Sony lost over $3 billion on PS3 pricing

[Sole Signal]

Very interesting to see Sony addressing the "risk factors" in their annual report so directly. I glanced through some of their past annual reports and noticed an interesting trend in their Game division strategy…(bold emphasis mine)

In 2005 hopes are high and it details their strategy…

Sales in the Game segment are dependent on the timing of the introduction of attractive software and a

significant portion of overall demand is weighted towards the year-end holiday season.

In 2006, ostensibly after noting the Wii’s success, and thinking that a change of strategy might be in order …

Moreover, it is particularly important in the Game segment that these products are provided to consumers at competitive prices to ensure

the favorable market penetration of the platform.

In 2007, after realizing that things aren’t going so great, and realizing that they have cash to be made elsewhere…

In the fiscal year ending March 31, 2008, SCE will place emphasis on expanding its PS2 and PSP® businesses, as well as on accelerating market penetration of PS3.

Yep, the “accelerating market penetration for the PS3” has been relegated to dependent clause status, behind pushing for the growth of PS2. Check out these stats on Sony sales for the past year, both hardware and software:

Worldwide hardware unit sales:

PS2: 14.71 million units

PSP: 9.53 million units

PS3: 3.61 million units

Worldwide software unit sales:

PS2: 193.5 million units

PSP: 54.7 million units

PS3: 13.3 million units

Obviously not going the way they hoped....

[big giant circles]

Right about now, Blueray does mean nothing.

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

Exactly. Gotta think long(er) term.

Investing in technology is like that. And by 2015, maybe there will be something else that comes out that's better, but people will say "Oh, but everyone's already got Blu-Ray. This will NEVER catch on". Then they cycle repeats.

Also, I've read a bit on what McVaffe said about physical copies of media being more or less done away with, and I agree. I'd wager that this is going to become a big deal down the road.

[JCvgluvr]

*Sakurai looks at topic title*

Sakurai: *laughs*

[linkspast]

*Sakurai looks at topic title*

Sakurai: *laughs*

Kevin *looks at post*

Kevin * says get out or add to the dissicucion*

Do you think that physical media will be replaced. I for one cant see this happening until there is some way to be 100 percent sure that it is safe. I mean its cool to be able to take your entire CD libary in an iPod. But if (when) it fails it is nice to know you have a physical medium you can go back to and fix what you lost.

Also I love having a collection. Its not much But I like seeing my game series, and move box sets. I dont know I dont think seeing that on a screen can quite replace that.

[Poke'G]

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.

You're missing an important part of the transition between DVD and VHS. How many videos do you have that are still in really good condition? DVDs, if kept properly, will last a very long time and play the same way they did when first bought. Videos could never pull that off. Over time we had VCRs that put less wear and tear on the tape when playing it, but it never changed the fact that videos lost their quality very quickly.

DVDs are in no way immortal, but are a much better investment than a video. It made sense to double up those movies you had on video, because if they weren't dying all ready (as much of my family's library was) the would die in due time. The DVDs on the other hand I expect to hang onto for quite some time, save from freak accident or theft.

I saw the need to get DVDs, and looked forward to their price drops, even in their infancy.

Now, I don't give a crap about HDDVD or BluRay, even when they dropped into reasonable price range. DVDs are cheaper, the quality is fine, and they'll last just as long as the HD ones. I see no incentive to upgrade.

[The Pezman]

I see no incentive to upgrade.

It helps if you have an HDTV and can watch HD and non HD content on cable. After watching HD for a relatively short amount of time, the quality difference does become apparent, and I at least always felt a little dissatisfied having to go back down on a given channel.

HD hasn't been marketed very well (even the phrase "high definition" is ambiguous and can refer to a number of resolutions), but it is a significant upgrade and one that does enhance viewing experience.

[kupernikus]

It helps if you have an HDTV and can watch HD and non HD content on cable. After watching HD for a relatively short amount of time, the quality difference does become apparent, and I at least always felt a little dissatisfied having to go back down on a given channel.

HD hasn't been marketed very well (even the phrase "high definition" is ambiguous and can refer to a number of resolutions), but it is a significant upgrade and one that does enhance viewing experience.

After having good HD programming, I kinda don't watch the non HD channels outside of speed and G4, since I dont have them in HD. Ive skipped anything else though.

[I-n-j-i-n]

High Def will start taking off after the Japanese do with theirs. Obviously, technology nowadays still follows Japan like a kart on a donkey. PS3 obviously wasn't going to be an overnight Bluray converting machine, but they had to start somewhere. Also, as slow as the process has been, the conversion rate is still increasing steadily and high def is creeping up even in TV stations. It's a matter of time. Just not as shockingly fast during the VHS/DVD transfer.

