Koei on Ps3 Costs

[Sis]

Yep just like the PSP with UMD movies oops. Look what we are trying to say is if tens of millions of people buy a PS3 and buy millions of games, maybe just maybe they might also want to buy blu-ray movies on the same machine. Answer this.

If Blu-ray movies outsell the HD-DVD movies 10 to 1, what do you think the HD-DVD movie companies may do? And before you answer the question think about this. Software sells always tend to follow hardware sales.

mckmas, those are two very good points. A) With a larger install base, there's more potential for a side-product sales and B) it's really about the product--if more movies are purchased in one format than the other, that format will win.

I apologize for contributing to derailing this thread; I didn't realize a disagreement with the sentiment that "Blu-ray is gauranteed success because it's going to be in PS3" was going to receive this kind of debate.

.Sis

 

[Shifty Geezer]

B) it's really about the product--if more movies are purchased in one format than the other, that format will win.

That's an over simplification. The PS2 game format is vastly more popular than the XB game format, but the XBox hasn't lost all developer support as a result. If there's ENOUGH of the 'loser' format sold, it'll still be supported. eg. If 60% of movie sales are BRD and 40% are HDDVD, that won't spell the end of HDDVD.

 

[Black Dragon37]

No. It is perfectly within the realm of possiblility that the PS3 may be more successful as a console than the PS2 and yet Blu-ray may fail as a standard storage format.

Gamecube has how many units sold? 20 million? That market segment is non-trivial yet I see no one else using that small disc format for anything.

.Sis

That small disc wasn't intended to be the next format. So that point is moot.

Unlike Nintendo, Sony wants the Blu-ray disc to be a future standard. That wasn't Nintendo's intention with the Gamecube's format.

 

[Acert93]

That's an over simplification. The PS2 game format is vastly more popular than the XB game format, but the XBox hasn't lost all developer support as a result. If there's ENOUGH of the 'loser' format sold, it'll still be supported. eg. If 60% of movie sales are BRD and 40% are HDDVD, that won't spell the end of HDDVD.

Being the big fish in a small pond can be more lucrative than a small fish in a big pond. We have seen this to be true in the game market frequently. DoA is an example, and Nintendo's philosophy banks on this as well.

If we see a 70/30 split or a 60/40 split I can see dual format drives being popular.

TW&Co get the cheaper HD DVD production for their budget line and can provide DVDs cheaper and/or bigger margins. Sony&Co get the bigger space when DL BDROMs come out and can offer more feature rich content and charge more.

Everyone wins.

 

[scooby_dooby]

All I gotta say is.....bring on the price wars!!

 

[goonergaz]

my tuppence for what it's worth...

PS3 is a true trojan horse whereas PS2 had DVD as an added bonus. By the time people are begining to think about nextgen formats (film wise) PS3 will be due out (if not already out - I am talking about general public rather than early adopters), so people will think that they can get a PS3 which will play next gen films (as well as current ones) and see how it pans out...obviously if PS3 owners 'dabble' in 'nextgen' film then they'll buy BR.

Certainly I can't see BR dying from the start, maybe it'll be another Betamax...who knows, but point is - if Sony sell 20M PS3s that's (IMHO) 20M people who won't want to buy films on ANOTHER format and need to buy ANOTHER player.

 

[scooby_dooby]

Certainly I can't see BR dying from the start, maybe it'll be another Betamax...who knows, but point is - if Sony sell 20M PS3s that's (IMHO) 20M people who won't want to buy films on ANOTHER format and need to buy ANOTHER player.

By the bext estimates I can find ~15% of the population in the US has HDTV's right now. So if 20million people buy PS3's, only a small fraction of those are actual HDTV owners who would buy new media. There will be some who decide to futureproof, but teh fact remains that the vast majority of PS3's sold will not drive HD Media sales, because the vast majority of buyers do not own HDTV's.

BTW,estimates for PS3 to hit the 20million mark are well into 2009!! In the period that matters, i.e. the next 1-2 years, ps3 is only expected to sell ~1million in 2006, and ~6million in 2007, meanwhile standalone BR and HD-DVD players will become available, and the sales of those standalone players will decide the winner, sales will depend mainly on price, and movie library.

PS3 is a good trojan horse, but with a late 2006 launch in the US(expected) it's only expected to sell ~1million players. HD-DVD players will be launched very early next year so they'll have nearly a full year to sell their players and get them into homes...it's gonna be interesting, consumer wins here because price-wars rock

 

[NavNucST3]

Yep just like the PSP with UMD movies oops. Look what we are trying to say is if tens of millions of people buy a PS3 and buy millions of games, maybe just maybe they might also want to buy blu-ray movies on the same machine. Answer this.

