Article/Interview with Howard Stringer (some PS3 talk)

[Titanio]

"Stringer banking on HD strategy for Sony rebound"

http://www.hollywoodreporter.com/thr/article_display.jsp?vnu_content_id=1001393147

Some relevant bits - some of it is Stringer talking, and some of the more interesting bits aren't direct quotes, so I'm not sure how much is the reporter's speculation. How and ever:

In a demonstration of the swift collaborative response to consumer-driven marketplace changes that a revitalized Sony can deliver, the company soon will unveil a line of compact, portable video devices to fill the time gap before PlayStation 3 launches in Japan in March and in the U.S. a year from now.

An early strategic victory in Stringer's tenure has been winning support from Warner Bros. and Paramount Pictures for Sony's campaign to make Blu-ray the standard for next-generation DVD production despite those studios' initial backing of the rival HD-DVD format, backed by Toshiba.

...

Although no money has changed hands and no major concessions were made, sources say that Sony has provided caps on Blu-ray disc manufacturing costs and timetable guarantees.

"The reason Sony has suddenly gained support for Blu-ray is simple," said a high-level studio executive close to the discussions. "PS3 is a subsidized Blu-ray play that will sell 20 million units. The first HD player will be on the market for $1,000. PS3 could be at $300 or $400. Sony will be selling them at a loss the first six months to a year just to get Blu-ray players out in the market. So studios realize they need to have their content on it."

Indeed, packaging Universal Media Discs of "Spider-Man 2" with the new PSP in March convinced Sony that its PlayStation franchise had the potential to be much more than a game player. The PS3 and portable new multimedia devices will feature original short-form content, Internet messaging and other functions.

The promise of PS3 already has served as a catalyst for new business alliances for Sony. Comcast is in talks with Sony about ways it can joint venture on the PS3 and other Sony portable video devices to extend its brand into the wireless interactive space.

Sony is discussing content search and management, advertising and other common ground alliance with Google and Yahoo!, which soon might begin paying to be the welcome screen on Sony's sleek Vaio laptop computers.

A massive new marketing campaign is being spearheaded by newly appointed global marketing chief Andrew House to help reposition Sony in a brutally competitive marketplace by touting about a dozen of its top products, including the Bravia LCD TV, the next-generation Walkman, PS3, PSP, HDV Handycam, Sony Ericsson mobile phones and the Genesis digital camera system for studios created in cooperation with Panavision.

(The new Bravia ad is pretty cool btw - if it's a sign of things to come that's a very good thing imo. you can see it here: http://www.bravia-advert.com/)

In keeping with the PlayStation business model, PS3 will roll out at a loss for the first six months, then rapidly turn profits on game-license fees. PS3 will be bundled with a selection of preloaded films, TV programs and games and sell for between $300-$400.

The full article is very much worth reading. Seems Sony is very busy indeed, and PS3 is at the centre of that.

 

[Carl B]

I agree, I read the article this morning and I found it excellent. There was one error that stood out - the reporter referencing the PSP as a hard-drive enabled device - but except for little hiccups like that really a very good read.

 

[Jon Brittan]

The thing is, if the first HD-DVD players really are released at ~$1000 then that can only be because of manufacturing cost as that would be prohibitive to the distribution of the medium...

*If* that is true then surely a Blu-Ray player cannot be significantly cheaper to manufacture...

Again, *If* that is true then just how much of a loss will Sony be making on each PS3 or how expensive will it have to be to avoid that loss?


Either that HD-DVD player cost is wrong, an HD-DVD player is a hell of a lot harder to manufacture, or PS3 is going to force Sony to take massive losses or be extremely expensive.

 

[Titanio]

The thing is, if the first HD-DVD players really are released at ~$1000 then that can only be because of manufacturing cost as that would be prohibitive to the distribution of the medium...

*If* that is true then surely a Blu-Ray player cannot be significantly cheaper to manufacture...

Again, *If* that is true then just how much of a loss will Sony be making on each PS3 or how expensive will it have to be to avoid that loss?


