Academic journal article Innovation: Organization & Management

Life Cycle Analysis of the Optical Disc Industry Market Innovation and Development

Academic journal article Innovation: Organization & Management

Life Cycle Analysis of the Optical Disc Industry Market Innovation and Development

Article excerpt

1. Introduction

The global optical disc industry depends on the systematic innovation of digital audiovisual technology in order to meet consumer demand for comprehensive digital home theater systems (Joshi et al., 2011; Steen, 2009). The Digital Versatile Disc (DVD) is an entrenched part of the world's media landscape and is approaching the mature phase. The Blu-ray DiscTM (BD) has emerged as the next generation of optical discs designed to replace the DVD format. Data from BD can be read, recorded or re-written depending on the disc type (such as Blu-ray Disc - Read Only Memory (BD-ROM), Blu-ray Disc Recordable (BD-R), Blu-ray Disc Rewritable (BD-RE)). Each Blu-ray disc holds approximately 10 times the storage of a DVD with a standard capacity of 50 gigabytes (GB). The demand for BD continues to increase and corresponds with the global adoption of digital high-definition televisions (Semiconductor Portal Inc., 2011). According to Japan Recording-Media Industries Association (JRIA)'s report, the recordable BD market is expected to expand to 412 million discs in 2013 from 113 million discs in 2010 (Semiconductor Portal Inc, 2011). On the other hand, the demand for CD and DVD discs hit record highs in 2004 and 2006 respectively and the market will continue to shrink as BD increases global market share. The technological intensity of the optical disc industry and the patterns of quick breakthroughs and obsolescence make it necessary for strategic business planners to understand and predict the life cycles of the marketplace. Knowledge of the technology life cycle is important since it provides firms with business intelligence necessary to plan resources for research and development, manufacturing, marketing, and sales.

The goal of this study is to model the present and future development of the optical disc market and analyze trends from both supply and demand perspectives. On the technical supply side, trends of relevant patents are studied (Dolfsma & Leydesdorff, 2011). On the demand-driven side, the financial performance of DVD and BD sales are analyzed. Previous technology forecasting studies have used life cycle curves to predict technological and market development of emerging technologies for products such as global positioning systems (Yuan et al., 2007), and photovoltaic (solar) cells (Liu et al., 2011). No research has mapped the emergence of technical innovations related to the markets of systematic innovation driven by consumer demand such as digital audio-visual technologies. In order to explore the history and evolution of the optical disc industry, this research provides a life cycle analyses of the technologies and market trends. Logistic curve modeling is used to forecast technology trends and market development for DVD and BD. The paper is organized in the following sections. Section two introduces the industry and market for the DVD and BD technology. Section three introduces the pearl curve analysis and provides reasons for applying it to this technology sector. Forecasts of DVD and BD technology trends, market trends, and sub-product patent trends are presented in Section 4. Finally, Section five discusses the managerial implications and future development of the optical disc industry. The conclusions are provided in the Section six.

2. The optical disc industry

The global optical disc industry is sustained by the systematic and continuous innovation of digital audio-visual technology. The optical discs and standards developed over the last three decades are divided into four stages including Compact Disc readonly-memory (CD-ROM), recordable (CD-R) and rewritable (CD-RW), DVD-Video, and BD (Joshi et al., 2011). When DVD technology emerged in 1997, digital sound and videos in DVD format quickly entered the global home entertainment market and revolutionized the music and movie industry. The revolution repeated itself in 2006 when the industry introduced BD. A single BD disc is capable of storing 50 GB of information or almost 6 times the capacity DVDs (The CD Information Center, 2013; Moskovciak, 2010). …

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