In this week’s studies we are discussing if DVDs and VOD (Video on Demand) are an example of Red Queens or Increasing Returns. Red Queens, according to Thornburg (2008), are when two technologies are dominating the marketplace in a head-to-head fashion. The competition to stay ahead of the other benefits the consumer as the competitors constantly improve the product to stay in the game. (The term Red Queen was derived from the notion of Alice in Wonderland with the Red Queen in hand, running simply to stay in place.)
Increasing returns, according to Arthur(1996) in his article entitled, Increasing Returns and the World of Business is when two
two innovations also begin to compete but one clearly dominates the other into extinction.
I do not think that DVDs and VOD are Red Queens. When VOD services began, DVD rental places such as Blockbuster had to begin adding to their repertoire of services. For example, not quite yet in the VOD stage, when Netflix delivered movies to the house, Blockbuster added that feature.
Then VOD services began to gain popularity including Netflix, and Blockbuster began to offer VOD services.
I do not think DVDs can compete with VOD, and that eventually VOD will eliminate the DVD market. Currently, however, VOD has not completely modeled the increasing returns yet because, in my opinion, of the human factor of ease of use, need for a new piece of technology, need to learn new technology, and because VOD generally involves commitment to a monthly service. Beta, VHS, and DVD players were all generally the same: Insert a media device into a machine, play, FF, Rewind, Stop, eject. The concept of VOD is different. It will take more time for people to move over to the new way. Also, monthly fees may not appeal to many (like myself) who watch only 3 or 4 movies a year.
Red Queens or Black Jack?
Thornburg (2008) warns us not to extrapolate the future from the past, that changes occur in a non-linear, exponential fashion with the appearance of wild cards at any moment. (A wild card, according to Thornburg, is an innovation that seemingly appears unexpectedly from nowhere and takes over the marketplace.) Arthur (1996) discusses his model of increasing returns and the new management style needed to accommodate this new business model. In Arthur’s discussion, he uses the analogy of gambling at a casino.
Using Thornburg’s reference to cards (Red Queen) and warning about wild cards and using Arthur’s gambling analogy, I propose that perhaps VOD could even lose to Black Jack. Black Jack basically trumps all. So a Black Jack innovation could simply trump all in the video marketplace and could be easy to use, easy to learn, convenient, not requiring learning complicated technology, and appealing to all. Black Jack is like Thornburg's wild card, but in this analogy, it may not be a complete surprise out of nowhere. Also, the term "Black Jack" has the connotative meaning of "I win!"
McLuhan’s Tetrad
In the end, I do believe that currently, VOD is beginning to replace DVDs, yet both have similarities in McLuhan’s Tetrad. Below I have put the DVD into a Social Tetrad and the VOD into a technology tetrad.
References
Arthur, W. B. (1996). Increasing returns and the new world of business. Harvard Business Review, 74(4), 100−109.
Thornburg, D. (2008c). Red Queens, butterflies, and strange attractors: Imperfect lenses into emergent technologies. Lake Barrington, IL: Thornburg Center for Space Exploration.
3 comments:
Koh,
Well said. I differ in opinion in that I feel that DVDs and VOD are in competition, but not to the point where one will replace the other. This, to me, is more a matter of convenience and less a matter of what will happen next.
John R.
I guess John, your definition of competition is about the DVD itself where I looked at it in terms of the vendor. Blockbuster knew its physical stores could not compete with NetFlix's mail service so they had to add that service. Then Blockbuster had to add VOD. So it was not like they could do something to the DVD to make it compete, but rather had to do something to their service offerings to compete. Actually as I type this, I am beginning to confuse myself.
Koh
Koh,
I like your analogy of the Black Jack as the sudden winner in the “video game” :-) Your posting reminded me of when Netflix first came out and eliminated the late fee problem. I’ve probably spent as much money at Hollywood Video on late fees as I have on the original rentals! It didn’t seem like it took very long for Hollywood to start offering rentals sent to your home or for Blockbuster to eliminate late fees.
I still don’t think it’s a case of Red Queens because the market still seems to easily bear DVDs sent in the mail, rentals in the store, and video on demand. However, I think that the actions taken by the video and DVD rental places in competitive response to Netflix benefitted the customer. Like you, we don’t like the monthly fees for Netflix, especially because we don’t rent that many movies either. We tried it for a while and then discontinued it. It’s very convenient now to be able to watch a lot of our favorite TV shows or watch movies on demand through Comcast, our cable carrier. A lot of the programming available on demand on Comcast is free.
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