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Blu-Ray vs. HD DVD

A few years ago consumers had a choice to make: Blu-Ray or HD DVD. Today, everyone knows what Blu-Ray is, but most people couldn’t tell you that there was ever something called an HD DVD. Blu-Ray won the “good quality DVD war,” and they did so because of an information cascade.

This article provides many reasons why Blu-Ray won. It talks about how Toshiba was overconfident and let the price drift up, it gives a lot of credit to Time Warner choosing sides, and it mentions that the PlayStation 3 had a Blu-Ray player in it. There are many reasons why the market chose Blu-Ray over HD DVD, but the one people underestimate the most is the role of the PlayStation 3.

Customers knew that this war was taking place. They didn’t want to deck their living room with a Blu-Ray player and a collection of Blu-ray disks that would be outdated in a year. Each customer therefore had to choose a side. The fact that isn’t brought up enough is that buying a PlayStation 3 made that choice for the customer. Everyone who had a PlayStation 3 in his or her household no longer needed to make a choice. Why would they buy an HD DVD player when they had a device that did the same thing? This matters because for the owner of a Blu-Ray player, every other person who buys one is a positive externality. You can borrow or loan out Blu-Rays to others and you have more and more confidence that Blu-Ray won’t become obsolete.

Just like Facebook, people chose Blu-Ray because everyone else did. Eventually, HD DVD’s stopped being produced altogether. Blu-Ray hit a percentage of the market that HD DVD couldn’t come back from. The crowd chose Blu-Ray, and the crowd holds the power.




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