Sony Blu-ray A Campaign for a High Definition Movie Future

Bryan Dickey Summer 2007

Professor: Dr John Mayo

MMC6469: Communication and Change: The Diffusion of Innovations

Table of Contents
Page Introduction Innovation Analysis Target Audience Analysis Campaign Analysis Competition Conclusion Bibliography

Introduction

Sony Corporation is one of the leading manufacturers of electronics, video, communications, video games and information technology products for the consumer and professional markets. Sony Corporation sells products worldwide and is based in Japan. They have annual sales of over $70 billion with over $18 billion being in the United States. They also view themselves as innovators in the consumer electronics industry. They were the first company to make portable music players popular with their Walkman line. They also were codevelopers of the Compact Disc (CD) and the Digital Video Disc (DVD). Sony Corporation has recently rolled out their newest and perhaps most important product innovation in the last few years. This innovation is a successor to the DVD. The Blu-Ray Disc will allow high definition media to be placed on a disc and played back through the help of a Blu-Ray Disc player. Both of these products are tied together to be successors to the huge DVD market which is currently the standard for consumers watching movies at home. Sony has created a very large scale campaign to help Blu-Ray to become the industry and consumer standard. This paper will set out to analyze and critique Sonys campaign strategies to put Blu-Ray on top. This will be done in regard to Rogers Four Main Elements in the Diffusion of Innovations. This paper will analyze the Blu-ray technology (the innovation), Sonys campaign for Blu-ray (how it is communicated through

many channels), when each element of the campaign will roll out (over time) and Sonys target audience (the members of the social system) (Rogers p.11) . The competition that Sonys Blu-ray technology will face in the form of HD DVD and how that plays into their campaign will also be addressed.

Innovation Analysis
Sonys most recent innovation in the consumer electronics market is the Blu-ray disc technology. This includes the discs themselves as well as any players and readable/writeable computer drives. This set of products is designed to be an innovation of the home entertainment market. Blu-ray is a high-density optical disc format, similar to a DVD, for the storage of digital media. The main function of the technology is the ability of the format to store and play highdefinition video. High definition video and audio content is the new wave technology for home audio and video. High Definition televisions (HDTVs), which are capable of showing content in the high definition format, are growing in popularity in the United States. By the end of 2007, approximately 36% of households will have at least one high definition television, and fewer and fewer non-HD televisions are being sold. This type of technology will be the standard for all televisions not to far in the future. Blu-ray players can play Blu-ray discs on the HDTVs at full resolution in full high definition video and sound. These discs are made up of a high density format optical disc used for the storage of digital media, most notably high definition video. The name of the disc comes from the blue-violet laser that is used to read and write the discs. The innovation is intended to replace DVD technology. The Blu-ray discs can hold a substantial amount more data than that of a DVD. For example, a dual layer DVD can hold about 8.5 gigabytes while a Blu-ray disc can hold about 50 gigabytes. This large amount of extra storage on

a similar sized disc is what allows the high definition media to be placed on it and shows that Blu-ray is a substantial innovation over DVD. This additional space allows 9 hours of high definition media to be stored on a dual layer disc or 23 hours of standard definition media. It is possible that in the future technology will give consumers access to discs with more layers allowing up to 250 gigabytes on a single disc. These discs have been created but can currently only be utilized using players not intended for release. To utilize this new high definition technology, consumers must also have a Blu-ray disc player. It will allow them to watch Blu-ray disc movies and record onto the Blu-ray discs. The Blu-ray Disc Association has also recommends to manufacturers that all Blu-ray drives be backward compatible with DVD technology so that consumers DVDs can still be utilized on their new players, albeit, in standard definition. The last use of Blu-ray discs is for Sonys gaming console, the Playstation 3. All games on the Playstation 3 utilize the Blu-ray technology and also allow the gaming console to serve as a Blu-ray movie player. More will be discussed about the influence of the Playstation 3 in the Campaign Analysis section.

