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Toshiba: $1 Billion In HD DVD Losses In 2007

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Old 03-13-2008, 05:31 AM   #1  
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Arrow Toshiba: $1 Billion In HD DVD Losses In 2007

Toshiba: $1 Billion In HD DVD Losses In 2007

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By Swanni

Washington, D.C. (March 13, 2008) -- Toshiba may have lost roughly $1 billion on its failed HD DVD business over the last year.

That's according to an article by The Nikkei, the daily business newspaper in Japan.

Toshiba announced last month that it would exit the HD DVD business at the end of March, ceding victory to rival high-def disc format Blu-ray.


Toshiba will have to pay plenty for its HD DVD exit.

The company had invested heavily in HD DVD, subsidizing the cost of low-priced players and providing marketing incentives to studios and other supporters.

The Nikkei reports that total Toshiba HD DVD losses could reach $995 million for the fiscal year ending March 31.

The newspaper did not cite a source for its estimate, according to the Associated Press, but it added that Toshiba could lose another $498 million this year in dismantling the business.

AP also reports that Toshiba is now evaluating its next move after the HD DVD pull-out.
"When we have determined if a revision to our earnings forecast for the fiscal year ending March is necessary we will release it as soon as possible," Toshiba said Thursday in a statement.
http://www.tvpredictions.com/toshibaloss031308.htm
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Old 03-13-2008, 06:10 AM   #2  
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I wonder how much of this money went to keep up the low price of the HD DVD players.
I've never understood the big price difference between HD DVD and BD players from manufacturing point of view.
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Old 03-13-2008, 06:14 AM   #3  
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Originally Posted by OneFinn View Post
I wonder how much of this money went to keep up the low price of the HD DVD players.
I've never understood the big price difference between HD DVD and BD players from manufacturing point of view.
1 million players - guesstimate $200 per player = $200 million. The lions share IMO is the studio incentives, advertising, R & D, etc.
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Old 03-13-2008, 06:25 AM   #4  
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1 million players - guesstimate $200 per player = $200 million. The lions share IMO is the studio incentives, advertising, R & D, etc.
Are you saying that Toshiba lost ~$200 a player in 07 when players were $300+?
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Old 03-13-2008, 06:26 AM   #5  
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Toshiba: "The company had invested heavily in HD DVD, subsidizing the cost of low-priced players and providing marketing incentives to studios and other supporters."

Sony: Spent much, much more on marketing incentives to studios and less on subsidizing hardware.

Toshiba believed the battle was hardware driven and Sony KNEW it was media driven. Toshiba is an "industrial" giant. Sony is very large in the Consumer Electronics segment, Entertainment production (movies, games, music, etc.). So each approached the battle from a different perspective-- and Toshiba was wrong. Sony had the "media" experience and background on how to approach this problem.

While Toshiba thought better hardware at a lower price would prevail, Sony knew that it was all about available media content, and they played their cards well!
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Old 03-13-2008, 06:31 AM   #6  
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Thats a really good summary Rick. Sony learned that the tactics they used to make PlayStation as big as it is, would also apply to the home video market.
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Old 03-13-2008, 06:38 AM   #7  
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Originally Posted by Rick-F View Post
Toshiba: "The company had invested heavily in HD DVD, subsidizing the cost of low-priced players and providing marketing incentives to studios and other supporters."

Sony: Spent much, much more on marketing incentives to studios and less on subsidizing hardware.

Toshiba believed the battle was hardware driven and Sony KNEW it was media driven. Toshiba is an "industrial" giant. Sony is very large in the Consumer Electronics segment, Entertainment production (movies, games, music, etc.). So each approached the battle from a different perspective-- and Toshiba was wrong. Sony had the "media" experience and background on how to approach this problem.

While Toshiba thought better hardware at a lower price would prevail, Sony knew that it was all about available media content, and they played their cards well!
+10000
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Old 03-13-2008, 06:48 AM   #8  
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Originally Posted by Rick-F View Post
Toshiba: "The company had invested heavily in HD DVD, subsidizing the cost of low-priced players and providing marketing incentives to studios and other supporters."

Sony: Spent much, much more on marketing incentives to studios and less on subsidizing hardware.

