Report: Sony facing massive PS3 losses

Chris Gerhard · 07-17-2007, 02:58 PM

Quote:

Originally Posted by MikeRox

Momentum released Total Recall in the UK, Optimum released La Haine (they get the rights to movies such as Spirited Away and Princess Mononoke over here), BBC are releasing Planet Earth (not Warner Bros in the UK). They both have several other titles out as well.

There are quite a few other companies starting to dip their feet into HD (on the whole) too including Bandai Visual who support both formats, Magnolia, First Look and Rhino all have HD DVD releases out next week in the US. Big River dip their toes into HD in August and Koch Distributing join HD in September.

Their presence may not be as well felt as the "major" studios. But alot of their output is often far better, and so for many people far more valuable to formats.

Rhino is Warner so I would expect releases on both formats from them and the Rhino releases might be good, I know I like a lot of DVD-A music releases from the Warner group.

Chris

The_Omega_Man · 07-19-2007, 03:02 AM

Quote:

Originally Posted by MikeRox

Momentum released Total Recall in the UK, Optimum released La Haine (they get the rights to movies such as Spirited Away and Princess Mononoke over here), BBC are releasing Planet Earth (not Warner Bros in the UK). They both have several other titles out as well.

There are quite a few other companies starting to dip their feet into HD (on the whole) too including Bandai Visual who support both formats, Magnolia, First Look and Rhino all have HD DVD releases out next week in the US. Big River dip their toes into HD in August and Koch Distributing join HD in September.

Their presence may not be as well felt as the "major" studios. But alot of their output is often far better, and so for many people far more valuable to formats.

Thanks Mike! I was looking for this info.... I have a few OTHER FUD Masters that I need to relay this too!

Omoplata · 07-19-2007, 06:17 PM

Quote:

Originally Posted by Chris Gerhard

If there is no 100% agreement, the side with the big majority should rule and that sure wasn't HD DVD.
Chris

Sorry, fanboyism is showing here. If you advocate for consumers then the side that best serves the needs of the largest and widest group of consumers is the one that should rule.

Unfortunately for your position, the whole BD model that Sony has set up, was sold to those hardware vendors based on maximizing benefit to vendors (via high revenue, and sustaining maximum hardware pricing over a longer period of time, keeping the Chinese from licensing the standard and driving average revenue down, etc.) without much regard to consumers except as sources of cashflow.

Now, Toshiba isnt doing this for altruism, either, they are obviously in it for long term success as well - however the proposition HD DVD was formulated to bear took into account certain mainstreamable aspects that better serve consumers e.g. standard DVD and CD compatibility out of the gate, more affordable price point and faster decreases in pricing over time due to choices in BOM, etc.

As far as studios, well, we will see what happens. They are mercenary to whatever large installed base can show it will buy many movies over the long run (e.g. a more substantial sustained revenue stream) which tends to point to a greater number of high-attach rate households.

PS3 remains a sticky issue because it is dual parts savior and smokescreen. We cannot derive much insight into underlying consumer appeal for either format's proposition by looking at a game console as the demos it appeals to are fundamentally different. So if you want to look at apples-apples you look at players. When looking at aggregate market to see overall installed base, you include PS3. That tells you total households, but to see what consumer behavior results from either camp's basic value prop, players are the key.

Now, looking at installed base tells you potential, but without context. PS3 has created a somewhat sizeable base thus far and eclipsed HD DVD. However PS3 as a PS2-style trojan horse fails as a long-run proposition - PS2 was 299 and then really exploded once it hit 199 and below. PS3 was 500-600 and has tanked as a result of this non-mainstream-accessible pricing - no sustainable mainstream volume in big numbers after all the fanboys and enthusiast early movers who will pay anything have run out.

So, PS3's contribution from this point forward will be anemic compared to what it did due to launch surges from the three major geographic launches that happened from late 2006 through March/April 2007 - Japan, US, and Europe. It doesnt sell well past launch because of the same reason BD players dont sell well - too expensive for most people.

Additionally PS2 sold into what, 120+ million homes worldwide? Maybe more? That's lifetime. it would be very, very optimistic for PS3 to ever hit that during its life cycle given the competitive market and its problems with outrageous pricing (over $800 in Europe for example). But let's say it does, and it still remains the big driver of BD household penetration.

However the end objective is to eventually supplant DVD, stated by Sony themselves. That market has sold well over 120M players into just the US alone, not even counting worldwide.