Target Audience Analysis

Sony has a target audience for the Blu-ray disc technology. The target audience for this technology is actually everyone who currently owns a DVD player. The technology is the next step in the evolution of the home theater experience and it is akin to the complete transfer from VHS technology to DVD technology. As of late December 2006, 81.2% of U.S. households have DVD players. This number has grown from the number of households that had DVD players in 1999, at 6.7%. Sony is hoping to take over this market with a technological innovation that is as superior to DVD as DVD was to VHS. The campaign that Sony has planned for Blu-ray must take into account the different groups of the target audience. Innovators The innovators in this target audience are going to be relatively wealthy individuals and families that pay attention to the technology market. They want to always have the newest technology available and are able and willing to pay for it. This groups venturesomeness is almost an obsession, states Rogers (p.282). They then become people of a more cosmopolite nature. The have a large enough set of funds that they may comfortably take risk on new technology and they often have a flair for things that others may seem as risky. This group will already have the HDTV that Blu-ray requires for functionality.

Early Adopters The early adopters in the technology market also pay close attention to new things in the technology market. They will likely already own HDTVs and have the funds to purchase the Blu-ray player when they come out in stores. They are also likely to be well respected in their local communities and are often opinion leaders for their peers. This group can help trigger the critical mass by adopting an innovation. This group is the most important group to have on Sonys side when they have to deal with any competition as will be discussed later. Early Majority The early majority in the technology market pays attention to the technology market but wants to wait a bit to see how things are going. They are the group of people who adopt just before the average member of the group does. This group interacts with their peers in the group but is rarely an opinion leader (Rogers, p.283). This group also is very important to address for Sonys Blu-ray campaign. They make up a third of all members in the group and therefore the key in getting greater adoption of the system as a whole, which is Sonys main goal. Late Majority The late majority are relatively skeptical of new technology. Rogers states, The late majority adopt new ideas just after the average member of a system (p.284). When it comes to the Blu-ray technology, members of the late majority will likely wait until a large number of their friends have had the players,

they have been able to see them in action, and/or the price has come down to make the new technology accessible. Laggards The laggards are the last to take on a new technology. They are the most traditional group and they possess no opinion leadership in this group (Rogers, 284). They will likely wait to take on the technology until the price has come down significantly, availability is high, and bugs are completely worked out. They are also likely to wait until they have no choice but to adopt. Laggards in this target audience are likely to be currently moving from VHS technology to DVD and will not likely think about Blu-ray for quite some time. This group will need to be considered for the later times of the campaign. The target audience is so large that there is a large difference between the innovators and the laggards. This difference will denote a campaign that has many tactics and a long roll out period.

Campaign Analysis

Sony has put together a large and well planned marketing campaign to move Blu-ray to the forefront of High Definition technology. Mike Fasulo is the Chief Marketing Officer at Sony and has responsibility for making the campaign a success. He has worked with Sonys marketing team to come up with a comprehensive campaign that informs consumers without confusing them with all of the technology changes that are currently on the cusp for audio and video technology. Television signals are in the process of changing from analog to digital signal, High Definition televisions are taking their place in homes, HD signal programming such as Discovery Channels popular series Planet Earth, and High Definition movies, recording and music are here. Sony wants to have HDTV be the "umbrella" under which all of Sony's marketing efforts will fall. Fasulo said the company's diffusion campaign will encompass all of their HD-related products. They hope that one campaign for all related HD products will be more clear and easy for the consumer to relate to. Fasulo also stated last June that Sony's marketing efforts will extend across all media, including print, billboards, television, "live" events and the internet. These segments are what make up the public advertising part of their campaign. To truly reach their target audience there is much more to the campaign than just advertising. There is effort in timing, partners, and movies that are extremely important to the diffusion of this innovation.