Toshiba believed the battle was hardware driven and Sony KNEW it was media driven. Toshiba is an "industrial" giant. Sony is very large in the Consumer Electronics segment, Entertainment production (movies, games, music, etc.). So each approached the battle from a different perspective-- and Toshiba was wrong. Sony had the "media" experience and background on how to approach this problem.

While Toshiba thought better hardware at a lower price would prevail, Sony knew that it was all about available media content, and they played their cards well!
You are kidding right? Pulling our legs?

Sony lost over $3 BILLION subsidizing the PS3.
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Old 03-13-2008, 07:56 AM   #9  
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I just saw an add for HD DVD Sunday night on VS. They were sponsoring the extreme cage fighting. Kind of makes you wonder, if Toshiba lost 1 billion just how much has Sony spend? Can Sony ever get out of the hole they've dug with profits from the PS3 and Blu-Ray?
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Old 03-13-2008, 07:59 AM   #10  
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Originally Posted by Lee Stewart View Post
1 million players - guesstimate $200 per player = $200 million. The lions share IMO is the studio incentives, advertising, R & D, etc.
Funny, I was thinking exactly the same amount..
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Old 03-13-2008, 08:06 AM   #11  
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Originally Posted by hatt View Post
Are you saying that Toshiba lost ~$200 a player in 07 when players were $300+?
Yep - that is what I am guessing at.

And we have the millions of free HD DVD's that Toshiba bought from the studios and gave away. Add that to the losses.
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Old 03-13-2008, 08:19 AM   #12  
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Originally Posted by Lee Stewart View Post
Yep - that is what I am guessing at.

And we have the millions of free HD DVD's that Toshiba bought from the studios and gave away. Add that to the losses.
Yeah, whenever I actually do receive my free movies.
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Old 03-13-2008, 08:30 AM   #13  
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Quote:
Originally Posted by Rick-F View Post
Toshiba: "The company had invested heavily in HD DVD, subsidizing the cost of low-priced players and providing marketing incentives to studios and other supporters."

Sony: Spent much, much more on marketing incentives to studios and less on subsidizing hardware.

Toshiba believed the battle was hardware driven and Sony KNEW it was media driven. Toshiba is an "industrial" giant. Sony is very large in the Consumer Electronics segment, Entertainment production (movies, games, music, etc.). So each approached the battle from a different perspective-- and Toshiba was wrong. Sony had the "media" experience and background on how to approach this problem.

While Toshiba thought better hardware at a lower price would prevail, Sony knew that it was all about available media content, and they played their cards well!
I don't pity companies that lose billions upon billions, they will just make that money somewhere else. Big Deal IMO.
The amount of money SONY lost and is still continuing to lose makes me wonder why they don't just drop Blu-Ray. It's very costly for them to continue this business unless there is a miracle which they start selling BD like mad.

Whatever Toshiba loses in the end, Sony will easily triple that price in loses. We all know the PS3 was the only reason for Blu-Rayís success. Congrats to Sony for making this smart but expensive move.

Itís difficult for Toshiba to battle a company (Sony) that owns its own studios to begin with anyway.
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Old 03-13-2008, 08:43 AM   #14  
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Quote:
Originally Posted by Lee Stewart View Post
You are kidding right? Pulling our legs?

Sony lost over $3 BILLION subsidizing the PS3.
PS3 is a different division to Blu-ray. Technically SCEI subsidised the PS3 rather than the CE division. But Sony have always subsidised their games consoles, it's a tactic they introduced that helped propel them to market leaders in the games industry.

Though they've never taken such aggressive losses on a console before, there really is a long term viability to the platform I've never experienced with a games console before if they can get enough active users out there to make the system viable.
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Old 03-13-2008, 08:45 AM   #15  
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Originally Posted by Super XP View Post
Whatever Toshiba loses in the end, Sony will easily triple that price in loses. We all know the PS3 was the only reason for Blu-Rayís success. Congrats to Sony for making this smart but expensive move.
The PlayStation 3 will still end up being a profitable venture for Sony in the long run. Therefore all these initial losses they've incurred to boost Blu-ray will actually benefit the platform in the long run, and also never count as losses Blu-ray incurred for Sony.
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