A forecast simulation analysis of the next-generation DVD market based on consumer preference data

Abstract

Just as standards wars over formats had characterized VCRs upon introduction to the market, the next-generation DVD standards war between Blu-Ray and HD-DVD lasted 6 years before Blu-Ray won the contest. Beginning with stated preference data drawn from a structured conjoint survey conducted before Blu-Ray became the de facto standard of the next-generation DVD format, we estimate consumer preferences on digital video players. A Bayesian mixed-logit model is used and market share simulations are conducted under various scenarios based on the estimated parameters from Bayesian mixed-logit model to surmise the future South Korean digital video-player market. Results indicate that consumers feel that network size and title availability are more important than hardware-related facets of the product, such as definition and storage capacity. The level of title availability and price of the Blu-Ray player for Blu-Ray's dominance over DVD will dramatically vary by the penetration rate of DVD players.