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Timing This campaign by Sony for its Blu-ray technology started long ago when it was developed in 2002 as a successor to DVD. The early version of Blu-ray was not intended to home video used and instead for business archiving and storage. It was not long before Sony realized it could be turned into a successor to DVD. One of the important parts of being a successful innovator in the technology field is being first to the market with the technology. This is where Sony had the first major misstep in their campaign. On March 31, 2006 in Japan and April 18, 2006 in the United States, the first high definition movie player hit the market in the competing format of HD DVD. Partners This technologys success almost hinges more on its acceptance by other companies than by the target audience. For Blu-ray to be a success, Sony needed to have movie studios on board so that movies will be released in the new format. They also need hardware producers to want to build players so that there is more access for customers in the market. Sony has made good decisions in making partnerships. They now have many partners on board supporting Blu-ray exclusively. The movie studios that are partners with Sony are MGM, 20th Century Fox, Disney, and Lionsgate. All of these companies have agreed to release their movies exclusively in Blu-ray format for the next generation of technology. Warner Brothers and Paramount are also producing movies in Blu-ray format

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although not exclusively. With these companies combined seven of the eight major movie studios are producing movies on Blu-ray discs. This is a good measure by Sony to increase the level of diffusion in the market. The more access to the movies that the target audience wants to see that are available in Blu-ray the better. Samsung, Apple Inc, Panasonic, Dell, and HP amongst many other are partners with Sony in the hardware department. Samsung was the first to have a Blu-ray player to market. While it is very important to have multiple companies producing the hardware for consumers to purchase, there is a misstep here. Sony should have had the first player available since it is their name that is most associated with Blu-ray. It seems strange to the target audience that the developer of the technology cannot get a player out quickly with few bugs. It makes the consumer question the technology as a whole to a small degree. It would have been better if Sony had put out the first Blu-ray player with Samsung and others following shortly or even on the same day. Since they had already been beaten to market in timing by their competitor, a more solid official rollout would have been a better choice. Retailers are another group of partners that are difficult to secure but can definitely increase the level of diffusion by increasing access. Blockbuster Video had been renting both HD DVD and Blu-ray in 250 stores until recently. Beginning in July 2007, Blockbuster Video will carry only Blu-ray in 1,450 of its stores. The original 250 will still carry both HD DVD and Blu-ray. Their online delivery service will also carry both formats. While renting movies online is

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growing, the more traditional segment of the market starting with the early majority and then moving to the late majority will likely see the ability to rent Bluray movies from Blockbuster as positive sign. It would likely take Blockbuster to fully switch to Blu-ray from DVD for the laggards to change. Target, while not a partner, has picked up Sonys Blu-ray player as the sole standalone HD movie player to be currently sold in stores. This means if you want to buy a HD player and you go to Target your only choice will be Blu-ray. This will be long with extensive displays in store. Online shoppers will be able to purchase both formats from Target. Movie Campaign This point in the campaign Sony is beginning to court the early majority. At this point many of their opinion leaders have Blu-ray players at home and now they themselves are deliberating on a purchase of one. They just need to know that it is truly right for them. This is where the next phase of Sonys campaign comes in to sway them the final bit they need as the innovation is already set to reach critical mass as this group moves in. Blu-ray technologys main purpose is to serve as a successor to the hugely popular DVD technology. Movies that can be watched in the comfort of the consumers home are very popular. This must be a major part to Sonys campaign for them to be successful and it appears that this is well integrated into their plan. The early majority of the target audience wants to get the player but they also want to know that they watch most of their favorite movies on it. Some of last summers as well as this summers most popular movies will be released

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solely on Blu-ray including the Spiderman franchise, the James Bond Franchise, Pirates of the Caribbean, all Disney/Pixar films, and the Da Vinci Code. This is where the partnerships with the movie studios and Blockbuster are so important. Another aspect to the campaign that is just beginning in July 2007 is free movies. Sony is giving away 5 free Blu-ray movies with the purchase of a Bluray player between July and September 2007. The consumers will be able to choose which movies they would like from about 20 films. While the limitation of movies is to be expected, there would likely be more diffusion if consumers were allowed to choose from the entire Blu-ray library. Another tactic of the movie campaign is to have the most movies available in Blu-ray format. Sony may have been beaten to the market but they have been determined to surpass HD DVD as soon as possible. As of July 17, 2007, there are 302 movies available on Blu-ray disc. As of July 3, 2007 there had been 241 movies available of HD DVD. This gives a large advantage to Blu-ray as consumers will factor in the number of available titles into their purchasing decisions. Media Events Media events can accomplish many goals for a company trying to showcase it latest innovation to the public and Sony tried to take advantage of this type of opportunity. In June of 2006, Sony set up a series of media events at the companys high-end Sony Style boutique stores in the top 10 U.S. markets. These events were invitation only. Invitations went out to members of the press, celebrities, and valued customers. This is where Sony introduced members of

