Business Case Studies, Competitive Strategies Case Study, Toshiba versus Sony, DVD Format War

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Case Title:

Toshiba versus Sony: The Next Generation DVD Format War. Who Would Set the Standard?

Publication Year : 2006

Authors: M.V. Patil, Menaka Rao

Industry: Engineering, Electrical and Electronics

Region:Global

Case Code: COM0184B

Teaching Note: Not Available

Structured Assignment: Not Available

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Abstract:

In the last week of March, 2006 Toshiba Corp. launched its first version of HD-DVD player, HD-XA1, priced at $799.Within few weeks, on 18th April 2006, the company launched another simpler version of HD-DVD player, HD-A1 which was priced even lower at $499 with a per-unit loss of $200. According to analysts, the cost of the HD-A1 player was about $700 or more which included the internal electronics, packaging and manufacturing of the player. Toshiba's marketing department intentionally undertook a substantial per-unit loss on the HD-A1 to boost sales and give the company's HD-DVD platform (player and disc), a head start and build an early lead in the format war over the Blu-Ray format technology which was developed by Sony Corporation. The competitors of Toshiba were Sony and a few others using the rival Blu-ray format. Sony was scheduled to launch the Blu-ray format player in September-October 2006 with price tag of $999 or more.

Consumer electronics analysts and tech-industry watchers remained glued watching the movements of the two rivals Sony and Toshiba as they took a head-on-clash over the race to establish the next-generation, high definition industry standard for Digital Video Disc(DVD) players and discs. Ultimately, there could be only one winner whose format would become the industry standard. Whether Toshiba's apparent ‘loss-leader strategy’ would help to get an early advantage for HD-DVD format remained to be seen. Most consumers were expected to be neutral during the early stages of the format war; there would not be a winner immediately. In the times ahead, the answer would be known, but, till that time it was a marketing war of the technology titans.

Pedagogical Objectives:

  • To understand the HD-DVD and Blu-ray format Strategies adopted by Toshiba and Sony
  • To understand that customers now can have opinions of formats in the future/li>
  • To understand HD-DVD’s China Risk
  • To understand the HD-DVD and Blu-ray Market/li>
  • To understand the concept of a loss leader strategy/li>
  • To understand that technological warfare could lead to the market getting divided/li>
  • To understand pricing strategies of the HD-DVD and Blu-ray formats./li>

Keywords : HD-DVD and Blu-ray format Strategies; HD-DVD's China Risk; technological warfare; Loss-leader Strategy; Competitive Strategies Case Study; pricing strategies of the HD-DVD and Blu-ray formats; Hollywood Film Studios; marketing war of technology formats; Betamax and VHS(Video Home System) war; Toshiba Corporation; Analytical Optical Disc; Sony Corporation Ltd; Entertainment Market

Contents : 
HD-DVD versus Blu-ray
HD-DVD and Blu-ray Market
The CorporateWar
HD-DVD Advertising campaign
HD- DVD’s Pricing Strategy
Future formatted ?
Microsoft Xbox strategy

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