Either that HD-DVD player cost is wrong, an HD-DVD player is a hell of a lot harder to manufacture, or PS3 is going to force Sony to take massive losses or be extremely expensive.

The cost of technology at the start of its lifecycle, to the consumer, rarely bears any relation to manufacturing cost.

But obviously Sony will be taking a loss on PS3.

 

[dukmahsik]

tired of all this talk, when do we get some more real details on pricing, rsx, etc.

 

[Jon Brittan]

The cost of technology at the start of its lifecycle, to the consumer, rarely bears any relation to manufacturing cost.

But obviously Sony will be taking a loss on PS3.

I realise that, but if they want HD-DVD to survive then it would never see players released at ~$1000 if Blu-Ray devices are already available at ~$400, so either the guy is pulling figures out of... , something's wrong in HD-DVD production costs or PS3 is *massively* subsidised/expensive

 

[Carl B]

Keep in mind also Jon that PS3 will have an entirely different economy of scale going as well. They can mass produce blu-ray read heads for the PS3 expecting every single one to be sold. Who in their right mind though is going to dedicate a factory line to making millions of HD-DVD heads (or standalone blu-ray heads) right at the beginning at those formats lives?

Truly at least in that respect, I think Sony *should* be able to source their read heads at a significant discount to the norm.

And of course to go further, the $1000 for initial standalone players reflects an exotic price for exotic tech that normally only a certain demographic can afford anyway. It'll get pitched to them when they're buying their new HDTV, for example.

 

[Titanio]

tired of all this talk, when do we get some more real details on pricing, rsx, etc.

A couple of months.

I realise that, but if they want HD-DVD to survive then it would never see players released at ~$1000 if Blu-Ray devices are already available at ~$400, so either the guy is pulling figures out of... , something's wrong in HD-DVD production costs or PS3 is *massively* subsidised/expensive

Well, first off we don't know how much HD-DVD players will cost - but I have seen the $1000 figure thrown around. In terms of standalone Bluray players at the same price, though, it's very possible such players will also be recorders and so forth, which is worth remembering when discussing this. That doesn't account for the gap entirely, but again, retail prices on new tech aren't particularly..telling of anything expect that enough people are willing to buy at those prices

 

[Mmmkay]

I realise that, but if they want HD-DVD to survive then it would never see players released at ~$1000 if Blu-Ray devices are already available at ~$400, so either the guy is pulling figures out of... , something's wrong in HD-DVD production costs or PS3 is *massively* subsidised/expensive

Traditional CE products like stand alone movie players are sold on the principal of cost plus pricing. They include their cost of manufacture and surplus profits in the wholesale price as it is their only revenue stream. Initially prices are very high because of the small market demographic that will adopt early. Prices rapidly decrease in line with growing sales and cheaper manufacturing costs.

Things like consoles have secondary revenue streams through software sales and peripherals. This allows them to sell as 'loss leaders'. These products traditionally sell lower than their cost to manufacture as they recouperate those losses through software sales etc. Their prices remain steady for much longer than cost+ products because 'traditionally' they wait until the cost of manufacture decreases a suitable amount to further subsidise their prices. The goal for loss leaders is to end up selling at a profit like cost+ products, it just takes place further down the line in their life cycle.

 

[mckmas8808]

I really really hope most of this stuff does pan out for Sony and the PS3. This is what they brung in Howard Stringer for. Now Howard get busy.

 

[Mmmkay]

I'm still an unknown quanitiy so I can't edit... or spell principle correctly either

Just to say, yeah there are plenty of other factors involved in CE pricing, I was decribing a very basic core principle which separates the stand alone manufacturers from console manufacturers. I see time and time again people getting confused why HD/Blu-Ray players will cost $1000 at launch and the PS3 wont and well it's getting tiring. The exact same principle is why it's largely irrelevant talking about a PS3 containing a $500 graphics card.

