Blog 5: Increasing Returns & Red Queens

My daughter used her Netflix account to obtain “Paycheck” but due to some technical issues, she was unable to download, instead had to pick up the DVD from Blockbuster.  This is one example of the DVD continuing to have a presence in the marketplace.  Normally, downloading the video from Netflix would have been the optimal choice, saving travel time and purchase cost. 

Whether the competition between DVDs and video-on-demand should be viewed as an example of either Increasing Returns or Red Queens, one must examine both concepts and then determine: if the two technologies are competing against each other or did the two technologies reach the marketplace simultaneously.  If the technologies are competing with each other and one is trying to stay ahead of the other, then it is said to be a Red Queen.  If the two technologies reach the marketplace at the same time and one locked in market share, then it is considered Increasing Returns.   “Technologies need to be accepted in order to have an impact, and the rate of acceptance is based on many factors, only some of which relate to the quality and capabilities of the technology itself” (Thornburg, 2008, p. 3).

We know that the DVD reached the marketplace in the mid 90’s, locked in market share, was very expensive, but enjoyed a significant presence for quite a while.  Dr. Thornburg opined that when a Red Queen emerges, it can have a disruptive impact on the competition.  Since Video-on-Demand emerged in 1998, is competing against an existing technology (DVD) for market share and has not quite yet locked in market share, I consider it to be a Red Queen.  Anderson posited that DVD reached critical mass in 1998, a year later critical price drops, but had not reached displacement or free availability.  Eventually, the DVD loses its market share and will soon be commodified (Anderson, 2004).  However, even though displaced in the market, due to the digital nature of the DVDs, they will continue to have a presence in homes.

Video-on-demand has many of the attributes of McLuhan Law: enhances quick access to viewing choices, obsolesces DVD purchase, retrieves old movies not on DVD, and reverses media technology usages.

Tags: DVD. Video-0n-Demand, technology, Red Queen, Increasing Returns

Sarah D.

References:

Anderson, C. (2004). Chris Anderson of Wired on tech’s long tail  [Video]. Retrieved from http://www.ted.com/talks/chris_anderson_of_wired_on_tech_s_long_tail.html

 Thornburg, D. (2008c). Red Queens, butterflies, and strange attractors: Imperfect lenses into emergent technologies. Lake Barrington, IL: Thornburg Center for Space Exploration.