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 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.