The digital streaming game is taking off full force. Personally, I own a VUDU and I love it. I don’t sacrifice quality and I get the latest titles at the same time as DVD. Oh, and it cost less than most Blu-ray players.

Blu-Ray just looks much better than overly compressed iTunes HD content or other VOD content.

Sat Radio sounds better than staticy FM or compressed iPod MP3’s but again easy access trumps quality.

Though your first point seems to imply that these failures occurred because of the presence of web, which seems to be false, particularly with BluRay.
The value proposition with BluRay simply isn’t compelling enough to justify the cost. When DVD first arrived on the scene, it provided a picture and sound boost that was recognizable on most TVs that were in circulation and TVs that would even better show off the image quality could be bought at not a significant cost. Additionally, users got commentaries, deleted scenes, games, etc.
The problem with BluRay is that the only value proposition is a boost in image quality (and sound, I guess) which needs a particularly expensive upgrade in TV to realize that enhanced image quality. BluRay’s failure is that it relied on another technology that simply wasn’t in place while providing little extra value itself. This failure would have occurred with or without the web.

There is one difference between Blu-Ray and Sirius that was overlooked.

Sirius XM does have some programming that is not available to customers in any other way plus, it was to be commercial free.

However Blu-Ray is just a “shinier new penny” in the DVD world. Since most people don’t have a TV that can take advantage of the higher resolution, soem that have purchased Blu-Ray players are sheeople who’ve been duped into believing Moore’s law exists for anything technological.

I remember in the beginning, they said satellite radio “would” have NO commercials (a plus for me). Have you heard the volume of commercials lately? I’m just waiting for the Sham-wow guy to show up. Satellite also hosts cutting edge shows and exclusive content. Remember the David Lawrence Show? It is hard for me to catch in Texas without satelite. Stern. (lets not discuss if he was overpaid or not, some think it was an advertising gimmick, etc) ESPN Radio

Both are going to suffer in this economy as people re-define important and necessary expenses.

Unfortunately, Obamanomics and the economic bailout won’t help these two that much. Perhaps Sirius XM a bit more, as bank liquidity might allow investment to flow in.

-James

You meant to write “There is a recession.” For some reason you preferred to use 17 words instead of 4.

But I agree w/ you for sure on market before market share and not ignoring your balance sheet. – Thanks for the article, look forward to more of your unique perspective.

You’re trying to compare two entirely different markets with two entirely different approaches to market segmentation and draw some type of parallel.

SiriusXM has a problem because they forgot that they needed to charge enough money on their service to cover their operations. They are a subscription business – the model is clear. Time to get that SG&A down to where it should be for the revenues the company actually generates.

BluRay is actually doing fine in the market. It has been selling ABOVE the curve of DVD.

Both technologies are suffering from a simple microeconomics problem of left-shift demand caused by dropping incomes. Unfortunately for both, that shift is coming during their growth phases when they really need to expend more capital to get their critical mass for the next set of consumers.

That said, SiriusXM has a business problem of never really being necessary or demonstrable unless you had the service in the car. I just purchased a vehicle this year that allowed be to even experience it. Before then I wasn’t worried about it. Even now, I don’t see the point of spending money just to not have commercials and if I want better music my new vehicle has an iPod interface so I can listen to what I want without a monthly subscription fee. Since there is a near-peer substitute, why would I pay for SiriusXM.

The BluRay player is probably the last optical medium the market will see and its a good one with support from all of the manufacturers in the market. You can’t go into an electronics store without seeing them and they are getting cheaper and they are going to keep growing in number. Marketing and consumer behavior trends have already shown us this market shift. BRD may never reach the height of DVD, but it certainly won’t be a business failure except to those who don’t understand business. There will continue to be a market for optical media for at least another decade. Hell we JUST got rid of VHS.

So while your comments are interesting, you’re going to have to really step your game up around here. Random rants with nothing but conjecture to back it is not the best way to stick around.

That is, of course, a perfectly valid reason to criticize a company. You describe the reason why first movers often end with permanent cost disadvantages relative to those companies that start second, third, fourth, etc. Companies like Amazon.com, that seem to get a areal advantage from going first, are the exception, not the rule, in business.

I’m having trouble thinking of any companies that start that way. My first thought was General Motors, but it cobbled together several small car companies who were already successful. Most companies that start with too much money end up like Taligent – they develop a fatal internal politics, more focused on satisfying their initial investors than focused on satisfying customers.

I think Sarah makes a good point about Sirius – this is not the way to start a company.

Technologies are a little different than companies.
While it is easy to think of a lot of technologies that got obscene amounts of funding and then failed, I can also think of a few counter-examples.
The OS/360 project at IBM, circa 1965, involves one of the most famous budget overruns in the history of computers, yet IBM pushed on, stubbornly, and eventually the project helped secure IBM’s total dominance in mainframe sales.

It is interesting to remember some of the technologies of the 90s. There were “push” technologies, which many companies tried to promote, though Marimba was more associated with it than any other company. There were also new “document-centric” technologies. I recall reading long articles in MacWorld, circa 1995, about how all current operating systems were application-centric, but in the future all operating systems would be document-centric. These were technologies that received a lot of investment, and they received a lot of attention from the press. Very little ever came of them.

Blu-Ray doesn’t seem to belong to this class of vaporware. It has actual sales, actual fans. But how long would it take to earn back the money spent on it so far? I think Sarah Lacy makes a good point in #2, this could be a great business, but the initial roll out has been poorly handled.

I think Point #2 applies with special force to Sirius. Surely this could have been a viable business, but the company has been sunk under the weight of the heavy up front deals that it committed to. Poor cash management, which is an inevitable side effect of starting with too much money.

Now the reason why they liked BluRay over HD was… pure marketing. I heard things like “the quality on BR is better. BR has more capacity.”

Forgot if any of the above is true (yes BR discs hold more data, but they use the same codecs, so I didn’t understand the image quality thing). The REAL news here is that NON-GEEK PEOPLE WERE TALKING ABOUT BLU-RAY AT A BBQ! People are genuinely interested in owning movies and in HD quality. And they will even re-buy movies they own in SD DVD to HD DVD just like they did with VHS to DVD.

I don’t fully understand this article’s intention of comparing Sony with Sirius. DVDs are a proven money making winner; Satellite Radio is a new concept where the previous model was FREE to the listener. Both spend an exorbitant amount to promote their brands but Blu-Ray is here to stay. They get a fee every time another company releases a Blu-Ray DVD. In the end, did Sony pay too much to win the battle vs HD?

The main competition is new media — streaming video via IP, full downloads, bittorrent (piracy), etc. There are a good number of big companies trying their hand at supplying movies. It is a good thing people like to own a physical copy of the movie they just paid for, but with each new generation they get used to doing things a new way. Kids are born using computers and the internet. They don’t even use CDs anymore. It’s all about mp3 and digital. Sony needs BR players to come down in price a lot, and NOW so they can reap some rewards before these emerging services take off.

One thing: if you do decide to spit in my face, don’t run away afterwards.