I had an interesting conversation with a techie friend yesterday. She was commenting on the blu-ray disc v. HD DVD competition (a.k.a the format war) and how she can’t believe the more expensive technology (blu-ray) got picked for development. For first half of our conversation, I simply nodded where I deemed it appropriate. I knew about blu-ray and I knew what HD DVD was and that was enough for me. Never mind the complexity of technology development. It was not half way through her narration that I realized something. The format war was ultimately decided by one player – Sony. (Analysts believe that Sony's PlayStation 3 video game console played an important role in the format war, believing it acted as a catalyst for Blu-ray Disc, as the PlayStation 3 used a Blu-ray Disc drive as its primary information storage medium. Of course, the changing alliance between companies was also created)
Blu-ray’s success may be attributed to Sony’s corporate synergy. In marketing, we use the term synergy to refer to the promotion and sale of a product (and all its versions) throughout the various subsidiaries of a media conglomerate. The best example of corporate synergy is the Walt Disney Company, which own motion picture studios, record labels, cable television networks, radio networks, hotels and theme parks all over the world. (Think of Hannah Montana’s success. Disney Channel created her tv show, Hollywood Records produced her album, and Radio Disney played her songs). With the Blu-ray disk, the moment Sony committed to developing the technology, the war was half-way over. Sony, like Walt Disney Company, had its finger in all the pies in the industry that uses the technology: Sony Pictures Entertainment (tv and film production house), Sony Computer Entertainment (video games), Sony Music Entertainment (the record label), and of course, the Sony brand commands brand recognition in consumer electronics. With each business feeding the other, Sony had a definite consumer of the technology – Sony can manufacture the discs, their record label, production house, and video games can consume it, and the electronic appliances they produce can play it.
The format war is an interesting insight on how technology development can be dictated by many that turned out to be only one. Interestingly enough, synergy the term is also used to describe a situation where the final outcome of a system is greater than the sum of its parts.
Blu-ray’s success may be attributed to Sony’s corporate synergy. In marketing, we use the term synergy to refer to the promotion and sale of a product (and all its versions) throughout the various subsidiaries of a media conglomerate. The best example of corporate synergy is the Walt Disney Company, which own motion picture studios, record labels, cable television networks, radio networks, hotels and theme parks all over the world. (Think of Hannah Montana’s success. Disney Channel created her tv show, Hollywood Records produced her album, and Radio Disney played her songs). With the Blu-ray disk, the moment Sony committed to developing the technology, the war was half-way over. Sony, like Walt Disney Company, had its finger in all the pies in the industry that uses the technology: Sony Pictures Entertainment (tv and film production house), Sony Computer Entertainment (video games), Sony Music Entertainment (the record label), and of course, the Sony brand commands brand recognition in consumer electronics. With each business feeding the other, Sony had a definite consumer of the technology – Sony can manufacture the discs, their record label, production house, and video games can consume it, and the electronic appliances they produce can play it.
The format war is an interesting insight on how technology development can be dictated by many that turned out to be only one. Interestingly enough, synergy the term is also used to describe a situation where the final outcome of a system is greater than the sum of its parts.
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