Part 2 of 3: What makes a successful niche format.
At first glance, a successful niche format seems to be an oxymoron because if a niche format sold very well, it wouldn't be a niche format. However, there is a place in today's market for formats that never quite take off yet still sell just enough to be profitable. Indeed, most niche formats are well respected within the audiophile/videophile communities although largely unknown to the general public (hence the niche name). Some examples of niche formats include DAT (popular with amateur musicians, DAT also mutated into a data backup format for computers), records (the once king of all audio formats is still strong in clubs and discos as well as the audiophile community), MiniDisc (more popular in Japan than the U.S. however) and Laserdisc (unfortunately being rapidly displaced by DVD).
In part one, we had come to the conclusion that availability of software and price/value meant more than technical superiority. However, for niche formats, these rules don't seem to apply. For example, among the formats I listed above, only the record can be considered cheap (although some of the high-end turntables have heart stopping price tags attached to them). Furthermore, while Laserdisc and records both rate highly in the availability of software area, DATs and MiniDiscs do not. In fact, I can't say I have even seen a pre-recorded DAT. However, DATs and MiniDiscs are recordable which does help explain why these formats are still around.
More tellingly, these formats were/are considered more technically advanced than their peers (whether or not this technical advantage is real or imagined is another matter). For example, DAT are capable of recording material at a higher sampling rate than any other consumer recordable format. Records are supposed to sound more "smooth" than CDs. MiniDiscs, while audibly inferior to CDs, were re-recordable years before CD-Rs and CD-RW hit the big time. Laserdisc was the format of choice for home theaters for 20 years. It is obvious that certain segments of the buying population need/want something different than the rest of the buying population.
Another thing to consider is that none of the niche formats mentioned above were actually intended to become niche formats. All of them were marketed (some of them heavily) to the general public. Some of them were successful (or at least in the running) before becoming niche formats (i.e., records, LD). However, in the end, all niche formats fell by the wayside compared to their mass-marketed. Nevertheless, they managed to survive when so many others have disappeared. So what enabled these niche formats to survive while so many other failed?
One factor is that most of the niche formats mentioned here are backed by huge electronic companies that are unwilling to let them die. For example, both DAT and Minidisc are backed by Sony. Pioneer has been a big backer of Laserdisc from the early days. Records are an exception - there is no single large company backing it.
Finally, and most importantly, the few people willing to buy these niche formats are often willing to pay a premium. Beta was backed by Sony, just like DAT and Minidisc. However, few people were willing to pay a premium for Beta, especially since Sony released better versions of Beta (Betacam SP) for the professional market.
Its interesting to note that Sony is targeting a format (SACD) directly at the niche market, bypassing the usual path a niche format takes. However, this is a subject for Part 3 (coming next week).
2600.com has lost its court battle. Eric Corley, owner of the 2600.com website was sued by the movie studio because he had posted the DeCSS code on his website. Lawyers for 2600.com had unsuccessully argued that the posting was protected by the first amendment. Unfortunately, Judge Lewis A. Kaplan did not agree and ruled that 2600.com had violated copyright law.
New video and audio formats don't come around that often. Even fewer are successful enough to replace an existing format. For example, records lasted 100 years before being largely supplanted by CDs. VHS has lasted around twenty years so far and is likely to be around for at least another five to ten years. Ditto for the compact cassette.
However, when a new video and audio format is launched, it is seldom alone. Its seems as if new formats come in waves. In the early 1980's, during the birth of home video, VHS had Beta (a.k.a Betamax), Video 2000, CED (a.k.a. RCA SelectaVision) and Laserdisc (a.k.a. Laservision) to compete against. Similarly, during the early 1990s, recordable digital audio formats where popping up all over the place - CD-R, DAT, DCC and MiniDiscs were launched within a span of a few years.
Once again, we are in the midst of another wave of new formats. In the past two to three years, we have seen the launch of DVD, DVD-Audio, SACD, DIVX, several recordable DVD formats and ATSC DTV (a.k.a HDTV). You might have noticed that many of the formats I have mentioned so far are no longer with us. Beta, DCC, CED and DIVX have bitten the dust (DIVX died an especially quick death). Some of the other formats I have mentioned have not been raging successes, yet have lasted for many years as a niche format (LD, DAT, MiniDiscs).
So why do some formats survive while others fail? Does the most technically superior format survive? Or does the cheapest format win? Is there a single reason, a golden rule, why a format survives? Or is a combination of reasons? First, lets look at . . .
Part 1 of 3: What makes a successful format
I think the best way to see why a format succeeds is to examine the similarities and differences between it and a similar format that failed. The best areas to compare are technical superiority, price/value, availability of software, and manufacturer's support. I think some ideal comparisons are VHS vs. Beta, CD vs. the record, as well as DVD vs. DIVX. While, DVD has not reached the same level as success as VHS or the CD has, it is growing quickly and is fairly recent, so I'll include it in this comparison.
A quick tally of the votes reveals:
VHS - 2 wins, 1 tie.
Beta - 1 win, 1 tie.
CD - 1 win, 2 ties.
Record - 1 win, 2 ties.
DVD - 3 wins, 1 tie.
DIVX - 1 tie.
The two categories in which the most successful format either won or tied is price/value and availability of software. The category which matters the least: technical superiority (blasphemy to videophiles and audiophiles). Interestingly, the CD failed to win decisively over the record, which is probably why the record is still around as a niche format.
Coming next week: What makes a successful niche format?
8/8/00 - In what seems to be an exercise in futility these days, Pioneer has announced Rules of Engagement (LBX) for release on Laserdisc. Preorders are due September 12th, so if you want to see this one, preorder it by then. While you're at it, preorder everything in the "hold" section in the Release Calendar (except for Superstar).
Meanwhile, there will be no Laserdisc release in August (unless something gets re-scheduled) since Erin Brokovich has been put on hold.
8/5/00 - With Laserdisc production winding down, the amount of news to report has been dropping quickly. For example, this month, there is only one title scheduled to be released. That title is Erin Brokovich (LBX,DD) and it is scheduled to be released on August 15. However, that title may not even be released. After all, there hasn't been a Laserdisc released since End of Days.
With that in mind, I'll have to find something else to write about before both you and I get bored out of our collective minds. Therefore, I have decided to write a three part series on video and audio formats. I will be examining what makes a video or audio format sink or swim. I'll be looking at VHS, DVD, Beta, MD, DCC, DAT, LP and LD, of course.
Here are the subjects and tentative posting dates:
Part 1: What makes a successful format - 8/12/00
Part 2: What makes a niche format (LD!!!) - 8/19/00
Part 3: Predictions for the future a.k.a. Will DVD-Audio, SACD, and HDTV survive? - 8/26/00