Cost of winning a format war

[ShadowRunner]

This is going to be total guess work

Had bluray not been included in PS3 what would it have likely cost sony to ensure its outright victory by other means, assumingit would have been possible?

 

[Dregun]

I personally don't think the omission of Blu-Ray into the PS3 would have changed that much. The fact remains that the 360 was/is a good console and the success of the Wii was not a direct result of the PS3's "failure" (as some would put it). In fact I think the PS3 has gained from the inclusion of Blu-Ray, while certain trade offs were necessary as the speed of the drive is slightly slower then DVD the extra storage space has seemed to pay off.

The addition of Blu-Ray really defines the PS3, as not including it would have rendered the PS3 by many accounts indistinguishable from the 360. When you compare the two HD consoles it is the Blu-Ray drive that many consumers are now looking (and where) looking at as a benefit over the 360. While many can argue that a console is mainly for playing game, these purist can't seem to comprehend the fundamental change of the consumer. Consumers want more for their money; it is the reason why cell phones play MP3's, can watch streaming video and why Apple designed a phone to begin with. While MP3 players were hip and new, they are now becoming a common accessory to many peoples gadget portfolio. However the longevity of stand alone MP3 players is already starting to diminish; as previously stated consumers want "All-In-One" devices and cell phone makers are cashing in on that philosophy.

The market share of video games has not only grown, but shifted as well. What was once considered a geek toy, or a piece of equipment solely designed to appeal to the younger audience is now found its way into unsuspecting homes. Be it disguised as a "fitness" machine or a "media center" these machines are now encroaching into the realm of "main stream" peripherals that now accompany STB or Cable boxes next to TV's.

So I say the inclusion of the Blu-Ray drive is what has kept the PS3 competitive in this new world of Video Games. Without a distinguishable difference between its competition I feel the PS3 would have suffered a much worse fate then what it is experiencing now. Furthermore the inclusion of Blu-Ray into the PS3 has opened up a new revenue stream for Sony, something that in the long run could benefit future consoles; even Sony's competitors.

 

[Phil]

The addition of Blu-Ray really defines the PS3, as not including it would have rendered the PS3 by many accounts indistinguishable from the 360.

I would think that bluray was one of the prime reasons why PS3 was delayed to launching so much later than the Xbox360. Not having it, would have put the two consoles much closer together, resulting in that it would have been more pressure on Microsoft to distinguish its 360 from the (cheaper) PS3 riding on the success wave of the PS2....

 

[ShadowRunner]

I apreciate the input, but its not really the line of thinking i was hoping to go down.

It has come to my attention that some people think that future profits sony makes from Bluray should not be noted directly in relation to PS3s overall loss/profit, because the format war could have been won by other means, at cheaper cost. This got me thinking about what it would have cost sony to ensure the success had they not included it in PS3 (through subsidization of standalone players and cash incentives to movie studio for exclusive support etc.), personnally i dont think it would have won the war without PS3 but theoretically, and where they were willing to spend whatever it takes, what would it have likely cost them?

If it is the general consensus that future bluray profits should not be included when looking at PS3s profit/loss then we need to come up with a guestimate at what it would have cost them without PS3, so that the figure could be subtracted from the loss figure we currently have for PS3.
If bluray profits are not included then the investment they made to ensure blurays victory shouldnt be included either.

I doubt we are going to be able to come up with anything, but that is part of the point. I dont believe you can neglect to take into account bluray profits when looking at PS3 without opening a whole new can of super worms!

 

[Nesh]

I personally don't think the omission of Blu-Ray into the PS3 would have changed that much. The fact remains that the 360 was/is a good console and the success of the Wii was not a direct result of the PS3's "failure" (as some would put it). In fact I think the PS3 has gained from the inclusion of Blu-Ray, while certain trade offs were necessary as the speed of the drive is slightly slower then DVD the extra storage space has seemed to pay off.

The addition of Blu-Ray really defines the PS3, as not including it would have rendered the PS3 by many accounts indistinguishable from the 360. When you compare the two HD consoles it is the Blu-Ray drive that many consumers are now looking (and where) looking at as a benefit over the 360. While many can argue that a console is mainly for playing game, these purist can't seem to comprehend the fundamental change of the consumer. Consumers want more for their money; it is the reason why cell phones play MP3's, can watch streaming video and why Apple designed a phone to begin with. While MP3 players were hip and new, they are now becoming a common accessory to many peoples gadget portfolio. However the longevity of stand alone MP3 players is already starting to diminish; as previously stated consumers want "All-In-One" devices and cell phone makers are cashing in on that philosophy.

