of innovations had made people’s life easier. Anywhere the innovation becomes a practice by crossing through two stages, the diffusion and standardisation. Any innovation that begins with a single person or group of people then by the method of seeing and adapting, percolates or diffuses into the society; and if it possesses many advantages over the existing competetitor, it will replace its competitor and become standardized as explained by Hall (2004). The potential reasons for which an innovation is adapted or taken up for diffusion include the relative advantage of the innovation, its compatibility in the society, complexity of the innovation, trial ability and the ease of observability.(Rogers,1995). Economists as Griliches (1957) with the example of hybrid corn has proved that economic situation prevailing in the society might be an important reason influencing the diffusion. But one thing that has been accepted by all theorist is that for an innovation to be standardized it must be most convenient and appealing, and obviously cost effectivity, the network effectivity and the improvement offered compare to the old one. (Rogers, 1995) There are many examples that can be quoted to be an example of this diffusion and standardization, as QWERTY replacing DVORAK layout in keyboard (David, 1985); video cassette and tape replaced by CD and DVD; analog devices replaced by digital etc. This essay attempts to imbibe these facts and tries to examine the processes of “diffusion” and “standardisation” in certain well known cases and see the results. The examples selected for this study are the two famous technology races whereby one technology format tries to replace the other in the visual world, namely the VHS Vs Betamax in the video technology race and Blu-Ray Vs HDVD in the DVD technology race. VHS Vs Betamax Race When they first arrived on the market, they were one of the more exciting inventions in decades. They allowed consumers to record their favorite TV shows. Video tape could be explained as a mean of recording images and sounds in a magnetic tape that is used in video cassette recorders, providing the first time option for people to record the programs of their interest. The technology improved itself from being the open reel that then developed into as video cassette format, first as Type C format, and then Composite U- matic system as developed by Sony. It was then followed by the VHS of JVC and Betamax of Sony, which resulted in a video format war (Rosenbloom & Cusuman, 1987). The VHS (Video Home System) is a recording and playing standard that was introduced by the Victor Company of Japan- JVC, by 1976. Betamax was introduced by Sony in 1975 as a half a inch home video cassette recording as the next version of U- Matic. Since both formats are privately owned by different companies, it started a period described as videotape format war that has rocked marketing history in late 70’s and early 80’s. The first type of Video cassette to become popular was Sony’s Betamax that was introduced in 1975, which was quickly followed by its competitor, VHS by JVC. It was unanimously decided by the electronic industries that time to back Sony, but JVC came with its own (Cusumano, 1992). This battle was fiercely fought by both of them for about a decade, to capture the market as a standard brand. The final victory by VHS in this format war was not due to technical superiority, as seen by some market pundits (Cusumano, 1992). It was argued that Betamax was a better format, but it lost due to several factors that call for an intense debate and scrutiny. Although the in and out of causes are not known, it was widely accepted that VHS has overtook Betamax by slick marketing. Despite that fact that Sony first introduced Betamax into the market, thus enjoying first mover advantages; Cusumano (1992) argued that in a mass consumer market, the time needed to create a dominant standard was so great that first mover advantages became minimal. Instead, since both formats are privately owned and received no government intervention, the marketing effort which helps to create "bandwagon" effects and "network externalities" is crucial to the diffusion process (Cusumano, 1992). Apart from that, there were problems on the Sony management side, where there were some unsolved licensing problems between Sony and other companies that pampered the growth of Betamax, thus paving way for VHS to conquer and standardize itself. In fact, the race began much earlier, with, at the time of launch only, the VHS machines came much cheaper and simple in manufacturing process. This was a strong factor that made companies to favor VHS over Betamax. Added to it another wrong step by Sony spelled their doom, with Sony inadvertently gave its competitors a helping hand by revealing key aspects of Betamax technology which were then incorporated into VHS (Grindley, 1995). Though such management and technical differences existed, what appealed more to the consumers, was the obvious difference between the two format’s recording lengths, with the Betamax tapes lasting to 60 minutes - not enough to record a movie; on the other hand, VHS tapes offered 3 hours recording time - a perfect option for recording television programme and movies (Grindley, 1995). In the wake of it Sony also tried to adapt and offer various solutions for longer recording, but it was by then too late. In fact, recording time is quoted by experts as the deciding factor that changed the swing. Another issue that was also quoted as reason, though its validity was not much proved was the pornography, with Sony never made available adult content on Betamax; while it was easily available in the VHS (Owen, 2005). Apart from debates, eventually it was established that VHS overtook Betamax and got itself diffused and standardized as the choice of consumers, with Betamax ending production in American by 1993. Betamax was arguably a better