This survey has been published in:

Pillot J. (2009), « Comment se définit un standard technologique : la stratégie de Sony sur le marché des lecteurs et supports HD », Innovations - Cahiers d'économie de l'innovation, 30(2), 135-155

Pillot J. (2009), « Competition for the Market Standard : Sony’s Strategy in the emerging HD Market », Innovations - Cahiers d'économie de l'innovation, 30(2), 135-155

Judgments & Legal References : none

Overview : Competitive advantages flowing from the control of a standard are well known by economists. The same goes for means and strategies to set a new product or technology as the market standard. However, traditional explanatory factors do not seem relevant enough to explain the success of the Blu-Ray Disc standard on the HD-DVD one. Looking for alternative decisive elements to appreciate Sony’s success, I discuss the major role played by Sony’s PlayStation 3 in the final adoption of Sony’s technology from both an economic and a legal standpoint. I also stress the impact of such adoption on the whole industries prospective competition dynamics whereas digital convergence and several potential new players seem to call for a significant redesign of the HD market in the future.

Main Results :

  • Traditional factors – such as price competition, technology advantage or industrial partnerships – do not sound able to explain the adoption of the Blu-Ray Disc as the market standard.
  • The “contents race”, which the late Warner Bros. move to release its films exclusively in the Blu-Ray Disc format is the symbol, is usually mentioned by scholars and experts to illustrate the final result. Most of them, nevertheless, failed in determining the true reason of such a late exclusive agreement.
  • Sony’s PlayStation 3, in which a native Blu-Ray Disc player is included, appears as the real key of success in the Blu-Ray Disc format quicker diffusion.
  • Vertical integration as well as acting on strategic complementary markets may turn out especially efficient in setting a new product as the market standard.
  • Sony’s strategy proved valuable both on the relevant market and the complementary ones in which the Japanese major is also present (video game, home cinema, HD TV…). Impact studies on Toshiba’s share emphasize the strategic importance markets attached to this standard battle.  
  • Nevertheless, due to the fuzziness of HD market frontiers resulting from digital convergence, Sony’s monopoly on tangible HD format might be contested by new players supporting new technologies. As any high tech industry, technology drives competition dynamics and call businesses for a sound and permanent analysis of effective and potential competition.