– Thoughts on Strategy and Management

Sony takes it all

DVD business is one the biggest profit makers in Hollywood. Taking this issue into consideration it easy to see why movie makers of the big media companies (e.g. Time Warner, News Corp., and NBC Universal) can be very happy now. The long term “format war” between blu-ray and HD DVD has come to an end. Warner Bros. decision, the major Hollywood movie maker (Lord of the rings, Harry Potter) to prefer Blue ray discs was the driver. Sony with its blu-ray technology is the winner. The announcement of blu-ray supporters to increase the number of movies distributed on blu-ray format will change the face of this business and is likely to kill the HD-DVD.

Microsoft and Toshiba are the potential losers. Their video format HD is only accepted (or seen as the future format) by two large Hollywood studios. “Paramount’s current plan is to continue to support the HD DVD format,” said Brenda Ciccone, a spokeswoman for Paramount.

From a strategic point of view Sony was winner two times. Very early Sony anticipated that technical details will decide to battle for future. Consumers are confronted and confused with a huge number of technical gimmicks; hence technology might only influence his preferences. Instead the decision for a certain technology will consider available content for this format. Content is still king or even THE king in this century. Sony anticipated this development better that Toshiba or Microsoft. The content business is one of Sony’s core competencies. Sony is the only foreign company that runs its own movie studio in Hollywood (e.g. blockbuster Spiderman).

Hence Sony is the winner: It has the content and the right technology.

So what’s next? Microsoft could consider blu-ray support for Xbox. How about this: “Within a few years, the entire format war could be irrelevant anyway”, since customer will be used to download their movies (see this site). I don’t believe the latter one. The reason is simple – for the next decade there will be dozens of nations left, where high speed internet access is still expensive. Don’t focus only on Europe and Northamerica….the world is larger that these parts!