If Blu-ray movies outsell the HD-DVD movies 10 to 1, what do you think the HD-DVD movie companies may do? And before you answer the question think about this. Software sells always tend to follow hardware sales.

<thread derail>You guys are trying to divert the argument to BD vs HD, nowhere in .Sis' post was there a mention of HD-DVD. The simple fact is it is entirely possible, even probable, that even with a BD-ROM drive in the PS3 that B-O-T-H formats could fail.
You act as if everything Sony touches is gold and that they have never had a failed product REGARDLESS of "superior" (insert technological advancement here). I really hope some of you who so blindly follow a multi-billion dollar companies own stock in said companies. I don't think I have ever seen so many people be happy to rush into a new brand of DRM, especially in the form of BD-ROM+. I also find it amusing that the majority of people clamoring for the next-gen formats and declaring one the winner are the same people who oft mention that no one owns HD sets and do not own one themselves.</thread derail /rant>

 

[Mordecaii]

Just curious, are BD movies able to be played on standard TV sets with the PS3? If so, I know that if I bought a PS3 then I would start buying BD movies so that when I did get a HDTV I could instantly enjoy high definition movies.

Scooby, those PS3 sales numbers you posted were expected for the US alone, and are just guesses. If Sony plays their cards right they could advertise to people to get them to buy a PS3 instead of a stand-alone player especially if the PS3 is cheaper or the same price. It's entirely possible that both formats could hang around until the next format comes out, or one could beat the other. And of course having BD in PS3 hardly makes it an instant winner. But I know that if I was placing a bet on the winner then I'd have to go with BD mostly because it should have much higher market penetration. When people hear about their friends having PS3's with BD players in them, they will most likely either get a PS3 or BD player themself. In my opinion, just by being inside the PS3, BD will be the most talked about format and should have an advantage there.

Sorry, this is going to be my only post about this subject... back to the original subject!

 

[scooby_dooby]

The market for HD-Players right now is high-end AV enthusiasts. These people tend to know a thing or too about A/V, they tend to have money to spare, and they will tend to prefer a standalone system over a console.

In addition, PS3 will probably cost more than standalone BR or HD-DVD players(otherwise how do they sell?), it will be much harder to find in 2006, and into 2007 as sony struggles to meet the demand. A/V enthusiasts will just buy a standalone player that is cheaper, more readily available, and more reliable.

I just have a hard time believeing BR in PS3 will have a large impact on the winner of the format war, this isn't like UMD where 100% of the users can take advantage of the media, it's not like DVD when 90% of people had TV capable of playback, only ~15% of people own HDTV, therefore only a small fraction of PS3 buyers will use the system for HD playback.

 

[Shifty Geezer]

What percentage of those HDTV owners are also console owners who'll want to get a next gen console and also play next-gen media on their TV? If 5%, PS3's BRD seems to mean very little. If 85%, the presence of BRD on PS3 seem set to define the standard.

 

[mckmas8808]

The market for HD-Players right now is high-end AV enthusiasts. These people tend to know a thing or too about A/V, they tend to have money to spare, and they will tend to prefer a standalone system over a console.

In addition, PS3 will probably cost more than standalone BR or HD-DVD players(otherwise how do they sell?), it will be much harder to find in 2006, and into 2007 as sony struggles to meet the demand. A/V enthusiasts will just buy a standalone player that is cheaper, more readily available, and more reliable.

I just have a hard time believeing BR in PS3 will have a large impact on the winner of the format war, this isn't like UMD where 100% of the users can take advantage of the media, it's not like DVD when 90% of people had TV capable of playback, only ~15% of people own HDTV, therefore only a small fraction of PS3 buyers will use the system for HD playback.

Your post are starting to be comical. First you say Sony will only sell 1 million PS3s in the US in 2006 and now you think that standalone HD movie players are going to be cheaper than the PS3? Do you expect the PS3 to cost more than $800? And if this so small fraction of PS3 owners can't take advantage of the next-gen media due to a lack of a HDTV, then how many people are going to buy a HD-DVD player? Toshiba has already stated that they are probably going to release their first HD-DVD players at around $999.

 

[vazel]

just to butt in with my two cents. me and most of my friends and relatives only moved from vhs to dvd movies because we had bought a ps2. sure we first bought it as a gaming machine, but we didn't ignore that it could play dvd movies. since then we've bought standalone dvd players but the ps2 is what got us started on dvd movies. XD

 

[SMOKE]

THe PS2 it what lowered the cost of DVD players in the first place if any of you care to check on that. DVD players were near teh range of the PS2 whenn it released and now there WWWAAAAYYYY cheaper than any consoole out there that has a DVD option except GC. MS helped out in that also.