The biggest market potential comes from that huge mainstream DVD userbase - it dwarfs the primarily console audience that buys PS2/PS3, and is also comprised of a lot of different demos and income levels. And, in case no one has checked, this format war is a tempest in a teacup - the number of total players of both formats sold so far is positively tiny, and no one in the mainstream really cares because they are basically happy with DVD, and even $300 is pricey when DVD players are dirt cheap - they dont see a big reason to upgrade. At least not at the current cost differential.

You guys are enthusiasts so remember that. You are not the mainstream. People dont care about HD disc formats and wont until it gets affordable. No one is screaming about needing to feed 1080p content to their flat panels except the enthusiasts, which is a tiny, tiny niche compared to the mainstream market that will be the biggest revenue driver of success for whatever format succeeds. Remember that a huge number of people dont even realize they're not even watchin HD content on their HDTVs.

Ergo - no one cares about studio support, interactivity, BD+, internet connectivity, blah blah when the price is still seen as high to upgrade, and they are happy with DVD. Content is not driving hardware, we see this in the drop in PS3 sales and low BD player sales. Mainstream pricing will drive adoption.

If people were screaming for 1080p content, and put lots of value in the studio support and hardware support behind BD, then this would be a different race - they would show the support for BD by buying into the BD ecosystem enmasse despite the price differential. But they are not. BD is completely reliant on PS3 to survive.

Also consider that on the standalone player front we see something very interesting. HD DVD has consistently outsold BD, and boasts a much higher attach rate.

All this despite what is seen as "lesser" studio support and the marketing/branding/ad budget of one hardware company (Tosh) and Universal, and the HD DVD promo group - tiny in comparision and far outclassed in terms of the marketing budget and spend of the SEVERAL hardware companies backing BD, several studios, and so on. Plus the additional brand exposure for BD from the buckets of money spent promoting the PS3 around the world.

So.. it begs the question.. why on EARTH would HD DVD players still outsell BD players? I mean really. Could it be.. the price is more affordable to more people? Why on earth do PS2, 360, and Wii far outsell the PS3.. could it be that the price is more affordable to more people?

Well we do know that CEA research apparently says that yes, people are most motivated by price in their HD purchase decisions.

I am going somewhere with this Tolstoyish rant, which is that if we see that the affordability of technology helps make it more accessible and adoptable, and thus able to benefit a far larger number of people, AND if you at all support what's best for consumers...

How then do you support a HD format proposition that is much more expensive for hardware, will remain more expensive (and if Toshiba had not put pressure, would have remained at $1000 levels quite a bit longer), and has already demonstrated that the mainstream consumer does not care about its supposed superiority when presented with the cheaper competing alternative?

Anyway I'll shut up now.

Ntruder · 07-19-2007, 07:13 PM

Quote:

Originally Posted by Chris Gerhard

Personally, I think Toshiba is going to ultimately regret this mess. I do agree Sony has taken a bath and will never recover their Blu-ray investment, but Blu-ray will survive, there are too many companies behind it and I don't think Sony is the only company that blames Toshiba for this disaster.

Chris

I'm very curious about this comment. Why would you blame Toshiba for this disaster? Could you explain? I would strongly argue that you should be blaming Sony. I'm going to support my point from as much of an unbias point of view as I can.

evidence #1:
A Rogue Format:
Read this quote, from Wiki:

Quote:

The HD DVD standard was jointly developed by Toshiba and NEC.[1] On 19 November 2003, the DVD Forum voted to support HD DVD as the high definition successor of the standard DVD. At this meeting, they also renamed it HD DVD. HD DVD stands for "High Definition Digital Versatile Disc".[2] The format had previously been called the "Advanced Optical Disc" (AOD).

The DVD Forum, as you may or may not know, is a collaboration of electronics companies (Hitachi, Mitsubishi, Sony, Toshiba, Pioneer, Phillips, Time Warner, etc) in charge of deciding and communicating DVD standards. Now, in 2003, they officially named HD-DVD as the successor to DVD. Then suddenly Sony decided to challenge that and push their own format, which required the scrapping of all disc manufacturing equipment, complicating the entire process. Toshiba developed the official successor to DVD. Sony developed a rogue format that really targets a niche market, but made to challenge what was already decided by the industry standards governing body. So Sony ignores the decision of the DVD Forum, which THEY are a part of, and now we, the consumers, get shafted. Again.

evidence #2:
Sloppy management: HD-DVD has standards that all discs and all players must meet. I'm sure you are familiar with Blu Ray live. Well, thats new. Most of the BD players don't include this, not even the PS3, the trojan horse. (it has been rumored that a firmware update may remedy this, but still, why so sloppy Sony?) Sony has failed to standardize their format, and it hurts early adopting consumers.

evidence #3:
Head to Head: from the get go, Sony has flaunted how their format was far superior. This is simply not true. This format boasts greater storage space. Period. But does that even matter? A triple layer HD-DVD would be able to hold 45gb. Thats a ton of space. With proper encoding, you don't need a 75gb triple layer disc. Sony is again selling people what Sony wants them to want, not what consumers actually want. (if only I could dig up that quote from a Sony exec.)