The market share of video games has not only grown, but shifted as well. What was once considered a geek toy, or a piece of equipment solely designed to appeal to the younger audience is now found its way into unsuspecting homes. Be it disguised as a "fitness" machine or a "media center" these machines are now encroaching into the realm of "main stream" peripherals that now accompany STB or Cable boxes next to TV's.

So I say the inclusion of the Blu-Ray drive is what has kept the PS3 competitive in this new world of Video Games. Without a distinguishable difference between its competition I feel the PS3 would have suffered a much worse fate then what it is experiencing now. Furthermore the inclusion of Blu-Ray into the PS3 has opened up a new revenue stream for Sony, something that in the long run could benefit future consoles; even Sony's competitors.

Blu Ray is the reason why some would continue to buy it at the current price tag.

It is also the reason why the price is not attractive for so many others.

We all know already that it is the price the primary reason it doesnt sell high enough

And yes if BR was not included things would have been much more different.

The PS3 would have done much better but at the expense of Blu Ray domination

 

[tha_con]

As the OP stated, the question is not if Blu-Ray were not in PS3, would the PS3 be a success. The question is, were Blu-Ray not in PS3, would Blu-Ray be a success?

I do not think it would be.

 

[DrJay24]

As the OP stated, the question is not if Blu-Ray were not in PS3, would the PS3 be a success. The question is, were Blu-Ray not in PS3, would Blu-Ray be a success?

I do not think it would be.

How would that be a question for this forum then?

 

[ShadowRunner]

How would that be a question for this forum then?

Because it relates to how the success/failure of the PS3 is percieved?

 

[-tkf-]

because the format war could have been won by other means, at cheaper cost.

I think it would have been harder to the win the format war without a PS3, maybe near impossible.

The PS3 was pretty much the best Blu-Ray player from the release. And it got better with every firmware upgrade and can still take the crown as the best blu-ray player.

Without the PS3 blu-ray would have been judged on slow, low spec'd hard to upgrade (and in most cases impossible to keep up to date) stand alone players.

PS3 showed that Blu-Ray could compete with the now DEAD HD-DVD format.

 

[tha_con]

How would that be a question for this forum then?

Well, it mostly ties into Sony's choice to use the PS3 to usher in their new format, and if it was a wise choice. Sure, it's not entirely gaming related, but the discussion stemmed from the NPD threads, which IMO are just as useless and pointless to each and every one of us as gamers, but we still eat that up without question, don't we?

If Sony would have opted out of Blu-Ray in PS3, the format would have had to price match HD DVD to succeed as a format. This would have lost Sony FAR MORE MONEY than putting it in the PS3.

Additionally, the PS3 has more 'streams of revenue' than Blu-Ray players on their own, which enables Sony to sell the system at a loss, while making some money back in different arenas, minimizing their losses (movies, rentals, PSN Store, and PS3 software).

It was the right choice to make as far as ushering in Blu-Ray as the defacto HD standard. It may have not been the BEST choice for the Console wars, but ultimately, Blu-Ray may pay off more for Sony in the long run (if / when the economy recovers). Blu-Ray may help stimulate HDTV sales, PS3 Sales, Stand Alone sales, etc, which will generate revenue for the company as a whole.

 

[DrJay24]

Because it relates to how the success/failure of the PS3 is percieved?

Did you read what I quoted?

the question is not if Blu-Ray were not in PS3, would the PS3 be a success. The question is, were Blu-Ray not in PS3, would Blu-Ray be a success?

Sounds like a Blu-ray/Format discussion...

 

[tha_con]

Did you read what I quoted?



Sounds like a Blu-ray/Format discussion...

If Blu-Ray is a success, more specifically, a big hit, then those royalties will help soften the blow from PS3 losses. Basically, you can pretty much attribute any money that the Blu-Ray format makes over the next few years to the PS3, since it ushered in the "new era" for this format, and without the PS3, the format would have long since died.

I think it's fairly acceptable to discuss this in relation to the PS3. Does it bother you or something?

 

[grandmaster]

Blu-ray is a defining factor of PS3, and also one that gives it the notional ten year life-span. As someone else pointed out on this forum, 3-4 years from now, a downscaled, revised PS3 Slim will be one hell of a media portal/BD player/games player.

 

[tha_con]

Blu-ray is a defining factor of PS3, and also one that gives it the notional ten year life-span. As someone else pointed out on this forum, 3-4 years from now, a downscaled, revised PS3 Slim will be one hell of a media portal/BD player/games player.

That isn't the topic though. The topic is weather or not Blu-Ray would have won w/out the PS3.

