The DVD vs. DIVX Standard War: Empirical Evidence of Network Effects and Preannouncement Effects

The DVD vs. DIVX Standard War: Empirical Evidence of Network Effects and Preannouncement Effects

David Dranove, Northwestern University, and Neil Gandal, Tel Aviv University

1/01/2005
(Original Publish Date: 2003)

In this paper, we empirically test for network effects and preannouncement effects in the DVD market. We do this by measuring the effect of potential (incompatible) competition on a network undergoing growth. We find that there are network effects. The data are generally consistent with the hypothesis that the preannouncement of DIVX temporarily slowed down the adoption of DVD technology.