You have facts and figures to back those claims up I suppose?
NPD January 2009
- Thread starter archie4oz
- Start date
You have facts and figures to back those claims up I suppose?
Agreed, the real story of the Xbox 360 is its growth in Europe. Despite its relative market position over there, its growth in Europe from last generation is significant. This might be how the story is remembered later - XBox1 established the brand in NA, while the 360 established the brand in Europe.
Given the current market penetration of HDTV itself, this seems like an expected outcome. By the time next generation starts, HDTV will have a much larger share of the market, and therefore the potential market for HD consoles will also be larger.
Mintmaster
Veteran
I don't agree, because Sony could have won that war by simply price matching Toshiba on standalones for a while. What are people going to buy, Toshiba or Sony? Price is the only reason HD-DVD even survived as long as it did.
The PS3 hook should have been in the form of a high end model with large HDD and BR, while the base had DVD with or without a small HDD. That would have captured most if not all of the current BRD-buying PS3 base without subsidizing players for people that won't help win the war. Having BR for games has not been measurably beneficial for Sony, especially when cost is taken into account.
So you can't say future BR gains (if they materialize) are tied to past PS3 losses, as they could have won the BR war with a fraction of the investment. PS3 losses are for the gaming division alone.
Royalties are not that big, anyway. With DVD you're looking at around $500M/year spread among all the different IP holders. BR will be lucky to reach even half the volume of DVD, and I don't even know if Sony is getting half of the royalties.
I'm fairly confident that HD DVD would be the defacto standard right now were it not for the PS3.
How about the fact its pratically double its shipment to the rest of the world in just three years compared to the 4 years of the xbox, while globablly selling more games and consoles at a much higher average price point.
While the EDD division has changed over the year in terms of what business fell under that the divsion, the Xbox platform has always been the major revenue and cost generator. MS's Xbox centric division has posted revenue from 1.95 billion in fy 2001 to 8.1 billion in fy 2008 with posting quarterly profits as of late.
Regardless of PR and marketing hoopla that rather standard in this market, underneath I think MS has a more pratical and common sense view of "success".
HD isn't going to be relevant factor next gen, because all next gen consoles will sport HD specs. The xbox3 and PS4 will be more suited to compete against the Wii2 since motion control as offered by the Wii should be rather ubiquitious next gen. Unless, MS, Sony or Nintendo find some revolutionary feature that will have as much as market appeal as Wii control, more traditional features such as third party franchises will have a much stronger influence than it did this gen.
So, I guess for all intent and purpose, you weren't an advocate for Sony slashing their prices for pratically what was a $600 PS3 to offering a $400 PS3. All the merits that existed at that time exist right now.
Traditionally, spring has always been the best time to cut prices since the pricing cutting sustains sales for more than a few months. While you see a month of two of higher sales and then leveling to more reasonable level, what you don't see is the fall in sales that would have happen without a price cut. The $600 price tag of the PS3 was obvious when looking at the 90k months during the summer after launch. The Xbox1 had an 80k April after it first launch but a price cut allowed 150K-200K months through out the summer and early fall until the next holiday season hit. Sub 100K months will only serve to generate extra negative press. Furthermore, there are fixed costs associated with the PS3 manufacturing and marketing so the loss per unit can actually increase with no price cuts if Sony allows the PS3 volumes to fall too low.
Right now represents the best time to price cut because MS is not as likely to follow unless the 360 is severely affected. MS has already cut price last September, so while a cut now might be ignored, a 360's price cut next fall is well expected.
Consider the landscape before $400 PS3 was launched and how much better US sales for the PS3 was last year compared to launch year. The PS3 dismal holiday sales is the result of maintaining the current price levels for too long and Sony is practically abandoning all the momentum generated by that intial cut. Minimizing profit loss should always be balanced with the need to maximize marketshare. You can't abandon the need to maintain healthy sales for the sake of profitability without serious impact on demand.