 

[scooby_dooby]

Your post are starting to be comical. First you say Sony will only sell 1 million PS3s in the US in 2006 and now you think that standalone HD movie players are going to be cheaper than the PS3? Do you expect the PS3 to cost more than $800? And if this so small fraction of PS3 owners can't take advantage of the next-gen media due to a lack of a HDTV, then how many people are going to buy a HD-DVD player? Toshiba has already stated that they are probably going to release their first HD-DVD players at around $999.

Your inability to grasp extremely simple concepts is what's comical.

#1) I never said how many units sony would sell in 2006, I said "PS3 is expected to sell 1million in the US", expected by the analysts report that came out yesterday... Hello!

#2) OF COURSE hd movie players will be cheaper than the PS3 when it launches, they will have to in order to compete. It's 'rumoured' the first players will be around ~$900, that's in february, the PS3 is not launching until late in 2006! Do you think prices won't go down? Prices will drop because it's going to be a price war that decides this battle. Between BR and HDDVD standalone players.

You think Sony can manage to pack a BR drive, wireless controllers, built in wifi, a CELL processor, a 7800 nvidia GPU, 512 MB of ram for $400-500, yet HD-DVD/BR manufacturers will be unable/unwilling to market simple basic $300 HD-DVD/BR players? Ya right.

 

[mckmas8808]

#2) OF COURSE hd movie players will be cheaper than the PS3 when it launches, they will have to in order to compete. It's 'rumoured' the first players will be around ~$900, that's in february, the PS3 is not launching until late in 2006! Do you think prices won't go down? Prices will drop because it's going to be a price war that decides this battle. Between BR and HDDVD standalone players.

And that's my point. I don't think HD-DVD players can compete when they will be at least double the price of a PS3. I read that Toshiba said their standalone players would be $999, but you think $900. That's not really a big deal because some players may even be $900, but why do you think the price will be cut down to $300 is a few months? That's a 66% price cut. And we still don't know when the PS3 will launch in the USA. And when you say late 2006 do you mean September or like December?

You think Sony can manage to pack a BR drive, wireless controllers, built in wifi, a CELL processor, a 7800 nvidia GPU, 512 MB of ram for $400-500, yet HD-DVD/BR manufacturers will be unable/unwilling to market simple basic $300 HD-DVD/BR players? Ya right.

HD-DVD and BR standalone players won't have that guarnteed sell through rate that the PS3 will have. Sony knows that they will make their money back in a few years on the PS3, yet they will have to price their standalone Blu-ray players higher to make an earlier profit because they are not guaranteed to sell many.

 

[avaya]

Sony will price the Blu-Ray drive at the marginal cost of production in the total price of PS3, which will then be subsidised as a whole to ensure that cross price elasticity versus its competitors will not evolve into a serious issue and mass market penetration can be achieved.

For a standalone player be it Blu-Ray or HD-DVD the strategy is totally different. Initial demand driven by those early adopters is highly price inelastic. Any standalone player will be priced far in excess of its marginal cost of production. This strategy minimises the consumer surplus(utility savings) and maximises the producer’s marginal benefit (profits) if executed perfectly.

In the long run, as short run average costs fall per time period, the pricing model can change because the marginal cost of production decreases; economies of scale are then achieved as long run costs become constant.

Usually inelastic demand is a given in this scenario but in the middle of a format war cross price elasticity effects will be considered so the mark-ups on HD-DVD players will fall faster than normal. Same type of effect happened to standalone DVD players when PS2 arrived.

However the first HD-DVD players are only guaranteed to sell to early adopters with HD sets. PS3 is guaranteed to sell to HD consumers and those still with SD. The number of potential PS3 buyers far outweighs the number of potential HD-DVD buyers. Given this reality HD-DVD player producers will be under pressure to make sure that the mark-ups applied to players will not erode too quickly, otherwise profits would be woeful.

Now consider the very real prospect of those purchasing a PS3 then buying a HDTV – would they want to buy another standalone movie player for even $200? Nevertheless this will apply pressure on HD-DVD hardware makers to reduce their mark-ups faster.

HD-DVD hardware makers are stuck between a rock and hard place on this issue. The people making these decisions will clearly be earning every penny they get paid.

Actually, wow, looking at it PS3 is a monumental advantage for the BDA and quite a headache for the HD-DVD side. It could be critical in enticing the first move studio from the HD-DVD side over to the BDA.

 

[mckmas8808]

Great post avaya. That's exactly what happens in the real world.

 

[ihamoitc2005]

Economics

Avaya is economics black-belt.

 

[MfA]

Earning every penny? If HD-DVD fails it will have been money down the drain (I dont earn enough money to prescribe to the "success is thanks to management, and failure is down to bad luck" belief ).