If Sony is to be believed, the verdict is already in: HD-DVD is a non-starter, and their cross-Japanese Toshibian rivals are toast. They may very well be right: Blu-ray is certainly outperforming HD-DVD in terms of sales and support, and may be headed for the victory stand when it’s all said and done. But in order to get there, Sony may be setting themselves up not only for only a glimmer of glory, but also a high-Richter disaster that could send the giant’s movie and gaming divisions reeling.
In order to move units, it’s not uncommon for video game manufacturers to initially push consoles at a loss. The PS3, while priced at Neo Geo-level prices, is still, by all available indications, costing Sony a loss of a few Benjamins per unit. Still, the PS3 plays Blu-ray movies, and at five or six hundred dollars a pop, is far cheaper than any other Blu-ray player currently on the market. Obviously, as has been widely reported, this means that it really makes no sense to shell out a thousand bucks for a player when you can just buy a PS3 (assuming you can find one in stock), and simply ignore the fact that it plays games if you are so inclined.
Sony’s strategy is obviously to get movie fans into the video game aisle, assuming that, if they already have the game machine, they’ll surely buy some games (the true money generator for video game companies.) Meanwhile, they are surely hoping that PS3 fans, already possessing the movie player, will shell out cash for some fine Blu-ray titles — hopefully giving Blu-ray a crossover appeal that will allow it to eradicate HD-DVD. As an aside, I remember that a number of my friends bought a PS2 solely to play DVDs back in the dark ages of video, replacing aged and breaking VHS players with crisp and clear 480p resolution.
Sounds great: PS3 fanboys will push Blu-ray into the black, and high-def movie buffs will give the PS3 the market share it needs. If Sony is right, they’ve got themselves a little circle of success here.
The only problem is that they are very likely wrong.
Such cross-platform dependence is virtually unheard of. I can’t think of another case where the success of a video game console and a movie media format were so closely intertwined. And while I can certainly applaud Sony for the chutzpah of putting all of their eggs into a single glossy black basket, this is untrodden territory that relies on everything in the marketplace working just right.
The few months following the release of a next-gen console essentially determine whether it is a success or failure. The number of PS3s that Sony has been able to put on shelves in this time is dangerously low — a key fact that has allowed Nintendo (and Microsoft) to get a huge leg up in market share. Now, couple these dangerously low supplies with the fact that a number of people purchasing them may be primarily purchasing the systems for movie-watching purposes, with absolutely no intention of buying a single game (especially since PS3 games aren’t cheap) and you have a sizable percentage of your user base essentially unconcerned with your key money-driver: game sales. Because Sony’s PS3 shipments were so small, every single console matters. If even a small number of these are owned by movie buffs who purchase very few (or even no) games, they are in trouble.
And it gets worse. Because the PS3 is cheaper than stand-alone Blu-ray players, a smart movie buff will scoop it up, if only for the movie-watching capabilities, essentially making their stand-alone players seem like an absolutely ridiculous and unnecessary product, and assuring that a large portion of their inventory goes unsold (even if you have to wait a bit for your local Best Buy to get a PS3 in stock, isn’t it worth it to shave $500 off the price of your Blu-ray player?) Unsold merchandise, especially unsold merchandise that costs a grand, is bad business.
Now, the window of time a movie format is dominant ain’t big, and is getting smaller. VHS was huge for many, many years. DVDs: a shorter time. The Blu-ray/HD-DVD winner will almost certainly dominant for an even shorter time before something bigger and better comes out (most likely through media-less data transmission.) So, assuming Blu-ray wins, as Sony is praying, they may only reap the benefits for a very short time, while feeling the associated losses for a much, much, longer period. Losses that not even the inventors of the Walkman can survive.
Seth Porges writes on future technology and its role in personal electronics for his column, The Futurist. It appears every Thursday and an archive of past columns is available here.
While I appreciate all the gloom and doom, the fact of the matter is that most mainstream consumers as well as A/V fanboys are sitting out the war between Blu-Ray and HD DVD. Based on the home theatre podcasts and reviews I subscribe to, few if any early adopters are purchasing the PS3 solely for its Blu-Ray player — most of the pure home theatre buffs are still waiting for 1) stand-alone high-definition disc players to come down in price, and 2) 1080p TVs to come down in price. Blu-Ray movies (and HD DVD movies) displayed on a 720p or 1080i monitor just don’t look light-years beyond regular 480p DVDs scaled to 720p or 1080i. Right now, the upgrade in equipment and discs do not justify the price.
The surge in recent sales of Blu-Ray discs come from the PS3 gamers that are purchasing one or two Blu-Ray movies with the nice Blu-Ray rebates shipped with the PS3. And gamers will continue to buy games, Sony’s money-maker.
