Why Sony won the format war

When IIPM comes to education, never compromise

Blu-ray has out-marketed, out-punched and over-matched the HD DVD format

Earlier, Sony’s marketing was a bit more rope-a-dope than aggressive sell. Then, late last year, Sony rolled out a series of aggressive television ads that elegantly tied together Sony Blu-ray content with the players - Lance Ulanoff

I finally figured out why I was so dead wrong about the HD DVD versus Blu-ray format war. I should have analyzed the sides—Sony and Toshiba—not as two countries going to war, but as opponents in a close-quarters boxing match. Had I done so, I would have assessed each of the technology’s assets and deficits.

Back in the late 60’s and early 70’s when former heavyweight champion Muhammad Ali was winning all his bouts, commentators extolled Ali’s “reach.” His arms and fists extended a good 2 or 3 inches beyond his opponent’s. This allowed him to inflict stinging jabs to the face and head of his over-matched opponents, including Ken Norton and Leon Spinks. Sony, it turns out, has this advantage, too.

Reach and Distribution

While on paper Blu-ray developer Sony and HD DVD developer Toshiba may appear the same, there are key differences in this pugilistic battle. Sony smartly leveraged its position in a number of key products and content-distribution outlets. It seeded the market with Blu-ray-ready PS3 machines. The machines sold poorly in their first year, but it doesn’t take a rocket scientist to guess that more people bought PS3s than HD-DVD-ready players.

Sony also controls a major television and movie studio, so it had any easier time getting Blu-ray content out into the marketplace. Toshiba and its partners kept pace for most of 2007, but once Warner Bros. walked away, Toshiba could do little to stop others from doing the same.

Flash and Burn

When Muhammad Ali dismantled an opponent, he didn’t just methodically pound him into the canvas. Instead, he danced, smiled and just plain over acted. Sometimes winning in technology requires a little bit of the flash and dazzle. I think Sony got that. For example, Blu-ray drives arrived in PCs before HD players.

TV and Smart Marketing

Muhammad Ali was good TV. In fact, if you like boxing, there was nothing better (whether he was talking or fighting). Toshiba and Sony both sell TVs, but ask anyone on the street who sells the best TVs and HDTVs and they’ll invariably answer Sony.

Part of Ali’s allure and success involved everything he did outside of the ring. Ali would wage a verbal marketing campaign that made fight enthusiasts and his opponents wonder if the fight had been won by Ali before anyone ever stepped into the ring. For a long time, Sony’s marketing was a bit more rope-a-dope than aggressive sell. Then late last year, Sony rolled out a series of aggressive television ads that elegantly tied together Sony Blu-ray content with the players and, more importantly, Sony HDTVs. Finally, there was a full marketing package, a message that perhaps turned on not only consumers but fence-sitting partners who were tying to satisfy both the HD DVD and Blu-ray camps. Toshiba started running similar ads, but because they came after Sony’s, they had the feel of mimicry.

Never Give Up

Muhammad Ali is the only three-time world heavyweight champion (or at least the only one I recognize). The man never gave up. When he seemed down and out, he would train harder and come back with a new strategic battle plan that would usually flummox his overconfident opponents. I give Sony credit. I counted the company out early on, and I think others did as well. Last summer there were reports that HD DVD had taken the lead in the format war, but those claims proved chimerical. Toshiba, on the other hand, made a critical error in January when it responded to Warner Bros. dropping HD DVD by canceling a major Consumer Electronics Show press conference. Muhammad Ali never would have done that.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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