ShadowRunner
Veteran
Subsidization of standalone players would have never won them the format war. How would bluray have crushed hddvd by providing a hi-def movie player at a still equal/higher price?
NPD January 2009
- Thread starter archie4oz
- Start date
Subsidization of standalone players would have never won them the format war. How would bluray have crushed hddvd by providing a hi-def movie player at a still equal/higher price?
ShadowRunner
Veteran
No... But i also think they wouldnt have won the format war had they not included bluray.
I believe future profits of bluray should be noted when looking at PS3s loses. If not then whatever it could have cost sony to ensure blurays victory by other means (heavy subsidisation/buyouts of studios) should be subtracted from PS3s loss figure. You cant disregard future profits for it and at the same time count the loss incured to establish it, even if you think losses could have been less by establishing it a different way.
on another subject, how much profit do we think would be reasonable to expect the ps3 to claw back over its lifetime, if obviously not the whole ~4bn?
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I doubt serious that the 360 initial cost reduction strategy including ASP as high as they are now at this point in time. While the RROD proved costly and had negative impact on the 360 bottom line, Wii's demand and Sony ability to reduce the price of the PS3 has allowed MS to maintain at higher than normal price levels.
This time last gen the xbox was within a month of being cut to $149.00.
I am sure the conservative approach in terms of price cutting has allowed MS to absorb the cost of RROD alot better than cost cutting model that MS had planned before launch.
Given the circumstances why reduce price of BluRay disk when the situation never warranted it. Under different circumstances, who says BluRay movie couldn't sale within or at the same price as HD-DVDs.
What other advantages did HD-DVD hold other than costs?
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ShadowRunner
Veteran
Bluray could never compete with hddvd on price. if sony took a loss of $500 on each player so could the hddvd camp (give it away for free?), keeping the deficit the same. You are assuming blurays competition would be static which is crazy.
If you dont think profit from bluray should be included when looking at ps3 then whatever the cost of winning the format was another way should be subtracted from its losses.
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Dobwal you're extrapolating your theories based on relative positions across generations, rather than just on absolutes. The RROD costs are what they are, and they are large. MS is not mitigating anything with the MSRP's, because so long as the high-volume units are still lossy in their own right... see what I'm saying? MS losing less on a console doesn't get them to break-even on the gen itself any quicker.
Now, the Pro might have a positive margin as $100 for the hard drive one would hope would cover the negative spread. And the Elite for $400 I would have to think is profitable, but it is also low volume. The Arcade at $200 is still a loss-leader, and overseas it gets even rougher. MS' strength in the UK for instance is strength in a market where it loses more on hardware rather than less.
No we never will, and that's just how it's got to be. Back in XBox days it was a 'silent' support against Xbox losses, and today I agree that it's instead become a 'silent' drag on profits. The 360 *is* profitable now overall as a platform, there's no debate on that taking place here, but the question is whether it can recoup its launch costs. Billions were spent just on the launch of the platform, and billions on RRoD. It's not as steep as the hill PS3's got to climb, but it's still a steep hill.
Yet, they loss without even attempting to pour additional resources into winning the war, while Sony shipped millions of PS3 into the market at huge losses.
They wouldn't give away HD-DVD players when facing 10 million PS3es what makes you think they would have employed that strategy against Sony matching prices with them.
How 'healthy' are sales to begin with when they hurt? The console business model can be codified as meaning something we can all understand, but let's view also the dot-com business models of a decade ago as an extreme form of that, where "market share" trumped all rational thought of how a business should be conducted.
Here's the Carl take on 'success': if a company has 1% marketshare and makes $1 of profit every year, it is still way out in front of the company that has 99% marketshare but loses $99 billion a year.
I feel though that the majority of people on this board would hail the 'successes' of that 99% marketshare company, because hell, look at the sales!Every company has limits to how much they can expend in their pursuit of the brand (yes, even MS). Sometimes it's more important to live to fight another day. Sony in my mind would be absolutely negligent to cut the price of the console without a clear plan to support it as being the best time to do so; simply looking to increase sales numbers isn't good enough in a void.
The price cut will come this year, that much is almost certain. Whether it be Spring, Summer, or Fall though, we'll just have to wait and see.