 

[ShadowRunner]

That isn't the topic though. The topic is weather or not Blu-Ray would have won w/out the PS3.

Not exactly

What i realy want to know is two things:

A) Should future sony profits from bluray be included when looking at PS3s loss/profit/success?

B) If the answer to A is no, what would it have cost sony to ensure blurays win had it not been in PS3, so that we can add/remove what would have been a seperate investment from the PS3s finance figures

 

[Crossbar]

Not exactly

What i realy want to know is two things:

A) Should future sony profits from bluray be included when looking at PS3s loss/profit/success?

B) If the answer to A is no, what would it have cost sony to ensure blurays win had it not been in PS3, so that we can add/remove what would have been a seperate investment from the PS3s finance figures

Very interesting thread and very hard questions. To complicate things a bit further I´d like to add the following.

I think Sony and the Blu-ray camp may very well have won the format war without the PS3 by going the same route as Toshiba and the HD-DVD camp. But I think the format war would have dragged on longer and the uptake for Blu-Ray would have been much slower than what the PS3 achieved in number of units sold and market penetration. The PS3 solely managed to get 10 million blu-ray players out in the households within one year within a pretty heterogenous demographic which helped leverage the blu-ray format outside the video-phile demographics.

It is hard to set a price on that but it should also be factored in somehow. Achieving broad market acceptance fast helps accelerating the process of making the new format profitable.

 

[tha_con]

I can't remember where I read it, but isn't Blu-Rays market share currently larger than DVD's was at the same point in time during both of their lifetimes, respectively? I'll search around and see if I can find it.

 

[Dregun]

It's tough to say that Sony could have won the format war without Blu-Ray being available inside the PS3. HD-DVD players were cheaper (ok so Toshiba was cheaper); offered almost identical picture quality, the disc's were cheaper to produce and it came out before Blu-Ray. HD-DVD was also a completely finished product that offered features Blu-Ray couldn't at the time of release, a few specs later and Blu-Ray is a comparable product.

Don't get me wrong I was campaigning for Blu-Ray to win as I thought the higher storage space was important and the future ability to add even more layers was already possible and not just feasible as was HD-DVD. Yet owning both formats during the Great Format War of 2007 allowed me to see how close the race to victory was. The fact remains that the insurgence of Blu-Ray players into the market via the inclusion of a BD-Rom inside the PS3 is what ultimately turned the tide into Sony's favor. Those massive amounts of Blu-Ray players in the market even if only 10% of the PS3 owners were buying Blu-Ray movies is what got Warner Brothers to make the switch. I remember every week looking at the numbers of disc sales on new releases for each format; what we have with Video Game numbers is peanuts in comparison as that battle was not as fierce.

Blu-Ray would not be a success if it wasn't for the PS3, while the lower price may have sold more PS3's the money to be made by Sony from BD sales will trump PS2 and PS3 sales combined in the next 10 years. So all in all with that in mind, I would say the PS3 is a bigger success then the PS2 for Sony as not only did they produce a console that can potentially make them money, that console allowed them to get a huge cash cow for the next 10 years.

You really have to treat the PS3 and Blu-Ray the same way you would treat Apple and itunes. Without the ipod Apple would not have had the resurgence it has had over the last 5 years. Developing the ipod that uses media from the itunes store has given Apple a revenue stream they desperately needed and in doing so has allowed them to invest in other ventures..ala iphone, AppleTV, etc etc. Did developing and marketing the ipod take money away from other projects that could have increased sales of other already manufactured goods...probably; but in the end it paid off.

Financially the addition of a Blu-Ray drive in the PS3 was a success for Blu-Ray at the cost of a loss of market share/penetration for the Playstation Brand. That trade off while it seems large right now; in three years time will have paid for itself and turn in a hefty profit.

 

[tirminyl]

As the OP stated, the question is not if Blu-Ray were not in PS3, would the PS3 be a success. The question is, were Blu-Ray not in PS3, would Blu-Ray be a success?

I do not think it would be.

If that is the question then Blu-Ray would not be a success IMO. With the inclusion of the PS3, Sony was able to show the potential market for Blu-Ray players. Since every PS3 is a BR capable machine, Sony was able to use that to show movie studios, etc., that they already have x millions of BR players in users home.

Most counts, IIRC, were done of stand-alone players and never included the PS3 as a blu-ray player. I believe Toshiba liked to use that count when comparing it against HD-DVD but Sony always included the PS3's in their BR player count.

 

[Nesh]

That isn't the topic though. The topic is weather or not Blu-Ray would have won w/out the PS3.

impossible to know