Is Sony willing to lose market share to increase other divisions?

[skilzygw]

Is Sony willing to lose market share to increase other divisions profitability?

I was wondering this about Sony Corp. Are they willing to lose market share for Playstation game sales just to make profit with Blu-Ray licensing and Sony Pictures movie distribution?
I mean including all the stuff they are including in the PS3 the Blu-Ray player. Is not necessary and is just a giant headache, having to deal with DRM and delays. Why include it at all? They don't need it to keep market share. What it does do is increase the price of their consoles. There is no way if there console is $500 that they will sell as well as ps2 did. Just not gonna happen at that price point.

Maybe they see more selling more music/movie content as more profitable then more game sales?

I hope i explained well enough what I thought sounded like a coherent thought inside my head. Words be damned!

 

[Carl B]

Two things:

Indeed yes, it is paramount the primary consumer electronics division of Sony improve it's margins - it means a lot more to the bottom line of the company in the end.

and

Even if it were to cost $500 at launch, it wouldn't stay at $500 throughout it's life, so I'm not sure the black/white predictions to PS2 sell-through are warranted yet.

 

[Shifty Geezer]

Is Sony willing to lose market share to increase other divisions profitability?

Yes. They're in it to make money. If losing money in the console games space results in gaining more money overall, they'll do it. However, Sony is split into smaller corporations who all manage themselves, so it's not really a case of Sony as a whole acting in Sony's best interests. Stringer is supposedly trying to turn that around and maybe we are seeing a change from local company strategy to corporate whole strategy?

And this isn't to say that Sony are expecting to lose console presence either.

 

[speng]

No.

The main reason, it's been the profit and revenue generator for Sony for the past 8 years.
To gamble on reducing marketshare in hopes that you strengthen other divisions I think would not be a wise decision.

Give Microsoft an edge and they will overwhelm you. So they need to keep their lead, and drive other divisions through a large marketshare of the console.

Rather than reduce one to potentially gain in the other. A better strategy is to continue the marketshare penetration in the consoles, and exploit that by other divisions. That's primarily why I think a HDD drive will be standard. It enables several other divisions to "plug" into that system and reach a broader audience of consumers.

Speng.

 

[London Geezer]

Well, Sony seems to be slowly be getting back to normal in their other divisions. The Bravia LCD TV series are really great and they are now the top sellers in many parts of the world. Needless to say they make a big fat profit out of each Bravia sold, seen the stupidly high prices they sell them for (although they're not as stupidly high as they used to be, looking at Sony's history).
What needs to be made clear is that Sony makes a profit out of everey other thing that's not a PS3 that they make. Their movie division makes the profit, their games division makes them big profit, their music division too. That's the only way they can afford to dump money in their new projects like PS3.
Still, i think Sony will lose some console market share, it's only normal, they've dominated for 10 years and at the end of the day they can only go down even just a little. Unless the market itself grows, which we can't tell at present time. If that happens, it could be possible for all 3 players to increase their revenue, regardless of market share.

 

[Carl B]

No.

The main reason, it's been the profit and revenue generator for Sony for the past 8 years.
To gamble on reducing marketshare in hopes that you strengthen other divisions I think would not be a wise decision.

Give Microsoft an edge and they will overwhelm you. So they need to keep their lead, and drive other divisions through a large marketshare of the console.

Rather than reduce one to potentially gain in the other. A better strategy is to continue the marketshare penetration in the consoles, and exploit that by other divisions. That's primarily why I think a HDD drive will be standard. It enables several other divisions to "plug" into that system and reach a broader audience of consumers.

Speng.

I think your putting too much emphasis on the profits generated by Playstation though; it's not something Sony wants to risk, but at the same time those profits are below the potential of the CE division if they can raise it back up. In a sense the original question was framed in the wrong way, as it set PS3 up as a sacrificial lamb for the purposes of serving the rest of Sony, when certainly this is not the case. Sony will be giving 100% towards making PS3 as successful as it's predecessors, but at the same time we see the inclusion of 1080p and Blu-ray, dual HDMI etc... and these point directly to a strategy of also bringing greater attention to the products in Sony's pipeline that will take advantage of these technologies, primarily non-gaming in nature. Even Cell itself ties into that to a lesser extent, dependent in part on how close to the 'Cell grid' future they get.

Playstation 3 is definitely a lynchpin product for a number of Sony efforts, and it sets up the situation where people can question some of the decisions made precisely because at the same time as it is furthering those objectives, it must defend it's territory in gaming from the 360, presently mounting a strong assault. So people wonder, 'was BD smart,' '1080p who cares,' and 'what's with all these ports'... and they have a point. But for my part I think they were a smart move, as they will be in and of themselves some of the reasons I'm looking forward to the console.

And yes I agree, HDD inclusion is probably as much to spearhead a digital distribution content model as much as it is anything gaming related.

 

[skilzygw]

I agree, it definately helps their content divisions. Plug into their music service and download music onto the hard drive.

This opens up the fact that you need to be able to do 1 of these things
a) You need to be able to plug in an mp3 player an offload the ps3 hdd music to the mp3 player
b) PC on the network can see the HDD and move the bought music onto the pc and an mp3 player


Also stream High Def trailers for sony pictures movies, might entice Blu-Ray sales.

I guess it's more about content tie-ins. They definately have an edge on microsoft when it comes to content & entertainment.

However to increase these other divisions. They needed to add technology which in essence makes their hardware more expensive which will decrease sales.

 

[expletive]

I dont think it is SOny's intention to lose marketshare anywhere. I think they fully expect to keep marketshare in the PS business and use that as a foothold to bolster other divisions. So to answer your question, i say 'no', they are not planning to sacrifice some PS marketshare to gain in other areas. At the same time i odnt hink it would be horrible for them if that did happen.

FWIW, i dont think that becuase the Bravia sets are selling well it means that non-playstation Sony is now 'fixed'. I think they could just as easily be struggling again next year and be relying on PS profits to keep the conglomerate profitable.

 

[speng]

The question posed should have been, will Sony sell the PS3 at a higher loss to GAIN marketshare so they can upsell other products from other divisions. I think this is a resounding yes.

Losing marketshare is a no-no, it doesn't help anywhere.

Speng.

 

[Inane_Dork]

Even if it were to cost $500 at launch, it wouldn't stay at $500 throughout it's life, so I'm not sure the black/white predictions to PS2 sell-through are warranted yet.

I'm sure the price will drop soon enough, but it's a good point. Most console sales come from the $100-$200 range (provided the console is popular already). Starting at $500 means getting to $200 much later or it means cutting price very quickly. The latter can be interpreted many ways, but I don't think Sony would be willing to do that. Now, considering that Sony is already a year behind the 360, being even later to the mass market is a bad thing. MS might even hit that market at the time Sony launches.

It's a tricky situation.

 

[Carl B]

I'm sure the price will drop soon enough, but it's a good point. Most console sales come from the $100-$200 range (provided the console is popular already). Starting at $500 means getting to $200 much later or it means cutting price very quickly. The latter can be interpreted many ways, but I don't think Sony would be willing to do that. Now, considering that Sony is already a year behind the 360, being even later to the mass market is a bad thing. MS might even hit that market at the time Sony launches.

It's a tricky situation.

It is tricky, but depending on how the internal component prices drop, some price drops that may otherwise have been $50 in nature may become $100 instead. That sometimes can build a negative perception in the minds of consumers though to have dramatic cuts, so I agree it'll be a fine line for them to tread.