The WSJ article of 2008 described the challenge faced by manufacturers in “crossing the chasm” of Blu-ray players to the high-volume profitable mainstream market. In 2008, average consumers (i.e., the early majority market) were resistant to switch from DVD to Blu-ray, even knowing about Blu-ray superior image quality. Some of the reasons were related to Blu-ray players’ higher price and the more expensive Blu-ray discs as compared to a regular DVD. Another factor was that most of these customers didn’t have yet an HDTV display required for harnessing Blu-ray players’ full benefits.
The article also discussed the difficulty of introducing disruptive innovation in the marketplace (for instance, Blu-ray technology), which reinforces the theories about “crossing the chasm” from Geoffrey Moore and “the innovator’s dilemma” from Christensen Clayton. Also as discussed in “finding new markets for new and disruptive technologies,” about shifting the basis of competitions, Blu-ray manufactures must employ several tactics to communicate the value proposition of Blu-ray to the mainstream customers through a well-integrated marketing strategy. They should also orchestrate price cut to a level at which Blu-ray becomes very attractive to this significant market segment. Nowadays high-end Blu-ray models are sold for $100, and the actual price of an entry-level Blu-ray player had dropped from $230 to $50. Today Blu-ray discs are sold in the same price range as DVDs (ranging from $5 for classic titles to $25 on new releases). These developments on pricing were forecast by industry analysts, and it was fascinating to see in this article that in 2008 there were two leading competing technologies for high definition entertainment:
- Blu-ray;
- HD-DVD.
Blu-ray won because it had a wide variety of Hollywood titles when compared to HD-DVD players. But there are two real threats for the Blu-ray full-adoption by mainstream consumers: the rise of subscription-based on the cloud of high-definition video streaming (e.g., Netflix, Vudu, Hulu, Amazon) and downloadable movies from Apple’s iTunes services and other online providers. Those alternatives represent the next wave of disruptive innovation to the high-definition entertainment industry. How about 3D, 4K, VR applications?