The DVD vs. DIVX Standard War: Empirical Evidence of Vaporware

David Dranove, Northwestern University , and Neil Gandal, Tel Aviv University, University of California, Berkeley, and CEPR

1/01/2005
(Original Publish Date: 11/9/2000)

In this paper, we empirically measure the effect of the DIVX preannouncement 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 in the DVD market and that the preannouncement of DIVX slowed down the adoption of DVD technology. This suggests that strategic preannouncements can indeed affect the outcome of a standards competition.