Sony lost over $3 billion on PS3 pricing

[lazygecko]

http://kotaku.com/5018899/sony-lost-...cing-imbalance

In practice a new console isn't cheaper than a gaming PC, but due to market expectations you can't really sell one at such a price. A $600 launch price wasn't really enough to attract consumers.

There's nothing unusual about losses when releasing a console, it's viewed as an investment in getting a foothold on the market and is compensated through license costs on games. But now Sony doubts if they will ever recover from the PS3.

This, along with the huge success of the Wii, I think gives some insight on how the future of the industry is going to look. The hardware has to become more cost-effective.

[Jam Stunna]

Man, that's a pretty penny. It's almost unbelievable that they charged $600 for the PS3 and still lost that kind of money. Sony has stated before that they wanted the PS3 to have a ten-year life cycle, so do they believe that they can't recoup their loses even over that stretch of time?

[Schwaltzvald]

Make it $250, throw in a couple of extra perepherals, maybe a 10% discount for any released titled (new or not) along with heavy promotions on third party developers. Then we'll talk...

In the end though even if this does not happen, I'll probably still get it for MGS4, Siren - Blood Curse, and RE5/SH5 (if they any good) along with the ability to play home made BR discs...

It does make one wonder what exactly will happen in the supposed ten year life cycle on the PS3... Will there be newer editions to the hardware ala slim PS3..?

[big giant circles]

It's a good example of whether one makes more profit selling few at a high cost with a larger margin, or selling lots at a low cost with a smaller margin.

[Jam Stunna]

It's a good example of whether one makes more profit selling few at a high cost with a larger margin, or selling lots at a low cost with a smaller margin.

But there's no margin for the PS3, or at least there wasn't. Sony has lowered production costs, but I believe they still lose money every time they sell one.

[The Author]

Back when it came out, I think I saw that for them to break even you had to buy somewhere between 5 and 10 games.

[big giant circles]

Dang, see, I guess there's a definite line between what kind of quality people want and what they're willing to pay. If $600 is enough to scare off buyers (coupled with the prices of new games) then maybe that should have been rethought.

I gripe a bit about the graphics on the Wii, but as well as they're doing, apparantly that's not the main thing people wanted. Guess they should have put less into R&D and making the components what they are that they could make a good system for $200-300 less.

/me shrugs

$3,100,000,000, though. that's a giant number.

[linkspast]

SO what does this mean for me... I mean is the price going to go up a few bucks after they have some more amazing games like MGS4.. I dont have a PS3 but believe me I have been very close to buying one, on impulse just to play MGS4.. But then I relizes that would be just stupid....

Can they even afford to raise the price, is there any way for them to clear this loss.

[The Author]

Blueray licensing.

Every movie that uses blueray makes them money. And what they did is get as many blueray players in as many homes as possible. It was quite a gamble since HDDVD might have been the one to win the format war, but it may payoff well.

5 games is not a lot, and and when they start making money, if they make it on games and blueray DVDs, hey will make quite a profit.

It's a risky move, but they payoff may be greater. When the X-Box 720 comes out, it might even be on blueray, meaning Sony makes money off of that as well.

[Nekofrog]

Blueray licensing.

Every movie that uses blueray makes them money. And what they did is get as many blueray players in as many homes as possible. It was quite a gamble since HDDVD might have been the one to win the format war, but it may payoff well.

5 games is not a lot, and and when they start making money, if they make it on games and blueray DVDs, hey will make quite a profit.

It's a risky move, but they payoff may be greater. When the X-Box 720 comes out, it might even be on blueray, meaning Sony makes money off of that as well.

Bluray won a meaningless war against HDDVD.

HDDVD was never the true enemy. Most people predicted its demise before the war even began.

Bluray will never, EVER win the war against standard DVDs. Now that they have been adopted, people are not simply going to abandon them to another new format that pretty much also demands the purchase of a brand new, very expensive television set as well as sound system just so they can spend even MORE money rebuilding the collection that they already started on DVD.

No, it is much too early for a new format.

[Overflow]

Bluray won a meaningless war against HDDVD.

HDDVD was never the true enemy. Most people predicted its demise before the war even began.

Bluray will never, EVER win the war against standard DVDs. Now that they have been adopted, people are not simply going to abandon them to another new format that pretty much also demands the purchase of a brand new, very expensive television set as well as sound system just so they can spend even MORE money rebuilding the collection that they already started on DVD.

No, it is much too early for a new format.