format and entered the market first; however, VHS became of winner of this format war because of some distinctive features (i.e, longer recording time) and managerial efforts (i.e, marketing). The Blu-ray and HDVD Race: The DVD (Digital Versatile Disc) is the next break through in the digital world that has carved a place both in the computer industry and the home entertainment industry. Millions of dollars have been invested into DVD, thus next to the video cassettes were the era of the digital revolution. The story goes way back to the time when Philips and Sony were together in development of the Laserdisc and CD’s. After the break up, Sony carried over and adopted many technologies, one among them was the DVD they produced by 1990’s, the Blu-Ray disc. Toshiba in its own style along with Sony and Philips also started work on a next generation system, the Advanced Optical Disc that gently evolved into the HD DVD. And as the old adage goes, history repeats itself leading to another war of HDVD Vs Blu- Ray (Michael Grebb, 2005). On the technical aspect, both Blu-ray and HD DVD are similar in using the same kind of 405nm wavelength blue-violet laser, but their optics differs. Technically the Blu- Ray was more dominant as it had more storage capacity of 50 gigabytes, whereas the HDVD could only afford 30 gigabytes. This could have tipped the customer in favor of Blu- Ray. But the HDVD had an advantage of being early in the market than Blu-Ray with a caption- we offer what you want. For this Blu- Ray tried to tackle by saying we may be late but are better. (Tellis etal,2002) Another advantage on the side of HDVD was its compatibility with old DVDs and the third party duplication was much easier, as manufacturing process was entirely same as the old ones. On the other hand, the Blu-Ray discs couldn’t be manufactured with the old machine and it required an entirely new manufacturing process, with the cost looming very high. The next scoring point was pricing, with the HDVD coming at a much lower price than the Blu- Ray. (Wendt & von Westarp, 2000 ) In the beginning, the HD-DVD format appeared to have made a niche, (like Betamax in VHS Vs Betamax) by being more widely available to consumers at a lower price than Blu-Ray discs. When again here manufactures initially backed both the sides, with Dell, Hewlett Packard, Hitachi, LG Electronics, Mitsubishi Electric, Panasonic (Matsushita Electric), Pioneer, Royal Philips Electronics, Samsung Electronics, Sharp, Sony, TDK and Thomson, apart from the backing from Sony-affiliated movie studios Sony Pictures Entertainment and Metro-Goldwyn-Mayer, the Walt Disney Company and its home-video division Buena Vista Entertainment backing the Blu-Ray; on the other hand the main backer of the HDVD format being the Toshiba, which by itself has more market dominance than several CE backers on the Blu-Ray side along with NEC and Sanyo and backing of Paramount, Universal Studios and Warner Bros. (Sean P. Aune, 2007) Although both appeared neck to neck this time Sony won the war and ultimately Toshiba pulled out due to many reasons. The HDVD and Blu-ray have been again struggling and waging war to be the standardized format of that era of DVD generation. Toshiba started ahead in the race with getting approval for its HDVD format from the DVD Forum by 2004, and the products hitting the market by 2006. By the end of the same year Sony launched its Blu-ray format. At the stage of launching, both formats armed with significant number of backers started getting into bitter competition to the dismay of the industry. There was even a wide spread feeling that that a new format war could slow down developments of a nascent market and could cause a confusion for the consumers. But the match seemed to take a turn towards the Blu- Ray when the Warner Bros decided to back Blu-Ray followed by the decisions of key retailers such as Wal-Mart. UK retailer Woolworths also announced the phase out of HDVD products expressing their backing for Blu-ray. Closely following them were the US chain Best Buy, US online retailer Netflix and Constantin Film in Germany and National Geographic. Another dead blow for HDVD was the introduction of Sony's PlayStation 3 which has an in-built Blu-ray player, with the reality turning out to be , the Blu - Ray dominating the area with a sale of 10.5 million have been sold compared to one million HD DVD players(Erica Ogg, 2007,). Thus it could be seen here again though the HDVD entered market first with more adapted features as low price, easy replicability of instrument , it was Blu- Max which though was priced high became standardised with its high storage capacity and the best marketing and negotiation skills that had made many giants backing it and wiping HDTV from the picture. Conclusion: As a conclusion, this paper has described the evolution and emergence of two technologies, namely the VHS from the VHS Vs Betamax race and Blu-Ray from the Blu-Ray Vs HDVD race. All of the four concerning technologies are privately owned; and apart from the conversional reasons why a technology could diffuse and standardise as mentioned in the introduction section, the technology owner’s managerial efforts and its ability to obtain supports from other main players in the relevant market have been proved to be crucial. References: 1. Bronwyn H. Hall,2004, Fagerberg/ The Oxford Handbook of Innovation 2. Rogers, E. M. (1995), DiVusion of Innovations, 4th edn., New York: The Free Press. 3. Griliches, Z. (1957), ‘‘Hybrid Corn: An Exploration in the Economics of Technological Change,’’ Econometrica 25: 501–22 4. David, P.A. "Clio and the Economics of QWERTY." American Economic Review 75 (1985), pp.332-37. 5. Rosenbloom R., Cusumano M., "Technological Pioneering and Competitive Advantage: The Birth of the VCR Industry", California Management Review, vol. XXIX (4), 1987, 51-75. 6. 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