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

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 six 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 estimated consumer preferences on digital video players. A Bayesian mixed-logit model was used and market share simulations were conducted under various scenarios based on estimated parameters 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-Rayi¯s dominance over DVD will vary by the penetration rate of DVD players.

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