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their target audience to Blu-ray for the first time. The members were primarily potential innovators and early adopters of this new technology. By inviting people who are on the cutting edge and want to try any new technology they begin the diffusion process. By having these events in the top ten U.S. markets they are catching more of the early adopted group and not just solely the innovators. These localites will be more likely to be the opinion leaders that will eventually lead to Blu-ray reaching critical mass, which is the point in which enough individuals in a system have adopted an innovation so that the innovations further rate of adoption becomes self sustaining (Rogers p.344). These media events also serve to inform greater parts of target group such as the rest of early adopters and the early majority. The members of the press that were present went home to write about the new Blu-ray product line in newspapers, magazines, the internet, as well as television. This spread of information to the public informs them of the new technologies existence even if they are not ready to even consider the purchase of it. Knowledge plays a very important role in technology campaigns. Internet Campaign Sony has set up a comprehensive internet campaign. The Blu-ray Disc Association, which includes more than 170 of Sonys partners, has set up an extensive information site at blu-raydisc.com. This site can provide anyone who visits with all the information that they would need to become very informed about what Blu-ray technology has to offer. It has information about movies and music available and coming soon, information about all available players,

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technical information, industry information, press and event information, and even an optional sign up newsletter for updates. This is a great information source for consumers to go to. It is also very easy to navigate. One of the few flaws that I saw with the website was that in the upcoming events page, there way an event listed that happened more than two month prior to my accessing the site. This may give consumers the feeling that Blu-ray Disc Association is not up to date and they may want to stray from the product. Another part of the online campaign is to set up an online contest where consumers can create their own ads for Sony Blu-ray products. This puts the consumers into a creative control position and will further spread interest innovator and early adopter groups who are most likely to create these ads. The opportunities for prizes such as free Blu-ray players will serve to further proliferate the innovation. There are also specially developed internet advertisements around the web. Some of these ads are similar to their print ads and are on the companion sites to the magazines they are featured in. There are also internet video ads that have been developed for popular sites such as YouTube.com. Each way that they access new technology to advertise the brand, Sony is more likely to gain interest from the target market that is interested in new technology. Television Campaign Television is a strong mass marketing tool. The advertisements that play in-between programs reach a large yet specialized audience based on what program the ad is paired with. Sony began its television campaign correctly by

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again first going for innovators, early adopters, and some of the early majority of the similar HDTV market. On November 17th, 2006, Sony began airing commercials that demonstrate the visual superiority of Blu-ray on solely HD channels. These commercials also showed scenes from popular movies that are part of the Blu-ray library. On July 3, 2007, Sony aired its first regular television commercial for Bluray products. It is a bold a beautiful commercial that main goal is to attract interest rather than sell a product. This is the start of the public marketing campaign for the majority of the market. They are taking the first step for these sectors by trying to peak interest in the new technology and let consumers know that something new is available that is superior to current technology. Another move that Sony is taking is enlisting in celebrity help. Dale Earnhardt Jr. will begin appearing in television ad campaigns for Blu-ray, HDTVs, and Playstation 3 (5). This move can be good and bad for Sony. It is bad because they are not really in the point in their campaign where this tactic will necessarily help. Dale Earnhardt Jr. is not likely to be the opinion leader for many people in this high tech focused market. Earnhardt Jr. is the most popular driver in the most watched sport NASCAR, not necessarily the most tied to high technology and advancement. This can be a good move for Sony however, as he may be an opinion leader in a cosmopolite sense to the late majority and the laggards.