That is my segway into codecs. Lets look at the encoding: Blu Ray started using MPEG 2 encoding, which is prehistoric. Some newer BD's actually still use MPEG 2. HD-DVD uses VC1 encoding, which is great. BD producers have the option of using MPEG 2 or VC1. The other new codec that could potentially be used is H.264, (MPEG 4) which is basically a derivative of VC1. Remember how crappy BD looked when it first came out, yet Sony told everyone how far superior it was? Its deceptive advertisement.

I just don't see how you could possibly blame Toshiba for this mess. Sony is clearly the one to be mad at here.

Ntruder · 07-19-2007, 07:16 PM

Quote:

Originally Posted by Omoplata

Sorry, fanboyism is showing here. If you advocate for consumers then the side that best serves the needs of the largest and widest group of consumers is the one that should rule

..../cut down to save space/...

Anyway I'll shut up now.

Wow, thats one hell of a 1st post. *applause*
I look forward to reading more insightful posts like this in the future. Welcome to the forums.

Lee Stewart · 07-19-2007, 07:23 PM

Quote:

Originally Posted by Ntruder

I'm very curious about this comment. Why would you blame Toshiba for this disaster? Could you explain? I would strongly argue that you should be blaming Sony. I'm going to support my point from as much of an unbias point of view as I can.

evidence #1:
A Rogue Format:
Read this quote, from Wiki:

The DVD Forum, as you may or may not know, is a collaboration of electronics companies (Hitachi, Mitsubishi, Sony, Toshiba, Pioneer, Phillips, Time Warner, etc) in charge of deciding and communicating DVD standards. Now, in 2003, they officially named HD-DVD as the successor to DVD. Then suddenly Sony decided to challenge that and push their own format, which required the scrapping of all disc manufacturing equipment, complicating the entire process. Toshiba developed the official successor to DVD. Sony developed a rogue format that really targets a niche market, but made to challenge what was already decided by the industry standards governing body. So Sony ignores the decision of the DVD Forum, which THEY are a part of, and now we, the consumers, get shafted. Again.

evidence #2:
Sloppy management: HD-DVD has standards that all discs and all players must meet. I'm sure you are familiar with Blu Ray live. Well, thats new. Most of the BD players don't include this, not even the PS3, the trojan horse. (it has been rumored that a firmware update may remedy this, but still, why so sloppy Sony?) Sony has failed to standardize their format, and it hurts early adopting consumers.

evidence #3:
Head to Head: from the get go, Sony has flaunted how their format was far superior. This is simply not true. This format boasts greater storage space. Period. But does that even matter? A triple layer HD-DVD would be able to hold 45gb. Thats a ton of space. With proper encoding, you don't need a 75gb triple layer disc. Sony is again selling people what Sony wants them to want, not what consumers actually want. (if only I could dig up that quote from a Sony exec.)

That is my segway into codecs. Lets look at the encoding: Blu Ray started using MPEG 2 encoding, which is prehistoric. Some newer BD's actually still use MPEG 2. HD-DVD uses VC1 encoding, which is great. BD producers have the option of using MPEG 2 or VC1. The other new codec that could potentially be used is H.264, (MPEG 4) which is basically a derivative of VC1. Remember how crappy BD looked when it first came out, yet Sony told everyone how far superior it was? Its deceptive advertisement.

I just don't see how you could possibly blame Toshiba for this mess. Sony is clearly the one to be mad at here.

GLOW - I must say this is an excellent post. truthful and exacting - kudo's to you for being so objective. What a delightful surprise.

Stew4HD · 07-19-2007, 09:29 PM

Damn! Ity is sure great to see people posting down to earth ideals on here. I appreciate it very much. I am so tired of Mr FUDs tirades about how Toshiba and HD DVD messed all this up.. ad nauseum. Logic tells MOSt peopel that price is what sells things when given a product of equal or very near equal value. You will always have those that think they must buy a Big Brand X name when brand Y does the exact same thing but a lot lower price but overall, the majority decide with their wallets....