No kidding.

I remember, maybe about 6 or 7 years ago, when Monsters Inc. was still new, we didn't get a DVD player until my mom won a monsters inc. DVD from a radio show. Then we went all out on a nice, 27" tube TV (It was great at the time) and a surround sound system, and we've been satisfied since. Just having to pay over $500 for a new player and over $1500 for a TV to enjoy the new movies on just doesn't seem worth it. Besides, I can think of few movies where I am perfectly satisfied NOT being able to see every nuance of the guy's face.

[Filodemo]

Bluray won a meaningless war against HDDVD.

HDDVD was never the true enemy. Most people predicted its demise before the war even began.

Bluray will never, EVER win the war against standard DVDs. Now that they have been adopted, people are not simply going to abandon them to another new format that pretty much also demands the purchase of a brand new, very expensive television set as well as sound system just so they can spend even MORE money rebuilding the collection that they already started on DVD.

No, it is much too early for a new format.

That's what everyone said about DVDs when they came out. Oh tapes are too widespread by now, DVDs are too expensive and will never catch on. Give them a few more years for HD to spread and it'll soon replace DVD.

[Dunnowhathuh]

Ay, everyone here who isn't Australian should try buying an Aussie PS3. You pay more for it than the rest of the world AND you get a Bluray movie player that you can't use with the movies you bought in your country because of region lock! It'll be awesome.....

But in all seriousness, I do feel sorta sorry for Sony but it's their fault for screwing the whole process in the first place. I really do wonder what they were thinking when they first realised that "oh crap, these production costs are huge" and if they honestly thought people would jump to buy such an overly expensive thing (even if they were willing to make a loss from the get go). Fortunately for them, Sony isn't gonna go bankrupt any time soon so they can afford to take the hit even if they don't like it.

[lazygecko]

DVDs were on the market around 96/97. It took a good amount of time before people had universally switched from VHS.

[Penfold]

Bluray won a meaningless war against HDDVD.

HDDVD was never the true enemy. Most people predicted its demise before the war even began.

Bluray will never, EVER win the war against standard DVDs. Now that they have been adopted, people are not simply going to abandon them to another new format that pretty much also demands the purchase of a brand new, very expensive television set as well as sound system just so they can spend even MORE money rebuilding the collection that they already started on DVD.

No, it is much too early for a new format.

http://www.reuters.com/article/technologyNews/idUSL0963707920080609

http://www.videobusiness.com/article/CA6572676.html

I can see why some people aren't yet willing to adopt blu-ray, but I think it's a little silly when people try to predict the future in absoulte terms. All I know is the same week I ordered my PS3 (which, to my frustration still hasn't arrived...) I also ordered 5 blu-ray movies, two of which I had been waiting to purchase in an HD format, and there are a lot of movies I would prefer to have in an HD format once released.

[The Author]

Right about now, Blueray does mean nothing.

Around 2012, it will become a more important medium. That's what this format war was about.

[EdgeCrusher]

I refuse to believe anything is the new medium until it becomes that. Until then Ill be watching my dvds, playing my cds and mp3s, and such. Fighting over a format is retarded and its something that just has to happen for it to be the standard, not so much forced.

[Nekofrog]

That's what everyone said about DVDs when they came out. Oh tapes are too widespread by now, DVDs are too expensive and will never catch on. Give them a few more years for HD to spread and it'll soon replace DVD.

No they didn't. Not a single person said that, save for the people who didn't want to move from VHS to DVD.

DVD was a natural successor. Why do you think Laserdiscs failed (other than the giant size of them)? They came out too early compared to VHS; it wasn't a natural flow from one format to another.

Trying to FORCE a format switch does not work; that is what Sony is trying to do with Bluray. There is no NEED the high-def generation at THIS point in time.

Bluray is going to be seen as the false start of the HD home video generation. Its successor will win because it came along at a more appropriate time.

[Chuckles]

That's what everyone said about DVDs when they came out. Oh tapes are too widespread by now, DVDs are too expensive and will never catch on. Give them a few more years for HD to spread and it'll soon replace DVD.

This is quite ignorant, to say the least. DVDs supplanted VHS tapes relatively quickly for a variety of reasons, but some of the most important ones to the average consumer were the smaller size, the ability to choose scenes, no rewinding, vastly increased storage capacity for more content and so forth. Higher quality is certainly a part of that, but it's just ludicrous to say Blu Ray to DVD is just like DVD to VHS. Even with all of the very cool benefits that Blu Ray offers, it is still perceived as simply a slightly higher quality DVD. As Overflow and others have said, it'll take quite a while for people to spend thousands of dollars upgrading their systems just for that.