[JCvgluvr]

Kevin *looks at post*

Kevin * says get out or add to the dissicucion*

*Hands Kevin a sense of humor*

There, that's better. Maybe you can deal with life a little easier!

[The Coop]

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..?

They haven't even decided on final specs yet as it is, so rest assured, there are many more editions coming.

[1337 1]

*Hands Kevin a sense of humor*

There, that's better. Maybe you can deal with life a little easier!

There's a few people on these forums who could do with that. I've seen a few cases of people getting w33py about that same thing

*back on topic *

Its price is indeed very bad, but remember that the ps3 was considered one of the crucial factors in Blu-ray's victory over HD-DVD. In Australia, PS3s were actually bundled with many TVs as a blu-ray player/media player. Probably the same as many other countries, but it was initially the cheapest bluray drive. Even so, Sony's claims about the PS3 (can't remember the guys name, but everything he said was pure gold) wouldn't have helped much.

I still laugh at the one where he offered a reward for every PS3 still on the shelf at release. That was destined to backfire

[munchi]

High Def will start taking off after the Japanese do with theirs. Obviously, technology nowadays still follows Japan like a kart on a donkey. PS3 obviously wasn't going to be an overnight Bluray converting machine, but they had to start somewhere. Also, as slow as the process has been, the conversion rate is still increasing steadily and high def is creeping up even in TV stations. It's a matter of time. Just not as shockingly fast during the VHS/DVD transfer.

I agree. The switch is inevitable. Now, I will also say that part of sony's problem is the cost of the system. I know others have said that, but you have to think of it this way.

A couple years ago everyone had VCRs and to buy a DVD player that WOULD ONLY PLAY DVDS was $300-400 dollars...for a cheap system. Enter the PS2! "Hey parents! Make your kids happy and also get to the dvd player you've been wanting! Oh, and by the way its the same price OR CHEAPER than a boring dvd player. Our dvd player play original playstation games, new AWESOME playstation 2 games, AND dvds!! For the same price OR CHEAPER!!"

That was a complete no brainer. And once there was a PS2 in one outta' five homes, dvds took off like a rocket. I didn't have one but my friend did and I would buy dvds because I could go to his house and we'd hang out and watch them. This is the real cause of the speed of the format crossover.

Accessible hardware + no noticable increase in costs to the consumer = rapid switch.

The PS3 is different. At launch time and even now, the PS3 might be the same price but usually more EXPENSIVE than a plain blu-ray player. I've seen them as cheap as $150! Let me think, pay $150 or pay $600...hmmmm. Yeah, that was a big mistake. There was no "bargain" factor, no "Woohoo, even though I'm shellin' out a couple hundred bucks, I feel like I'm getting the best end of this deal!" It was more like "I'm paying for something that I think is worth it and I'm paying for every cent that it's worth." Which, from a sales perspective, is not what you want consumers thinking, especially during a depressed economic time period. Gas is four dollars a gallon...everyone is looking for the bargain and the discount. When the PS3 moves down in price to consumers feel like they're getting a good deal is when any kind of rapid transfer will take place. A lot of big businesses forget this fact but perception is reality.

[munchi]

I also feel like this thread is a good example of another reason sony is floundering.

Blu-ray!! No HDDVD!! NOOOO BLURAY!!!!

Those things are all well and good, but in the end it's neither. It's games. It's fun. Ironically, on all three platforms they market old games and people actually buy these games. Why? Because they are FUN! Contra is a long, hard, annoying, frustrating, crappy looking game. AND EVERYONE HAS PLAYED IT!! Why...because it's FUN! And that's why Nintendo has been around forever, and will continue to be around. That's why the PSP hasn't come close to the success of the Gameboy and probably never will. That's why, even with less third party support and crappy graphics, people pick up the Wii. Because it's fun! The Gameboy is fun! Can it play movies? No. Can it play music? No. It plays games. And other companies don't understand that people will pay money for something that just plays games. It was the same in the eighties. Computers did everything. Nintendo said, "my computer just plays games...no word processing...no graphic design capabilities...just games." And EVERYONE said, "It's a novelty to be sure, but it'll never last." AND EVERYONE BOUGHT ONE!!! Because the truth was the NES did games better than the computer, because games were the only thing it cared about. Fast forward almost thirty years and it's the same story. "Next Gen" systems do everything. Nintendo says "my next gen system will play games...no blu-ray dvd capabilities...no real hard drive function for storing your music and videos and crap...just games." And EVERYONE said, "It's a novelty to be sure, but it'll never stand up to the PS3!" AND EVERYONE BOUGHT ONE!!! Because the truth is that nintendo does games better than sony. Nintendo games are fun. Sony games are cool. And at the end of the day, in the still of the night, behind locked doors where no one can see, people, alone with themselves, actually care about more about fun than being cool.