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Print Campaign Sony is trying to capitalize on facets of mass media on this marketing campaign for Blu-ray. Even though print readership has been in a considerable decline for sometime, Sony has not ruled it out. Advertisements have been taken out in major magazines and newspapers. This includes mostly popular lifestyle magazines such as GQ and Popular Mechanics and more focused magazines such as Home Theater, Home Entertainment, and Wired (3). This will target those that are of a higher income level as well as those who are early adopters of new technology. Dale Earnhardt Jr. will also begin appearing in the print ads for Blu-ray and Playstation 3 as he does in the television ads mentioned above (5). Playstation 3 Campaign Sony also makes a line of very successful gaming consoles known as the Playstation. Playstation 2 as of March 2007 is the most successful home gaming console ever having sold almost 120 million units worldwide (4). Playstation 3 was released in November 2006 as a successor to the super popular Playstation 2. During the development of Playstation 3, Sony decided to install a Blu-ray drive and ensure that all games would utilize the new Blu-ray technology. All Playstation 3s would be capable of playing Blu-ray movies as well as Playstation 2 discs, and DVDs. Sony felt that a big opportunity to get more Blu-ray units out to the consumers would be to tie it to Playstation 3 and tap into the huge existing market. Many may argue that this was a huge mistake as doing so drove the price of Playstation 3 so high that many Playstation 2 owners were priced out of the

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market. This may have been a major mistake in terms of getting Playstation 3 to as many people in that market as possible but not so in terms of proliferating Bluray technology. Currently there have been almost 4.5 million units of Playstation 3 sold world wide. This number is very small compared to the number of units of Playstation 2 but it means that there are 4.5 million additional Blu-ray players in homes around the world not counting stand alone units. Campaign in the Future Where is Sony going in the future of this campaign? No one can be sure. This information is top secret insider information that they are keeping from their competitors in the HD DVD camp. However, difficult it may be to ascertain what Sony and the Blu-ray Disc Association have planned next it is more clear the path they should take. For Blu-ray to take hold indefinitely, Sony is on the right path. All of their efforts in the different areas of their campaign are heading in the right direction. They need to keep getting studios to release their libraries in Blu-ray. The greater the gap between the number of titles for HD DVD and Blu-ray the better. The Blu-ray Disc Association needs to better update its site and keep it monitored. There are some things Sony should do that they are not currently doing. Sony should invest in a large and dynamic website experience that shows the excitement of watching movies with superior picture and sound. Currently, the website is informative but boring. They should also do all they can to work with

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the Blu-ray Disc Association members to be the first to market the high definition player for under $200. This is the magic number for many consumers in the target audience of the early and late majority. Once the price dips below this number, consumers will decide to more fully take on the technology. It is important to get to this price point before the competition as it puts the technology in the range of affordability for most consumers. Prices of the Blu-ray discs should also come down as more consumers purchase the players. Over years the price of Blu-ray needs to come down to the level of DVD on discs and players. This will help bring the more traditional laggards into the fold. The television campaign needs to be increased in frequency over time on both HD and normal channels. As the number of household with HDTVs rises, the number of people who will consider Blu-ray will rise. People currently watch much of their television on normal channels on their HDTVs. These people need to be targeted. Another reason that this campaign still has a long uphill battle is the lack of compatibility with current televisions and the need for the target audience to first upgrade to a currently expensive HDTV. This campaign needs to be tied together with strong campaigns to increase the percentage of U.S. households with HDTVs. Another thing that they should consider is lowering the price of Playstation 3 to the level of its primary competitor, the X-Box 360. This will make it easier for that system to compete in its market and therefore get more Blu-ray players into homes.