[MkVaff]

Right about now, Blueray does mean nothing.

Around 2012, it will become a more important medium. That's what this format war was about.

I hope by 2012 there is an infrastructure in place to do away with physical copies of movies altogether and simply stream or download HD content straight to a set top box and watch it whenever... i.e. a tivo on demand.

I know the technology is in its infancy, but I learned my lesson after buying nearly 1500CDs, and then about 4 years ago I discovered Rhapsody. Now, I just pay the (very reasonable) monthly fee, and I listen to tons of stuff - new and old - whenever I want from any PC with an internet connection.

I would much rather pay a monthly fee for a similar video service than invest heavily in another media format which, eventually, will also go the way of the DVD and VHS. Besides, most people I know watch movies only once or twice...the idea of spending $20-$30 to keep a movie forever doesn't make sense so long as either VOD or Netflix exist. I'm saving my Blu Ray purchases to the few movies that come out each year that I absolutely love, and besides that the format serves me better for extremely pretty rentals.

[Overflow]

Right about now, Blueray does mean nothing.

Around 2012, it will become a more important medium. That's what this format war was about.

Blu-ray doth bringeth the end of the world in 2012.

lol.

[Jam Stunna]

The fact that Blu-Ray even won the war proves Nekofrog to be correct. Consider that HD-DVDs are cheaper, HD-DVD players are cheaper, they're easier to produce, and all of the other mass-market friendly advantages HD-DVD had over Blu-Ray. The reason that Blu-Ray won is because the only people buying any next-gen format are technophiles who don't mind spending a little extra for superior quality. Blu-Ray won that market, but it has a long, long way to go before it convinces average Joe Consumer to spend $1000 + on a new HD setup when a good DVD player is less than $100 now.

[Gilleece]

Can't blu-ray players play standard dvds?

If so then that is a huge advantage over the switch of VHS to DVD as BLu-ray can backline.

I wouldn't be too surprised if blu-ray does become the new standard in years to come as it is the most established next-gen hard copy avliable so it makes sense.

As for streaming HD content straight to your pc, thats a long way off. Mainly due to the fact that most people do not have access to internet connections anywhere near fast enough to stream HD content. ALot of internet connections can be slow just downling compressed flash videos.

Plus a lot of people like collecting Dvds. I can't imagine hard-copies going away for a very long time, if ever.

[MkVaff]

Can't blu-ray players play standard dvds?

As for streaming HD content straight to your pc, thats a long way off. Mainly due to the fact that most people do not have access to internet connections anywhere near fast enough to stream HD content. ALot of internet connections can be slow just downling compressed flash videos.

Plus a lot of people like collecting Dvds. I can't imagine hard-copies going away for a very long time, if ever.

Well, out here we have FiOS, which, while it may not be fast enough to stream HD, is plenty fast to hypothetically get an entire HD movie downloaded in less than a half hour. I don't think it's that far off really, but 2012 might be a bit early for that, but fast internet service is slowly becoming as prevalent as internet service itself.

A lot of people DO like collecting DVDs. I never quite understood exactly WHY, but it's definitely true. What's the point of a huge collection of movies when whatever format you buy them in will eventually be outdated? All those collectors with shelves full of VHS tapes now probably have new shelves full of DVDs, which will be replaced with Blu Ray, then the next format,...etc.

For the most part, a large waste of money I'd say. then again, what the typical consumer does and what actually makes sense are usually not exactly the same thing. Look at the current economy... It's taken upwards of $4/gal gas prices for people with hardly any use for them to finally say "Wow... maybe buying that Hummer to drive from my suburb home my office job 15 miles away wasn't the smartest idea."

Then again, the electronics industry in general is based on selling people on things that they really don't need. Sony will succeed after all!

[Toadofsky]

Man, that's a pretty penny. It's almost unbelievable that they charged $600 for the PS3 and still lost that kind of money. Sony has stated before that they wanted the PS3 to have a ten-year life cycle, so do they believe that they can't recoup their loses even over that stretch of time?

Heard rumours they're already starting to make a new console. Those rumours are neither confirmed from a reliable source, nor can I recall who told me...

Wouldn't suprise me, but how can they? I guess blue ray is the only thing that's going to help them beyond their other electronics...