You're cool if you bought a PS3. And then you sit with a frown in front of it while it takes a half an hour to install Devil May Cry to the hard drive. INSTALL!? What the hell!? I thought this was a gaming console! Oh wait, Sony said it themselves. It's not a console...it's a computer. SHIT!! I already have a computer! I already have a machine that CAN play games, but is INEFFICIENT at meeting my gaming needs. I wanted something that STREAMLINED the processes. That was DESIGNED to play games, to ENSURE my gaming experience was OPTIMIZED. Extras are cool but I want to play my game!!

I bought a wii. And when a fun game comes out, I buy it. I play it. I invite friends and we have a BLAST!!! How simple and easy and fun is that!? At the end of the day, that's what's important. That's why in the video game world the ONLY constant is Nintendo. They started as a company that just sold playing card games, nothing else. They are doing the same thing. They just upgrade the cards. And everyone else does something else besides games. Everyone else comes from somewhere else besides games. So they really don't get games. They really don't understand what makes games fun. I've never picked up a mario game was wasn't fun and the controls weren't intuitive. They flow. They're easy to play even when the difficulty is high. And Sony and Microsoft don't get that. They have third parties that get that. Companies like Konami and Level 5 and Ubisoft. So Sony and Microsoft will sell games because they have third parties that get the idea. But Sony and Microsoft will continue to argue and struggle with and focus on all the extras that really aren't the point. And that has and will continue to hurt they're systems success. The best games in the world can't save you from a stupid marketing campaign and an inaccessible system. Sega proved that.

[Overflow]

Wow. That was truly impressive.

It's almost scary to think that if third parties dropped off, the PS3 and 360 would die nearly instantly.

I entirely agree. Fun is what's important in video games, and people just don't seem to get that anymore. The gamer market is being flooded with gramers (Check out 'Nametags') who only play halo and madden, and care more about being cool with powerful hardware than having fun.

Like you said, that's why Nintendo is constant.

You guys should check out Game Overthinker. Run a search for his videos; they deal a lot with these kinds of issues. In one episode, he explains why Nintendo fans are so crazy over the success of the Wii and he points out the flaws with the 'hardcore' audience's opinion that games like mario and zelda are 'gaaaaay'.

[The Pezman]

They haven't even decided on final specs yet as it is, so rest assured, there are many more editions coming.

Link to info where you got this?

[Penfold]

Link to info where you got this?

Looking at the PS3 wikipedia page, the retail configuration section outlines the variability in the different versions of the PS3 that have been available over its life span. I'm assuming that's what he's refering to.

[Calpis]

After having good HD programming, I kinda don't watch the non HD channels outside of speed and G4, since I dont have them in HD. Ive skipped anything else though.

I completely agree. Before I bought an HDTV, I didn't give a shit about it and just thought it was something that either early adopters or rich(er) people cared about and didn't make too much difference in the long run, but now that I have an HDTV, SDTV just looks fuzzy and hard to watch. Especially Comedy Central. On top of it being SD, they have some video compression going on that makes this annoying ghosting effect that makes it almost unbearable to watch. Anyone else get that? Maybe it's just Comcast (although I doubt it)

On topic, I'm not surprised they lost so much money. Even if I have been contemplating buying a PS3 lately, I'm not paying $500+ for it. I've been trying to find a deal on Ebay, but it seems competition for those are pretty heated.

[ifirit]

Exactly. Gotta think long(er) term.

Investing in technology is like that. And by 2015, maybe there will be something else that comes out that's better, but people will say "Oh, but everyone's already got Blu-Ray. This will NEVER catch on". Then they cycle repeats.

There's already a new format in production, Holographic Versatile Discs. And this cycle will probably happen sooner than you might expect with the introduction of ultra high definition.

Also, I've read a bit on what McVaffe said about physical copies of media being more or less done away with, and I agree. I'd wager that this is going to become a big deal down the road.

I agree with that, but more as a consequence of these kinds of media struggles. People will likely look for something easier and more versatile, such as downloadable content through established distributors, than choosing to invest in some format or whatever that might not even be supported in a year or less. Of course, these kinds of format wars could eventually spread there too, such as .mpg/.avi vs. .mp4/.mov formats. Still, it's easier to get a compatible player than it is to replace your entire video collection.

