Blu-ray strategy

“Are you ready to go blu” runs the Sony campaign for Blu-ray discs. The Blu-ray Disc Association (BDA) developed the Blu-ray technology in the year 2000. “The Blu-ray disc is a next generation optical disc format that enables the ultimate high-def entertainment experience” – this is the definition provided by the Blu-ray Disc website. The name Blu-ray is derived from the blue violet laser that is used to read and write this type of disc. The key features of the optical disc are – largest disc capacity with 25 GB single layer and 50 GB double layer capable of writing five times more content than the DVD.

Pristine picture quality and high quality sound effects. Interactive features that enables menu navigation, internet connectivity allowing download of content. Big banner music companies and Hollywood studios support the Blu-ray disc technology. Tie-ups with leading consumer electronics companies and computing manufacturers provide extensive features and adaptability to other consoles. Leading consumer electronics players in the international arena (Apple, Dell, Hitachi, HP, JVC, LG, Mitsubishi, Panasonic, Pioneer, Phillips, Samsung, Sharp, Sony, TDK and Thompson) came together to develop this technology.

One of the major advantages of this technology is that it is compatible with backwards technology like CDs and DVDs. At present more than 180 companies support this technology with strong support from the major Hollywood studios like Disney, Fox, Warner, Paramount, Sony, Lionsgate and MGM. The Blu-ray technology met with competition in the form of HD-DVD launched by Toshiba Corp and NEC in the year 2006. The emerging battle for market dominance between the two drew parallels to the previous format war of the Betamax and VHS.

The HD-DVD or high defintion DVD is a high-density optical disc format that can store data and high definition video, a progressive version of the DVD. It has a single layer storage capacity of 15GB and a double layer capacity of 30GB. The technology is backward compatible with DVD and CDs. The Blu-ray technology has distinctive edge over its competitors with the backing of major consumer electronics and movie studios. The different divisions of Sony combined efforts to present a united front on promoting the Blu-ray technology.

Ben Feigngold, Worldwide President of Sony Picture Home Entertainment said “This crosses every part of our company. Blu-ray is a technology that will drive PC-sales, consumer electronic sales, movie sales. ” Sony’s marketing strategy to reach the consumers zeroed on the compatibility of the blu-ray players to DVDs. All campaigns include the message that movie titles were available on both DVD and Blu-ray. The company organized product demos at its company operated stores and invited the media for viewing clips on both Blu-ray and HD-DVD.

This was a strategic move to drive the difference in both the technologies and how Blu-ray was a far superior product than its counterpart HD-DVD. The company has been driving promotional campaigns to shift consumer interest in this new technology. The other interesting strategy homed in by Sony was the use of Blu-ray to technology in Playstation(PS3) – its next generation video games console. The blue-ray battle in the home theatre market has moved down to the video games market that is widely gaining popularity across the globe.

The launch of PS3 using the Blu-ray technology will push the consumers interest and create a market niche for the Blu-ray technology. But the launch of Microsoft’s Xbox using the HD-DVD technology has created ripples in the video games industry. The wide variety of choices available for the consumers and the excitement of experimenting new technology have extended the market segment. More and more consumers are ready to taste the technological delights provided by the Blu-ray and HD-DVD formats. The battle for market supremacy has just begun and the strategic changes and policies adopted by Sony will determine the fate of Blu-ray technology.

The consumers have responded well to the Blu-ray technology with increasing sales figures for blu-ray movie titles as compared to HD-DVD’s market share. DVD pioneer and Blu-ray Technologies head Erick Hansen sums up “ The consumers have spoken. Blu-ray is far and away the winner. Besides the one million Blu-ray movies sold in Europe, PS3 game discs produced for sale there exceeds 21 million, according to Blu-Ray Disc Association. ” He states that the Blu-ray technology has captured 73% of the European market share.

The affordable price range of new technology that is offered to the consumers has helped in gaining the market share. The technological edge combined with strong market presence and backing of media giants has given the Blu-ray technology a competitive edge over HD-DVD. Sony is planning to cut the price of the PS3 to gain more market share. It is expected that prices may be slashed to US$ 499 for 20GB and $ 599 for 40GB. But is this a feasible strategy since the cost of manufacturing each unit is between $725 and $905. The Microsoft Xbox, a popular gaming console and major rival of PS3 is priced at $399 only.

This has weaned some of the market share of PS3 but the brand positioning and superior technology with added features provided by PS3 the consumers will not mind paying more. But the PS3 is a trump card for Sony and it will be very effective in selling the Blu-ray technology to the consumers. The premium product in the form of PS3 will win the battle for Sony since it combines the features of a high definition gaming console and a fully functional Blu-ray disc player that can be used to watch high-def movies with all the additional features of the Blu-ray technology.

The consumers will definitely find it a good value for money and invest in PS3. Conclusion The liberalizing of economies and global business strategies has opened a huge market potential for multinational players. This definitely has redefined management perspective and marketing approach for most companies since local market forces that drive the economy needs to be assessed and addressed while taking strategic decision on marketing, pricing and positioning of products. The consumer needs assessment and expectation drive the market share for any product.

At the end of the day it is the consumer satisfaction that dictates the success story of any product launch in the market. The fallout of Betamax in the format war with VHS highlighted the company’s failure to realize this marketing aspect while positioning the product. The strategic failure of the company phased out a high quality technology from the market. Sony had learnt its lesson from the Betamax debacle. The company moves to position and capture the market share for Blu-ray technology is quite aggressive and well planned in contrast.

The market has a long way to go and as stated by Bob Chapek, Worldwide President, Walt Disney Studios Home Entertainment “Blu-ray will inevitably prevail because Blu-ray delivers what consumers want: True high definition picture without compromise, the best sound quality, the best choice in content, the most in special features, and of course the most disc storage capacity. ”

References:

1. Blu-ray disc – http://www. blu-raydisc. com/jp/index. html – accessed on 21st December, 2007 2. Sony spate of Good news Justifies Tech Strategy –  http://www.blu-ray.com/info/