Report: Sony facing massive PS3 losses

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.

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.

Originally Posted by Ntruder

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.

Originally Posted by Chris Gerhard

I support having one format and Blu-ray had the industry support to succeed, HD DVD doesn't and it is that simple. It has nothing to do with fanboy claims you guys like to make. I had nothing to do with it, I bought both and immediately called BS on the claims here that HD DVD is superior. Blu-ray is better and has the industry support and security the studios require. You have to have something that works for both sides, HD DVD does not and Blu-ray does. The fan boys are the HD DVD guys who have some silly emotional reason for preferring HD DVD. If the higher hardware costs means some have to wait a little longer before getting involved, so what, wait a while then get involved. Prices come down if the market is there. Right now, neither format offers much other than lower than expected hardware costs. The market is avoiding both despite that.

I am sure consumers would like to be given everything and I am all for that. Why settle for HD DVD, wouldn't free be better? I live in a real world, the group here that likes to stand up and say HD DVD has all region coding and lesser DRM, rah!, rah!, rah! HD DVD has lower priced hardware, rah!, rah!, rah! All that meant was that HD DVD has no chance at acceptance by a large enough market. Blu-ray has higher bitrate potential and greater capacity and that is something that matters. HD DVD has crapped on the market harming the format that had a chance and that was all it could ever do. I am still hopeful this holiday season will see the gap grow wider and the only possible thing that ends Toshiba's idiotic run with the half-baked format, retailers saying no thanks, we won't carry HD DVD will cause Toshiba to pull the plug and the market can realize its potential with one format that works for the industry and consumers.

Chris

Originally Posted by Ntruder

I'm going to try to say this as nice as possible. I just don't see anything right about this post. Every comment you make is extremely bias and carries almost no weight. "idiotic run with a half baked format?" What is that? Clearly you didn't read my post above about why you should blame Sony. You just dismiss everything good about HD-DVD and make outrageous claims with no supporting evidence or even reasoning.

Your only real solid argument that you have is that BD has better industry support, however, keep in mind that HD-DVD has Universal, one of top 6 movie studios, and their sales figures are still comparable. (software, that is. Hardware is an HD-DVD blowout) Plus, support from studios doesn't matter at this point. What will matter is market share, and adaptability. But I'm sure that doesn't matter to you.

Originally Posted by Stew4HD

Ntruder, though you make a valiant effort and what you say is true, Chris will never accept or acknowledge anything less than the total and complete demise of HD DVD. The guy is only here to spread as much negativity about HD DVD as possible, hoping to catch someone sitting on the HDD fence and rope them into buying BD.

We have all tried to reason with him to no avail. Those of us he dislikes or we argue too much with him, he puts on ignore and continues his digs. Just go and look at his past posts.. all saying the same thing, over and over...

I appreciate the effort though, truly I do

Originally Posted by Ntruder

Yeah it looks like you are right. Still, when people have an opinion based on false information, I always feel like they can be convinced if they are presented the truth from an objective point of view. Thats how my brain operates. It revises its working theories as new information is presented.