[The Coop]

Link to info where you got this?

Just look at the different versions of the PS3 that have come out since its launch (see Penfold's link). In a year-and-a-half, they've had four different hard drive sizes, added functions, removed functions... it's like they're still trying to figure out what works, what doesn't, and what's needed. Hell, they've got two versions that they aren't even making any longer already. Of course, Microsoft is equally as guilty of this, considering how many versions of the 360 there have been to date, so it's not like Sony is alone in their imbecilic antics.

Both companies keep changing parts of the system specs by removing or adding something that was/wasn't there in the previous iteration. Some are small, others, not so small. Perhaps someday they'll both settle on a final configuration, but I doubt that'll come anytime soon.

[The Pezman]

Just look at the different versions of the PS3 that have come out since its launch (see Penfold's link). In a year-and-a-half, they've had four different hard drive sizes, added functions, removed functions... it's like they're still trying to figure out what works, what doesn't, and what's needed. Hell, they've got two versions that they aren't even making any longer already. Of course, Microsoft is equally as guilty of this, considering how many versions of the 360 there have been to date, so it's not like Sony is alone in their imbecilic antics.

Both companies keep changing parts of the system specs by removing or adding something that was/wasn't there in the previous iteration. Some are small, others, not so small. Perhaps someday they'll both settle on a final configuration, but I doubt that'll come anytime soon.

I agree with what you've said, and it's this bullshit which has decimated my interest in the PS3. However, I don't think that is evidence enough to make the claim you did:

They haven't even decided on final specs yet as it is

Who knows? Maybe (just maybe) things will stay constant from now on. I doubt it, but that's still not reason enough to speak in absolutes like you did.

[The Coop]

Who knows? Maybe (just maybe) things will stay constant from now on. I doubt it, but that's still not reason enough to speak in absolutes like you did.

I have no doubt that there will be yet another PS3... another hard drive upgrade, taking things out, added/removed connectivity options, or the most likely reason, redesign. I would almost be willing to put money on it. We've already seen four PS3s, and a lot of systems usually go through some kind of a redesign at least once in its life span (Sony's done it each time thus far). After all, far more systems have gone through a redesign to make it cheaper, smaller, etc., than those that didn't. So we all know there's at the very least one more PS3 version likely coming. And with the four versions of the 360 that've been done, I'd have to say all this could be applied to it as well.

I honestly can't remember a time when the systems came in so many versions, so fast. And we're not talking about trying to fix hardware issues like the many SKUs for the PS1 and PS2, the anti-piracy touches for the DC, or the "keep unsigned third party games off" Genesis v1 adjustments. These are just simply new hardware versions where they're adding and changing the specs that should have been finalized before even one system came off the assembly line.

All that aside, I said "they haven't even decided on final specs yet" for two reasons, Pezman. One, it was a sarcastic remark on what's been done thus far (which I thought was pretty obvious), and two, it's a comment based on what history has shown us is very likely coming system-wise. But above all, it was simply an opinion, not an absolute

Edit: Cleaned up a spot or two.

[Poke'G]

High Def will start taking off after the Japanese do with theirs. Obviously, technology nowadays still follows Japan like a kart on a donkey. PS3 obviously wasn't going to be an overnight Bluray converting machine, but they had to start somewhere. Also, as slow as the process has been, the conversion rate is still increasing steadily and high def is creeping up even in TV stations. It's a matter of time. Just not as shockingly fast during the VHS/DVD transfer.

That's no guarantee. Remember Laserdiscs? Japan loved them, yet they bombed here commercially. Just because technology takes off in Japan does not mean America will follow suit.

It helps if you have an HDTV and can watch HD and non HD content on cable. After watching HD for a relatively short amount of time, the quality difference does become apparent, and I at least always felt a little dissatisfied having to go back down on a given channel.

Maybe, but I've stared down the SD and HD TVs at the stores when they have them side by side, and I really don't care about the difference. It's there, but it's not "Time to replace all my DVDs." significant. As long as I have the DVD alternative, and it's cheaper, I'm going with DVD. The extra detail is not worth the costs.

And for all you guys saying 2012-2015 that this stuff will be accepted, for all we know, downloadable media could surplant physical mediums by then. The market at this point is still way up in the air.