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Competition

Rarely does a new technology or innovation come along in our capitalistic society without any form of competition. Sometimes this competition is so short lived that most consumers do not even notice. An example that is along the subject of this paper is that of the MultiMedia Compact Disc. This product was created at the same time as the Super Density Disc that went on to become what we know as the DVD. No one remembers the competition that occurred shortly between two formats of the same type of technology, they just remember DVD replacing VHS. It was a smooth transition for consumers. There are also times when the competition is much fiercer. Most people over the age of 25 remember VHS versus Betamax in the 1980s. There was a proprietary battle between two formats of video cassette tape that would allow consumers to watch movies as well as record them. Consumers were faced with a tough choice of either risking picking the losing format or waiting until one format was the winner. In this case, VHS ended victorious. Unfortunately for consumers, there is a repeat of the VHS v. Betamax going on with the new high definition video disc technology. Sony has created their proprietary hardware in Blu-ray. They face strong competition from Toshibas similar competing HD DVD format. Both of these technologies offer different access to the same innovation of high definition movies and recording capabilities at home.

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Toshiba has created a similar technology for use of playing and recording high definition media. It is called High Definition Digital Video Disc or HD DVD. It is also designed to be the successor to the DVD. It can store about 15 gigabytes per layer or about 30 GB on a dual layer disc. This is compared to the 50 GB on a dual layer Blu-ray disc. Also similar to Blu-ray, all HD DVD players

are backward compatible with DVDs as well as the same size. Both companies seem to have come up with their own ways to achieve the same innovation in technology. Toshiba began its campaign to make their technology the industry and consumer standard similarly to Sony by aligning key members of the industry with their technology. This HD DVD Promotion Group Member List, as they are called, includes Toshiba, Microsoft, NEC, RCA, Kenwood, Intel, Sanyo, and Memory-Tech Corporation as hardware supporters. Major studios that will be releasing their movies solely on HD DVD are Universal Studios, The Weinstein Company, and First Look Studios. There are other companies and studios that produce movies in both formats and have yet to determine if they will offer exclusives to either Blu-ray or HD DVD. One of the major differences between the two formats is that the Playstation 3s main competitor the X-Box 360 does not utilize the HD DVD technology for its games although an extra cost add-on will allow it to play HD DVD movies. Microsoft has said this was because the addition of HD DVD to the X-Box 360 would have pushed back development time, increased consumer cost, and created more issues with game developers. This has lead to a

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substantial advantage for X-Box 360 over Playstation 3 in that market. This may pan out better for Sony in the long run if Blu-ray does win. Playstation 3 may then reach its critical mass much slower than X-Box 360 and in the end take over. Although simple and not likely to play a big factor in the proliferation of either technology, naming does play a role in the acceptance of consumers. The successor to televisions as we have known them since the color TV is the High Definition television or HDTV. Even though most consumers do not yet have one of these they are familiar with the name. Toshiba has a big win in this area with the name of their high definition movie technology. In the minds of the average consumer the name HD DVD is a simple as self explanatory name for the successor of DVD technology. The average consumer who has not yet been exposed to Blu-ray is likely to be confused by the name at first.

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Conclusion
Sony has created a large innovation to the home audio and video market with their Blu-ray technology. They have followed Rogers model and taken into account the Four Main Elements in the Diffusion of Innovations, creating the innovation, communicated through many channels over time among members of their target audience (Rogers p.11). Sony and the Blu-ray Disc Association would like Blu-ray to completely replace DVD technology and be the sole format in the next generation. This may not happen however. There are currently manufacturers working on making cost effective dual format players that can play both the Blu-ray format as well as HD DVD. As of right now there is only one dual format player on the market that lacks some of the functionality of each format and costs more than the price of a player from each competing format combined. It is possible that if this technology becomes cheap enough Bly-ray and HD DVD may have to compete solely on movie library which is another reason for Blu-ray to continue to focus on that area. Sonys campaign may have some flaws but overall their campaign has a solid plan that seems to point in the direction of success. They face heavy competition from competing format HD DVD. It is very early in the competition to call a format winner either way, although Blu-ray has pulled ahead in the United States. Their campaign is set to diffuse the innovation but only time will tell when consumers in the large target market will be ready to take on the innovation.

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