To me, Sony current predictament with the PS3 isn't a profitability goal for the sake of the PS3 itself, but a goal of Stringer to minimize the affect that the PS3 losses have the overall bottom line of Sony especially in the current enviroment. Stringer, in my mind, is more focus on the desires of his shareholders then the long term health of the playstation brand. And right now, Sony's shareholder are looking for more immediate remedies that will help eliminate any further losses to their portfolios that have already has seen a rapid and large loss of value since Oct 08.
Consoles exist in a market where product prices declines over time to generate or maintain demand. I can't see how Sony expects to maintain pricing for two years while struggling to sale the PS3 and then suddenly cut to prices that were somehow not affordable during the past two years and somehow reignite sales to competive levels since Sony doesn't operate in a vacuum in time. I think Sony's goal should be to accept an unprofitable generation and at least maintain 170K-220K non-holiday month rates just to maintain a positive presence and ensure a positive launch for the PS4.
Mintmaster
Veteran
If Sony kept charging $1000 for the players, yes. If they used a fraction of the subsidy money that went into the PS3 and priced BR players at $200, then hell no. Player price is the only thing that kept HD-DVD alive.
You can be sure that having BR in only the higher end PS3 model would have resulted in just as many sales as the current 60/80GB models managed. Early adopters want the high end, especially when you're talking about the most eager of Playstation's 100M+ fan base. Sony would still have sold as many BRDs to PS3 owners, and a whole lot more to standalone owners, while HD-DVD would have sold less. Warner would still make the switch.
The impact of RROD costs should be conveniently and sufficiently mitigated by the rather anemic retail price reduction of the the 360 this generation.
Right, it also would have split the user base, and offered absolutely no benefit to gamers using Blu-Ray, so 7.1 audio (or just great audio in general) that we all enjoy with PS3 titles goes out the window.
Also, it doesn't seem very likely that Sony would sell a player at $200, when the only profits to be seen from that are in royalties that will not be extremely large. Compared to gaming, where Sony can rake in profits from accessories, software sales (both disc based and PSN) and Blu-Ray (not to mention the videostore now).
PS3 + Blu-Ray afforded Sony the Blu-Ray victory, and probably cut their losses far more than simply launching cheap Blu-Ray players at a huge loss. Sure, Sony lost a lot on PS3, but I have a feeling they would have lost a lot more taking desparate measures to get Blu-Ray out the door at a cheap price, not to mention the "battle" for format dominance probably would have been a lot longer, which could have ultimately cost them more money. Not to mention studios may not have been so sure to line up with the BDA w/out the Playstation family support, at least ensuring millions of potential players out of the gate.
I think a lot had to do with the PS3 and it's install base, which contributed greatly to the success of Blu-Ray. The format may have won without it, but not as quickly, nor at such a "cheap" cost (not cheap, but perhaps cheaper than the alternative).
I am not disagreeing the 360 has suffered huge losses, but whereas formerly I was of the opinion the rest of embedded devices was break even or profitable, of late I suspect it's actually dragging down 360 profits. In other words the 360 business may be making more money than EDD as a whole. One reason is that I just dont see 360 hardware as being very expensive to manufacture based on whats in it.
We'll never know exactly how the videogame biz alone is doing at MS.
ShadowRunner
Veteran
I dont think bluray would have won if it wasnt for the PS3. In fact im not sure bluray would exist in the first place had the ps3 not been there to rely on. The companies that did get involved with bluray would have likely had the fact it would be in the ps3 in the back of there mind when they made the decision. Bluray costs more per disk to create also, it would benefit the film studios more if hddvd was the standard of choice.
No way could bluray have won in a straight price war, hddvd would always be cheeper and be able to undercut them. At very best the war would still be raging.
Gamasutra's NPD article lists the ASP of the 360 at $268. A fact I had long been curious about. PS3's is $407.
Pretty much exactly my guess of 270.
Here's an interesting chart
Once you factor in increased sales of the Wii version, WaW is outselling COd4.
Anyway, good article to read, 6 pages.
Pretty much exactly my guess of 270.
