The recently chosen digital video standard: playing the game within the game

Abstract

In the recent process leading to the agreement on the digital versatile disc two product standards have been developed: one by Philips and Sony, and the other by Toshiba and Time Warner. Three actions in the process of standardization have startled business analysts. First, Matsushita's choice to support the Toshiba-Time Warner standard. Second, Sony's statement to unconditionally market the standard developed with Philips. Third, the unexpected agreement between parties on a uniform standard. We show that these moves in the game concerning the digital video standard should be viewed as a game within a larger game. The larger game encompasses the players' interest beyond the digital technology. We develop and apply a straightforward managerial framework for product standardization games that supports managers looking beyond the small game.