But, let’s assume for the moment that the window of opportunity for Blu-Ray and HD DVD is indeed shorter than any other movie format in history. The PS3 is *still* positioned nicely for Sony’s future, because of its ability to download, store and play movies in high-definition via the AVC or MPG-4 formats. Oh, and the fact that the machine has an upgrade-able hard drive doesn’t hurt it, either.
I just don’t buy that the PS3 will sink Sony. I believe the opposite.
Well, it depends on how much Sony makes off of each Blu Ray title. I imagine the margins are pretty high as well, but I don’t know.
I doubt PS3’s failure can bring Sony down – at least not immediatly! Cos’ one would have to see if ppl would be willing to give them a 2nd chance with a cheaper PS3 (or a new PS4) – i mean how much would a failure now affect their image in the future.
I’m not to sure on this HD-everthing-era … the general puplic is not willing to pay thru’ their noses for quasi-percievable gains. Case in point SACD & DVD-Audio – which are better than CD (on some systems the difference is amazing), but ppl just don’t buy them! Probably there’s digital-distribution to blame for that too, but that (digital distribution) could actually hurt BluRay/HD-DVD too!
I’m no expert – but convergence is nice, too much of it is silly & the PS3 (IMO) is just that … Silly! … it does too many things! It’s trying to be a PC (which w/o Windows it ain’t), it’s a games console – an expensive one with basically the same performace of the way cheaper x360 (which has better online anyway) – and to top that off it wants to be a $600 HD movie player!! Ppl who spend $600 on any movie-disc-spinner want Denon/NAD (maybe Pioneer) stuff, they want bass management, pre-outs for all 5.1/7.1 channels, up/down scaling & other picture manipulation stuff!
Ah – forget it – lost cause anyway!
So if movie buffs buy the PS3 they’ll do badly? I don’t agree. Sony makes money off Blu Rays. If one assumes that movie buffs buy or rent Blu Ray’s, then it seems that Sony will be helped. You also argue that digital distribution will overtake Blu Ray soon. How many people are downloading DVD’s legally right now? Very few. I don’t see any major breakthroughs coming where people will be able to legally download a 50GB file to play on their TV in a reasonable amount of time. Obviously it’s not impossible, but it’ll be a few years before we have the equipment to do this.
Neo Geo level prices? Hardly. Neo Geo was $650 in 1990. That’s 1000 bucks in modern dollars.
What seems more likely is that movie buffs buying the PS3 are good for Sony. It increases sales of the Blu Ray format. The sooner the Hi Def wars are over, the sooner a Blu Ray drive will be seen as a value-added feature, and the more movies that will be available for it. The PS3 won’t be a loss leader forever. They already shrunk the chip, and removed the emotion engine, which should shave some cost.
As High Def TV’s get cheaper and Blu Ray releases get more numerous the PS3 will seem like a better value. One thing you’re not considering is that people who want high def games and high def movies might have a large overlap. People with tons of money and gigantic tv’s.
All this talk about PS3 failure before it even launches in Europe is foolish.
“I can’t think of another case where the success of a video game console and a movie media format were so closely intertwined.”
How about DVD and Xbox? Not HD DVD. Just plain ol’ DVD and Xbox. Can’t have Xbox 360 software without a DVD (aside from downloading software).
The one fact that has been lost in all this “controversy” is that the PlayStation 3 is actually an outstandingly great product. Whether you can afford to hand over $600 or not is irrelevant to the products purpose.
PlayStation is a lot like Rocky and PS3 is a lot like Rocky 3. Rocky was the nobody, fought with the established champions, won and gained the top title, let it all go to his head, let his guard down and lost his title to another Cinderella story. But in turn he learned his lesson, came back stronger than ever and regained the title.
Sony has been taking a lot of mud slinging, mostly among the online community, some of which they may have been asking for but the majority are a result of personal agendas that are far more corrupt and misguided than anything Sony has done.
The success and failure of the PS3 is most directly connected to opinions rooting from seeds like this article. It is almost an industry trend now for an online news site to post an article with a controversial headline about Sony’s PS3. Why not though, what does the said website truly care about what happens to Sony or their PS3, instead they’re focused on the increase of traffic when they release such an article… personal agendas.
Sony has released a quality product and its success is just as fragile as the next consoles, ultimately it rests in the consumers hands. Those hands can be guided by all sorts of powers wanting them away from certain products or closer to their own products. If you want one then buy one, the support will only empower the PS3 and help ensure its success. In turn if you don’t want one, then you should be without worry. Seems simple enough to me.