Here's an interesting chart
Once you factor in increased sales of the Wii version, WaW is outselling COd4.
Anyway, good article to read, 6 pages.
Wasn't the HD DVD install base something like 1.3 million with the bulk sold in the US, when the HD DVD camp capitulated. I think japan install base was less than 50K and Europe only at ~100-200K with the US around 500K HD DVD players with the rest made up with the 360 add ons and PC drives.
I hardly think that the least costly way to out compete those rather anemic numbers is selling 10 million Blu-Ray enabled PS3 that cost Sony a few extra billion to include and a few more billion in lost sales.
HDDVD nearly won the war WITH PS3 supporting Blu Ray. It came down to Warner Brothers decision to go Blu Ray instead of HDDVD, a decision which surely hung in the balance till the last minute. I think it's fair to say HDDVD would have won easily without PS3. The stand alone price was just too heavily in HDDVD's favor.
HD DVD came no where near winning the war. The HD DVD camp simply spit out numbers that excluded the PS3 by not defining it as a BluRay player. Its a given that if PS3 didn't include BluRay than standalone sales for the BluRay player would have been alot higher.
BluRay easily won with the PS3 involved but you don't need anywhere near a 10-1 advantage to win a format war.
Baloney, the split was often pretty close and the "war" a tense and bitter one, even WITH the 500 lb PS3 Gorilla in Blu Ray's corner (the majority of Blu Ray's sales were easily PS3)! The stand alone player sales were in favor of HDDVD even with much less studio support.
The war was a stalemate until WB decided it, but had they gone HDDVD instead, HDDVD would likely have won. The decision was that close. Remember the Paramount HDDVD exclusivity announcement? It was huge. Throw in WB and HDDVD would have won, WITH PS3 involved. Without, no contest.
There's no way people would have chosen $400 Blu Ray players over 199 HDDVD players..and they never did back when it was a choice. Anymore than they're chosing more expensive PS3 over 360 right now. The purported benefits of Blu over HDDVD were EXTREMELY nebulous to the average joe six pack to say the least. I mean, 30GB versus 50GB, when 30 is arguably "good enough", the average consumer could care less about that.
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ShadowRunner
Veteran
Why would bluray sales be higher though? why would those people not just buy a cheeper hddvd player?
Blurays hype was built entirely around it being in the ps3. If it hadnt been it would never have been supported by the movie studios, they didnt want a format war for just the sake of it. Blurays viability was based on the idea that the PS3 would guarantee it a huge install base, you have to remember PS3 was predicted to sell a whole lot more than it has and so the idea had more traction with people deciding on support for it.
I doubt sony would have taken the loss on the ps3 unless they thought they had to to establish bluray. They would have taken other steps had they been as viable.
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10-12 million to 1 million is hardly close. HD DVD was winning the standalone war but why not chose a PS3 over a standalone player when you could get a great BluRay player with a plethora of media features nevermind gaming for roughly the same price.
The BluRay and PS3 was hyped together because its inclusion was mapped out well before the HD war was to begin. Remember, Sony was selling Bluray recorders in japan in 2003 with the first prototypes appearing at exhibition in 2000. There were rumors that some inside Sony wanted the PSX to include BluRay.
Including BluRay in the PS3 was a no brainer at the time, but the cost associated is no where what Sony expected. Sony could have took 1 or 2 billion dollars and simply subisidized standalone sales with 4 million units sold at a 250-500 dollar loss and/or straight bought out a few of the bigger studios. Hindsight being 20/20 it would have been cheaper and took a little longer but savings from not including BluRay into the PS3 would of covered subidization and buyouts and the PS3 profit potential would have been a lot higher than it is now.
Do you think Sony planned for the current scenario faced by the PS3? Do you think that if Sony had surmised the current situation as the most likely scenario with PS3 inclusion of BluRay back in 2002-2004 that Sony would have found that to be an acceptable scenario?
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How so? Is MS making money on $199 arcades? The impression I got is that they're the bulk of new sales.