[I-n-j-i-n]

That's no guarantee. Remember Laserdiscs? Japan loved them' date=' yet they bombed here commercially. Just because technology takes off in Japan does not mean America will follow suit.[/quote']

That's one of the few times the trend didn't catch on, compared to DOZENS of other instances. Also, HD programming is becoming ubiquitous in Japan and even anime, which arguably doesn't really *need* high definition are getting in on the act. Bluray sales are rising pretty rapidly over there too. As for the States, the conversion rate is no pushover.

Compared to the almost zero HD turnover rate only a decade ago, the HD penetration in United States alone will be around 60% by 2010 from most estimates, because that's the only new type of TV that most people will be able to buy regardless, and let's face it: If you're buying a $1000 TV, you're not going to stick around with an inferior technology that has its support being phased out. And there are more and more high definition TV channels almost on a day to day basis. Even Bluray penetration is already 10+ million in the US alone and it will continue to rise (imagine in a decade with the steady penetration, and we're seeing a real phasing out of DVDs by then). Again, it's not a magical, instant process, but you have to be pretty delusional to think the penetration in the market isn't happening. Because it FACTUALLY is. I think it's pretty silly to equate Bluray with the Laserdisc. Because the Bluray is already a much bigger success than the Laserdisc ever was. And the Bluray is still a pretty new and relatively untested format with features that are still being explored compared to HDDVDs which had its run with with its features fully explored in its run.

Maybe, but I've stared down the SD and HD TVs at the stores when they have them side by side, and I really don't care about the difference. It's there, but it's not "Time to replace all my DVDs." significant. As long as I have the DVD alternative, and it's cheaper, I'm going with DVD. The extra detail is not worth the costs.

And for all you guys saying 2012-2015 that this stuff will be accepted, for all we know, downloadable media could surplant physical mediums by then. The market at this point is still way up in the air.

I don't know about the downloadable media being the sole player. People still prefer physical storage formats and storage for high definition files are still relatively expensive to the prospective lower price of Blurays by then. I do think downloadable media will be there to stay though. But I still think physical formats are pretty safe as far as movie discs go.

[Overflow]

I think it's been said, but I and other people enjoy having the physical videos, too. It's kinda cool to look at your rows of videos as you decide which one to watch, or flip through those pearly white Wii games.

The Virtual console games, while cool, are disappointing in this area: there is no physical reassurance that I bought the game, instead only a little picture on the screen. I think the same applies for videos: in most people's minds, a "hard copy" is never a bad thing to own. I can think of several times I've lost tons of stuff on my computer (Like movies in iTunes), but owning the physical copies made it easy to copy again.

[MkVaff]

I think it's been said, but I and other people enjoy having the physical videos, too. It's kinda cool to look at your rows of videos as you decide which one to watch, or flip through those pearly white Wii games.

The Virtual console games, while cool, are disappointing in this area: there is no physical reassurance that I bought the game, instead only a little picture on the screen. I think the same applies for videos: in most people's minds, a "hard copy" is never a bad thing to own. I can think of several times I've lost tons of stuff on my computer (Like movies in iTunes), but owning the physical copies made it easy to copy again.

While having a nice, large collection of any type of media is arguably something most people would like, when considering other technologies in terms of cost effectiveness and convenience, streaming / downloading would be the way to go. Despite the argument that nearly anything you collect could eventually be an obsolete format, I think the other arguments for this technology are more compelling.

Granted, there are CDs, DVDs, and games which you're such a fan of that just want to have an actual physical copy of. I haven't stopped collecting anything, though admittedly these days I'm much more selective about what I actually do spend money on.

But there's a lot of stuff I would like to play / watch / listen to and perhaps not particularly own. On Rhapsody, I pay a monthly fee of $12, and I can stream millions of songs, full albums, singles, etc for as long as I like. I can't count the number of CD's I've actually purchased after being able to hear them for weeks on this service, it's great.

The same could apply to streaming video and downloadable games. I don't think these services are meant to completely replace physical copies, but instead act as a much more convenient rental / preview system. I've had netflix for about 6 years and have watched a ton of movies from it. The only thing better than getting the discs mailed to my house would be to stream them. As well, I would absolutely pay upwards of $80/month with the option to download and play, at any time I wanted, any PS3 or 360 game that's available, and just delete it from my hard drive when I'm done.

These are the kinds of technologies that excite me much more than a new media format because they have the power to expose you to vast amounts of material in a conveniet way. That's why I'm 'meh' on Blu-Ray by itself. It's great for giving me gorgeous versions of stuff I know I like, but outside that it does little else.

When the movie and technology industries stops being a bunch of cunts and decided to make a decent streaming / downloading service for a viable price, you can bet I'll be one of the first to pick it up. And I will watch movies, and movies and movies. And all will be well in McVaffeland.