One researcher's word about format war

[JoeSp]

Found this to be an interesting read if you are a BluRay supporter:

http://www.homemediaretailing.com/news/html/breaking_article.cfm?sec_id=2&&article_ID=10208

 

[jgantert]

That's all based on PS3 sales meaning there will be more BR capable devices out there. Not saying it might not end up that way, but so far the PS3 is the best thing BR has going for it right now, player wise atleast.

-John

 

[teamerickson]

I'm not a Blue supporter, but it was interesting. I don't know if I can trust someone who would use the word "reckon" in an interview.

 

[JoeSp]

If this is what Sony was hoping would happen then they made the right corporate decision. Not neccessarily bad news for gamers but if BD comes out on top then it was a very smart move. Eventually prices will come down and more popular games will be out and help drive sales of the PS3. Even my wife is enjoying movies on the PS3. She finds they have more depth and sound better. I also have a Denon3910 but the sound is better out of the PS3 -- go figure.

 

[CochiseGuy]

One thing is for certain: this "format war" sure is expensive - for Sony & shareholders:

Sony Sees Gaming Losses Growing in 2007
Wednesday January 31, 7:42 am ET
By Yuri Kageyama, AP Business Writer
Sony Sees Gaming Losses Growing This Year, Seeks to Break Even in Division by Next Year

TOKYO (AP) -- Price cuts for the PlayStation 3 video game console are among the factors Sony is studying as it seeks to break even in its money-losing gaming business next fiscal year, a company executive said Wednesday.

Startup costs for the PlayStation 3 were the main reason for the 5 percent drop in Sony Corp.'s quarterly earnings announced Tuesday. The electronics and entertainment company also said the 20 percent price cut on the game machine in Japan, announced even before it went on sale in November, hurt profits.

Sony Senior Vice President Takao Yuhara said red ink in the gaming division for the fiscal year through March could turn out to be worse than the 200 billion yen ($1.6 billion) operating loss forecast for now.

Worried investors sold off Sony shares, which fell 2.8 percent in morning trading in Tokyo.

Costs for flying in PlayStation 3 machines to the U.S., advertising and other startup expenses were higher than the company had anticipated. But Sony hopes to break even in gaming during the following fiscal year, ending March 2008, Yuhara said.

But PS3, whose predecessor PlayStation 2 dominates the sector, isn't selling as briskly as the other new console on the market, Wii from Nintendo Co., which makes Pokemon and Super Mario games.

Nintendo, which saw profits for the first nine months of the fiscal year soar 43 percent, has shipped 3.19 million Wii machines globally.

And last year some folks were making a big deal of Toshiba's supposed $200 loss on each A1 HD DVD!

On the bright side, the PS3 looks like a real bargain for owners. On a more sobering note, I'm glad I don't own Sony stock, and I think I'll stick with HD DVD.

 

[williamkmurphy]

I don't know the exact subsidy for the ps3, but think about this...
every 1.5 million or so ps3's that sony sells costs the company about a BILLION dollars assuming a $650 subsidy which probably isn't that far fetched considering some of the standalones go for $1000 to 1300.

 

[JoeSp]

The lost per PS3 right now has been reported by many differant sources as $200 not $650. And that makes sense seeing as how some 2nd genertion BD players are sporting under $800 RSP. I tend to believe that the loss is much closer to $200 a console then $650. That would make a loss of 3 to 4 hundred million on 1.5 mil sales. That is still a heck of alot of money. Sony would have to sell alot of BD movies to break even on this deal.

On another note -- there is news from differnant sources that Sony is thinking about a price reduction this year to increase slow sales. They must be selling a ton of BD movies to think about doing this.

 

[navychop]

Or hope to sell a ton by putting out a less expensive player.

 

[John Kotches]

The lost per PS3 right now has been reported by many differant sources as $200 not $650. And that makes sense seeing as how some 2nd genertion BD players are sporting under $800 RSP. I tend to believe that the loss is much closer to $200 a console then $650. That would make a loss of 3 to 4 hundred million on 1.5 mil sales. That is still a heck of alot of money. Sony would have to sell alot of BD movies to break even on this deal.

The numbers floating around are between 200-300 / console depending on which model it is.

On another note -- there is news from differnant sources that Sony is thinking about a price reduction this year to increase slow sales. They must be selling a ton of BD movies to think about doing this.

No. They have to meet or exceed sales projections. This is orthogonal to the sales of BD movies.

 

[jpn]

I really don't see much reason why 2 formats cannot coexist indefinitely. Probably within 12-18 months multi-format players will reach the market, then it's all meaningless. We've had DVD-R/RW and DVD+R/RW for years now... there is no reason we can't have DVD-HD and BD in the same fashion.

 

[navychop]

Yes there is. Licensing. If either does not want to allow a dual format player, it won't happen. That LG player is really a BD player that can "sorta" play HD-DVD, for the most part.

And neither the studios nor the retailers want two to continue. The added costs of producing, stocking and tracking twice the number of product items is not trivial.

 

[BobMurdoch]

Or hope to sell a ton by putting out a less expensive player.

Or realize that demand is much less than they thought for a player that expensive.....

And I KNOW that the 360 + the add on equals the PS3, but not everyone cares about higher def video. Many are playing it on a 20-25" analog set...

Also, Sony lost a bunch of exclusives (GTA, Assassin's Creed, etc.) while Microsoft adds to them (Halo, Gears of War, Dead Rising). They need to do something fast or they might even lose to the Wii in market share....

 

[williamkmurphy]

They need to do something fast or they might even lose to the Wii in market share....

I don't think they can quickly redesign either the xbox or ps3 to sell for 250, make money on it, and have a kick ass controller interface. I know its off topic but... the last console that I (parents cause I was young) bought new was a SNES...I bought a used 64 for smash brothers so obviously I am not a gamer. The whip cracker hasn't played games in forever and is now addicted to my friend's Wii. The ps3 and xbox don't even interest us. The Wii is the king of parties you have almost 30 year olds that haven't played a console in quite awhile lining up to play and do so until their bowling arm hurts. And yes I was sore for two days after boxing (sad). Lets see a ps3 do that!

 

[jpn]

I don't think they can quickly redesign either the xbox or ps3 to sell for 250, make money on it, <snip> The Wii is the king of parties you have almost 30 year olds that haven't played a console in quite awhile lining up to play and do so until their bowling arm hurts. And yes I was sore for two days after boxing (sad). Lets see a ps3 do that!

What are you kidding???? The PS3 processor all by itself, in quantity, is more than $250. That thing would do nicely in Server hardware! It's a pricey box and they're still losing $ on it.

As for the party-box Wii, I've seen some parties where 40-somethings had a blast with it. There's something about being able to box with your kids, knock them out, and have nobody call the cops! The hard part is keeping the home furnishings safe while alcohol flows and arms fly!!!

 

[williamkmurphy]

What are you kidding???? The PS3 processor all by itself, in quantity, is more than $250.

That was my point. Nintendo was smart to go with a simple cheap design with no production problems.

 

[jpn]

That was my point. Nintendo was smart to go with a simple cheap design with no production problems.

Not so sure how cost-of-hardware compares to the xbox 360... the Wii's custom IBM processor and custom-graphics can't be cheap. It lacks a hard drive, but otherwise? Yes, off-the-shelf stuff like the SD slot, but add-in the wireless, the gamecube ports... not so simple, and it adds-up. And what about those remotes??? Bluetooth? Accelerometers? Not so cheap......