And for the Blu-ray format. If it fails along side HD DVD because consumer aren’t ready to give up on their DVDs just yet, that will be realistic and logical. If Blu-ray fails to HD DVD then that says very little about consumers and their own purchasing conscience. Blu-ray is the better product in every way. A consumer will pay no more investing into one or the other of the two technologies. But Blu-ray simply offers more space and a broader future of expanding that technology to grander storage. Recently HD-DVD announced their triple-layered HD DVD that holds 51gb and for whatever reason this was big news. Consumers must not realize that Blu-ray already has their double-layered 50gb disc on the market, a 100gb quad-layered disc coming to the market shortly and a 200gb six-layered disc in the works. What this simply means is that Blu-ray will last as a technology longer than HD DVD ever could and the success of HD DVD will mean less time before you’re expected to replace yet another format. Audio and Video technology of today will be ever changing and Blu-ray will be able to expand with new A/V formats that will be much larger than they are now. Consumers should remember not to support these formats based on which movies are on one or the other since in the end all companies will be forced into supporting the one victorious format. Support Blu-ray because it holds much more value to a consumer rather than the corporation pushing it.
Horrible story, very fictional. Write about something other than what you make up.
“Such cross-platform dependence is virtually unheard of. I can’t think of another case where the success of a video game console and a movie media format were so closely intertwined.”
Well, if YOU can’t think of it then it is most certainly a fact – nice ‘journalism’.
Think about how intertwined PS2 and DVD were… or, wait, since you can’t think of that, maybe just try reading up on it. PS2 launched the DVD format into mainstream. Intertwined, tightly, think of it.
Shuuuut uuup all the SONY fanboys and realize what he said is actually happening!! go get a 360 (It does all the same things as the pos3) or get the wii and have some fun instead of sitting around on the computer and talking.. go play–OH wait you have no games, well better go and buy more blu ray`s!!
Billy Shears what a fantastic peace of writing. You read my mind, in fact and unfortunately we (the ones who pay attetion) know how things work in industry, and the fact is that by some how the online community but mainly some kind of “journalists” are making a strage huge effort to bash Sony picture between consumers, we know what M$ can do to win monopoly, it’s like school history, as an example we had the very recent announce of Capcom that would launch Devil May cry4 also for the X360, that happened because the suddently remembered 2 days before the PS3 launch in Europe to make such an announcement or maybe because they had some influence with bemjamins to do so at this time… we don’t know nothing for sure, but what I know for sure is that is something that I saw many times before done… it’s like Nasdak, in the end it’s all pollitic… BUT… who will decide the PS3 success is not the online community or BLU-RAY, the “basic” consumers, those who think for them selves are the ones who decide things, and I see room for all the current products in the market, the Sony Fanbase is just too big to be ignored, and they will keep the Brand alive, no matter what.
PS: – Sorry my English, I’m Portuguese.
“Benjamins” We know sony is no match for m$- If m$ wanted to bury sony, they would have done it a long time ago! they just decided to chip away very slowly so it did not look obvious.
I`m a movie buff, own over 900 DVD`s, but I will not be buying into either HD-DVD or BlueRay, no, no, no, not falling into that trap again.
This time Ì have a few programs ( like AnyDVD-HD ) which I will use to copy HD movies onto Harddisk, yes, this is illegal, but hey, who cares… obviously the industry dosn`t care about its customers, so why should I care about the movie industry.
Me and my friends will enjoy the new world of HD for FREE and once we have our PC`s set up for copying, do you think we will ever buy a HD movie ever…..
Buying a PS3 is just like buying a three-in-one getto blaster – you know the ones with a cheap plastic cassette player, AM/FM tuner and CD-player all built into the one plastic box. When one of those components break you throw the whole thing out. The warranty is usually only 12 months so its designed as a short lived disposable.
After 12 months just buy a new one in a different colour. I mean it makes perfect sense to a cretin.
what is 360,gimmick add on.disposable shit.
X-Brick 360 is tooo expensive at $400! And with no HD-DVD Player!! Paystation 3 at $600 is too expensive! Even with the built-in Blu-Ray player!! Wii at $250 is way too expensive for the simple fact that it doesn’t even do any HD! But the competition is gooood. I don’t want any one format to “come out on top” in a big way, as stupid fanboys are notorious for wanting. I want a close three-way race so that prices keep falling faster and faster. I like choices. I embrace the fact that each of the three systems has something different to offer, leaving me with options. I have a 52-inch 1080p lcd flat panel by Sharp (what a sweet lovely device) and I’ll buy game consoles as they drop below $150, just as the PS2 did. Right now, I’m into PC gaming with my dual-link DVI nVidia card driving an insane resolution of 2560×1600! I have a Creative Gigaworks S750 7.1 THX 700-watt surround sound speaker system. I have plenty to keep me busy until console prices drop. 1080p is highly overrated since the best resolution on cable/satellite is only 1080i, which is fine the way it is.
All you fanboys, stop your bitching and go play with your lousy consoles. If you want the PS3 and can afford it, go for it. You want a X-Box 360? Go for it. You want to hold your Wii? Grab and hold the damn thing, but for goodness sakes quit yer bitching and moaning. Get what you can afford/love and quit bitching at the world. Nuff said.