Format wars and a touch of nostalgia


 

The five-year format war between Toshiba’s high definition digital video disc (HD DVD) and Sony’s Blu-ray reminds one of the days of Betamax-versus-VHS – but there’s more to it than just nostalgia.

 
Toshiba’s move to stop producing HD DVD, officially giving Sony a lead in the home video entertainment market, has proven a very significant point: that the success of any business model is heavily dependent on how fast a company can deliver the most innovative and convenient technology to its consumers.

As it waived its white flag, Toshiba admitted that there’s no point continuing a losing battle. In a statement released to the press on February 19, Toshiba Corp CEO Atsutoshi Nishida said they have “carefully assessed the long-term impact of continuing the so-called ‘next generation format war’ and concluded that a swift decision will best help the market develop.”

The first video format war began in 1976 when JVC developed VHS just one year after Sony’s launch of Betamax. The battle lasted for more than a decade until Betamax announced defeat in the late 80s; the format served a niche market in the 1990s, giving it a total lifespan of 27 years.
 
According to MediaCollege.com, while Betamax arguably had better technology, VHS proved to be cheaper and simpler to manufacture, while JVC allegedly incorporated some of the technology behind Betamax in its own, rival product.

Sony - having learned a lesson from this - opted to develop the latest version of Blu-ray to be incompatible with HD DVD despite an attempt by both camps in 2005 to “unify the two standards”.

Toshiba has also learned that it’s better to throw in the towel sooner, rather than later, to prevent any greater losses in the future.

While consumers may feel the pangs of nostalgia at the thought of saying “au revoir” to products that they have grown used to, high-tech living, like any other next generation realities, has to move on.

 
This will be little comfort to anyone who has already invested in a HD DVD player.  News like this means that consumers may be less willing to embrace new formats in the future: why would you invest in a new product if it may become obsolete within a few years?
 
However, consumers eventually emerge as the winners as they end up with a singular format that - because of economies of scale - is cheaper to produce: regular DVD players, for example, can be picked up for as little as $40.
 
And while Toshiba should be commended for cutting its losses early, the next time a 'format war' looms, let's hope that it's resolved immediately.
 
 
Comments

Comments