 

[mckmas8808]

I'm still an unknown quanitiy so I can't edit... or spell principle correctly either

Just to say, yeah there are plenty of other factors involved in CE pricing, I was decribing a very basic core principle which separates the stand alone manufacturers from console manufacturers. I see time and time again people getting confused why HD/Blu-Ray players will cost $1000 at launch and the PS3 wont and well it's getting tiring. The exact same principle is why it's largely irrelevant talking about a PS3 containing a $500 graphics card.

I wish I could carry you to every thread that people get this wrong. Honestly the most people to this day still don't understand the concept that you are speaking about. That's why you see reports of people stating that the PS3 will be $500-$600. Mmmkay just keep posting it and people will finally understand. The sad thing is this is B3D and a lot of people here don't even understand. Just sad man.

 

[Inane_Dork]

In keeping with the PlayStation business model, PS3 will roll out at a loss for the first six months, then rapidly turn profits on game-license fees.

I think that may be a little bullish.

PS3 will be bundled with a selection of preloaded films, TV programs and games and sell for between $300-$400.

Now this makes me think (yeah, I know, pretty odd for me). Will the "preloaded" content be on BR? DVD? Or on an HDD? Having all that content bundled with the system and it still costing less than $400 is not bad. I'm looking forward to what Sony does in terms of packages.

 

[MasaC]

"PS3 will be bundled with a selection of preloaded films, TV programs and games and sell for between $300-$400."

I have to agree with Inane_Dork that these are interesting choice of words. Bundled software that comes preloaded. Wouldn't you only use that phrase if you were talking about it coming preloaded on a harddrive?

If that's the case, what are we talking about? Standard HDD or 2 SKU's?

 

[scificube]

Sad if the PS3 comes out next fall in the US and not in the spring as promised. Actually sad is n't the right word...angry is more like it.

 

[Carl B]

"PS3 will be bundled with a selection of preloaded films, TV programs and games and sell for between $300-$400."

I have to agree with Inane_Dork that these are interesting choice of words. Bundled software that comes preloaded. Wouldn't you only use that phrase if you were talking about it coming preloaded on a harddrive?

If that's the case, what are we talking about? Standard HDD or 2 SKU's?

I think it's honestly probably on a BD disc or something. It would almost make more sense that way anyway, trying as they are to impress with blu-ray and all.

The author seems like they confused their language. They called PSP a hard-drive enabled device as well, y'know? So again, I think there's just a slight lack of technical parlance ability on that authors part.

Certainly an standard HDD would be exciting though!

 

[Titanio]

Sad if the PS3 comes out next fall in the US and not in the spring as promised. Actually sad is n't the right word...angry is more like it.

Sony didn't promise it would launch in the US in Spring. They said it was coming in Spring 2006. Launching in Japan in Spring 2006 covers that.

Welcome to the real world. You don't expect a US launch in Spring, do you?

 

[Carl B]

Sad if the PS3 comes out next fall in the US and not in the spring as promised. Actually sad is n't the right word...angry is more like it.

Has Sony promised a US Spring launch though? I thought that was just Japan. In any event, the article talks about PS3 March in Japan and in the Fall for the US. Not a quote from Stringer though, so could have been extrapolation on the authors part.

In a demonstration of the swift collaborative response to consumer-driven marketplace changes that a revitalized Sony can deliver, the company soon will unveil a line of compact, portable video devices to fill the time gap before PlayStation 3 launches in Japan in March and in the U.S. a year from now.

 

[MasaC]

I think it's honestly probably on a BD disc or something. It would almost make more sense that way anyway, trying as they are to impress with blu-ray and all.

The author seems like they confused their language. They called PSP a hard-drive enabled device as well, y'know? So again, I think there's just a slight lack of technical parlance ability on that authors part.

Certainly an standard HDD would be exciting though!

I hear you, it makes sense. However, I can't drop the thought that preload is a term that's associated with harddrives rather than optical media even among less tech oriented people.

 

[Mefisutoferesu]

Same package as the PSP probably. It'll probably come with a Blu-ray disk just to show off how amazing BRDs are so people are more inclined to buy them at stores. Or perhaps content loaded on an SD card? Don't expect an HDD though, at least, I'm not.