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Abstract
This paper examines the factors that affect market dominance in a standards competition by comparing the VHS–Beta war in the 1980s with that between Blu-ray and HD-DVD in the 2000s. We first look at the changing home video market in terms of technological development. Then we move on to discuss three main strategies in a standards war: first-mover advantage, indirect network effects and software provision, and strategic alliances of hardware firms. We find that technological innovation is essential. Being a first mover is helpful, but not sufficient, in building a dominant position in the market. Historical evidence shows that Sony created a network of complementary firms for Blu-ray. Consequently, an effective strategy to become a winner in a standards competition appears to be building a network of complementary products and subsequently an installed base.
Acknowledgements
Our thanks to two reviewers for their helpful comments, and special thanks to our editor, Jorge Rodriguez, for his detailed comments and suggestions, which greatly improved the paper.
Notes
1. We are grateful to an anonymous referee for asking this question.
2. Samsung may have held most patents, but this does not mean that all the patents were valuable. The value of patents is highly skewed, with about 90% being worth little (cf. Scherer et al., Citation2000).