Sony's Blu-ray DVD Wins Format War Against Toshiba

'Anxious' Studios, Retailers Counting on High-Def Discs, Players to Spur Sales

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YORK, Pa. (AdAge.com) -- Expect to see a lot more marketing for Blu-ray high-definition players and movies now that Sony has been declared victorious over Toshiba's HD DVD in the format wars. Sony, after all, now has to persuade many consumers to care before they consider upgrading.
Now that Sony's Blu-ray has won the format battle, they need to continue to market to sell consumers on the benefits of high-def players.
Now that Sony's Blu-ray has won the format battle, they need to continue to market to sell consumers on the benefits of high-def players.

Experts have contended that one of the reasons consumers were slow to switch to high-def DVDs was worry that with two formats available, there would be a repeat of the VHS-Betamax wars. And no one wanted to be stuck with the 21st-century equivalent of Betamax.

Need for awareness
Manufacturers of Blu-ray players and recorders -- which include inventor and patent holder Sony as well as Samsung, Panasonic and Sharp -- are rejoicing over the victory. "We'll see a lot of money being poured into Blu-ray advertising" now that the format war is over, said analyst Phil Leigh of Inside Digital Media. "Expect to see more promotions and such to create more awareness. Sony will try to make it clear that they are the standard now and consumers don't have to worry anymore."

Sony Electronics, which declined to comment, counts 180 and Omnicom Group's BBDO as its agencies, though the marketer has been known to outsource to other shops for project work. Sony has done little Blu-ray-only work; Blu-ray was included in the PlayStation3 work done by Omnicom's TBWA/Chiat/Day (the agency handles Sony's video-game division) and in a wrap campaign of all HD products done by 180 last fall. Sony Electronics spends in the neighborhood of $100 million annually on advertising.

But the truth might be that most consumers simply didn't care to begin with.

'Ignored by consumers'
"This was a format war that largely was ignored by consumers. They may have held off on buying [because of competing standards], but they also held off because high-definition DVD wasn't that important to them," said JupiterResearch analyst Michael Gartenberg.

And that might be the ultimate the challenge for Sony and friends. Now that they've won the format battle, they need to continue to market to sell consumers on the benefits of high-def players. Sony will likely get some help from the allies that made victory possible: movie studios such as Warner Bros. and retailers such as Wal-Mart, which switched to Blu-ray exclusively last week.

Jim Nail, Cymfony chief marketing officer, said consumers mentioned more and better choices of movies as the key reason for supporting one format over another.

Hoping for growth in HD
High-definition discs may be just what movie studios have been looking for to help their flagging disc sales. Flat DVD sales over the past three years have the studios "very anxious," Mr. Leigh said. "They really want to see growth in HD." And retailers would undoubtedly like to move higher-priced players now that a regular DVD player can be had for less than $100.

There were less than 1 million high-definition DVD players sold in the U.S. in 2007, according to NPD Group. That compares to about 10 million standard DVD players sold in 2007, down 14% over the number of players sold in 2006.

Mr. Nail points out that consumers surveyed by Cymfony last year chose "I really don't care" much more often when asked about their preference for either Blu-ray or HD DVD. Now, he said, they may be ready to commit.

"The demise of HD DVD should unleash demand for these next-generation players," said Mr. Nail. And although some are predicting a short honeymoon for high-definition discs because of the anticipation of high-definition movie downloads via the internet, Mr. Nail is betting that consumers are set enough in their ways to help high-definition DVD sales for years to come.

"In my many years in the digital space, I've noticed that consumer purchase and media consumption is a lot slower to change than the technology," Mr. Nail said.

Toshiba and Microsoft
For Toshiba, which mounted a last-ditch marketing effort to save HD DVD last month, including an ad buy on the Super Bowl, the long-term effects of its decision are unknown. However, analysts largely agreed that a quick decision and discontinuation of products by the end of March was a good choice. They doubted that Toshiba and its fellow HD DVD supporters -- including Microsoft, which supported HD DVD as an external add-on for in its Xbox 360 video game console -- will suffer a major brand dent for their support.

"It's a big setback for them," Mr. Gartenberg conceded, "but at the end of the day, life will go on. They'll retreat and regroup."
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