Anyway, thanks for the good read and the much needed reality check!

**PFC5** · 07-19-2007, 10:37 PM

Quote:

Originally Posted by Omoplata

Sorry, fanboyism is showing here. If you advocate for consumers then the side that best serves the needs of the largest and widest group of consumers is the one that should rule..........

[cut down for space]

How then do you support a HD format proposition that is much more expensive for hardware, will remain more expensive (and if Toshiba had not put pressure, would have remained at $1000 levels quite a bit longer), and has already demonstrated that the mainstream consumer does not care about its supposed superiority when presented with the cheaper competing alternative?

Anyway I'll shut up now.

WOW!!!!

That is a great post!

Welcome to the forum and keep those focused posts coming.

samcan07 · 07-19-2007, 10:44 PM

Quote:

Originally Posted by Lee Stewart

GLOW - I must say this is an excellent post. truthful and exacting - kudo's to you for being so objective. What a delightful surprise.

Is Ntruder the same poster as Glow????

**PFC5** · 07-19-2007, 10:55 PM

I was wondering the same thing. Maybe that IS the surprise (that Glow didn't post that quoted text).

The_Omega_Man · 07-19-2007, 10:56 PM

Quote:

Originally Posted by Omoplata

Anyway I'll shut up now.

Oh no...plez!

Encore, Encore!

Ntruder · 07-19-2007, 11:14 PM

Quote:

Originally Posted by samcan07

Is Ntruder the same poster as Glow????

ROFL! No, we are not the same person. (unless I have D.I.D. and don't know it)

As GLOW is clearly a god among peasants, I chose to pay homage to His excellency and show proper praise to his awesomeness by way of the Avitar.

The_Omega_Man · 07-19-2007, 11:19 PM

Quote:

Originally Posted by Ntruder

ROFL! No, we are not the same person. (unless I have D.I.D. and don't know it)

As GLOW is clearly a god among peasants, I chose to pay homage to His excellency and show proper praise to his awesomeness by way of the Avitar.

hmmmm

Ntruder · 07-19-2007, 11:22 PM

Quote:

Originally Posted by Lee Stewart

GLOW - I must say this is an excellent post. truthful and exacting - kudo's to you for being so objective. What a delightful surprise.

Not GLOW... Perhaps "Bizzaro GLOW?"

But I will take that as a compliment. Speaking of which, I am truly looking for critiques to my above post. Am I wrong about anything? I've searched for the history of HD-DVD and Blu Ray as much as I can, hoping to either justify or falsify my distaste for Sony and their role in this format war. If anyone knows anything that I don't, I'd be very interested in hearing it. I'm not trying to be an HD-DVD fanboy; I've arrived at this conclusion by way of research and information.

Ntruder · 07-19-2007, 11:23 PM

Quote:

Originally Posted by The_Omega_Man

hmmmm

its one of those "you had to be there" stories.

07-19-2007, 09:29 PM	#67
Stew4HD High Definition is the definition of life. Join Date: Dec 2006 Posts: 9,068	Damn! Ity is sure great to see people posting down to earth ideals on here. I appreciate it very much. I am so tired of Mr FUDs tirades about how Toshiba and HD DVD messed all this up.. ad nauseum. Logic tells MOSt peopel that price is what sells things when given a product of equal or very near equal value. You will always have those that think they must buy a Big Brand X name when brand Y does the exact same thing but a lot lower price but overall, the majority decide with their wallets.... Anyway, thanks for the good read and the much needed reality check! __________________ ___________________________________

07-19-2007, 10:55 PM	#70
PFC5 Super Moderator Join Date: May 2005 Posts: 28,420	I was wondering the same thing. Maybe that IS the surprise (that Glow didn't post that quoted text). __________________ Denon AVR-887 Klipsch RP-5 Pwred Towers (mains) (525 watts peak each 12"Subs) All Klipsch RC-25(ctr),(2)SS1(surr),(2)SS1(rearSurr) Toshiba (2)HD-A20,PS3,BD35 For SACD/DVD-A Samsung HD-841 Panny 50pz80u plasma SETTINGS RCA HD50LPW162 50"DLP w/HD2+ SA 3250HD 47" LCD+Yamaha5790+HD-A1(bedroom) Harmony 680 + (2) 670s (amazing remote/support) Game room with Onkyo receiver & B&W Speakers The_Cable_Game Take the high ground and be happier

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