ShadowRunner
Veteran
They didnt pour more than they did into the war because it was a lost cause, it was a lost cause because of blurays inclusion in PS3.
HDDVD would have put up much more of a fight if they were competing with a sony that was trying to beat them on price alone, which HDDVD camp would have kown they could have never been beaten at.
If sony sold 10 million bluray players at a loss of $400 that would have cost them 4bn, without guarunteed victory still.
You honestly think the current historical price reduction seen by the 360 is something MS planned for. If the high volume units are lossy at the current prices then they would have been more lossy at lower prices that MS would have been forced to compete with if Sony had components that were more cost friendly when it comes to price reduction.
You don't build a "black hole for your dollars" called the xbox1 and then set about and building another console with the need to maintain 2/3 (arcade) to 3/4 (Pro) of its original launch price for 3+ years. Who plans for the Wii to maintain a $250 price point for years after a launch a PS3 that can't get under $400 until its almost three years old.
You don't build a console for the mass market without some model for price reduction and I think its rather common sense to expect that MS, Ninty and Sony have a models that tend to follow historical trends and not the anomalies in price reduction seen this generation.
RROD would have been a more costly mistake if the current generation followed historical trend when it comes to price reduction.
Launch prices of $400 and $500/600 were already anomalous by that thinking. And would seem to contradict in spirit the mantle of the 'struggles' you feel MS would not have ignored in coming out of the XBox gen.
$200 from $400 (essentially) after 2 1/2 years isn't all that shoddy a move IMO in terms of the price reduction. As for Nintendo, well, they had probably planned on lowering the price, true, but they needn't maintain it due to the high prices of the others, they just simply lucked out by having a piece of kit in super-high demand.
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ShadowRunner
Veteran
Id say sony are happy selling what they are now without a pricecut. They are doing extremely well considering what the competition are offering. If they can stay in the same position until they can afford a pricecut without taking a loss they will be happy. Falling behind the 360 by another 1-2 mil units until they cut price dont really matter much, they need to concentrae on making money not on there competition.
How 'healthy' are sales to begin with when they hurt? The console business model can be codified as meaning something we can all understand, but let's view also the dot-com business models of a decade ago as an extreme form of that, where "market share" trumped all rational thought of how a business should be conducted.
Here's the Carl take on 'success': if a company has 1% marketshare and makes $1 of profit every year, it is still way out in front of the company that has 99% marketshare but loses $99 billion a year.
Every company has limits to how much they can expend in their pursuit of the brand (yes, even MS). Sometimes it's more important to live to fight another day. Sony in my mind would be absolutely negligent to cut the price of the console without a clear plan to support it as being the best time to do so; simply looking to increase sales numbers isn't good enough in a void.
The price cut will come this year, that much is almost certain. Whether it be Spring, Summer, or Fall though, we'll just have to wait and see.
New companies offering new products will go years taking losses to make their products viables. Just because Sony isn't new doesn't mean it shouldn't act like MS with the Xbox1 and sell at losses just to try to have a viable product in the future. Unfortunately Sony doesn't employ Nintendo strategy for console profit but Ninty was willing to keep pace with volume of price cutting of MS and Sony through multiple generation to offer the Wii. Even then Ninty needed motion control with its huge mass appeal to pull to number one. Sony can't count on that type of accessory success, so at best sony should try to keep the PS3 at levels that while poor don't approach sub 100k levels which have a huge negative impact on the press and the general public.
Moving a price cut a few months forward isn't going to have a drastic effect on the bottom line.
As a statement of fact that's certainly true, but my reference to the dot-coms was meant to highlight how very few of those companies go on to survive. MS was uniquely positioned to sustain the grind required. Sony isn't going to leave the business based on these losses this gen, but I don't think they can be expected to grind away to the tune of losses beyond $5B on a single platform.
Sony (rather, the BDA) would have never won the format war without the PS3. Period. Sony would be one of the few making BRD players for a cheap price (as they were initially) because other 3rd parties wouldn't be willing to price match Toshiba's players just to "win the war".
HD DVD was cheaper, a LOT cheaper. BRD was expensive.
The reason it was a "good idea" to put BRD in the PS3 is because the PS3 has more "streams of revenue" to bring in funds, meaning they could reduces losses on the console far more than they could with a stand alone player.
Putting it in a console also gave them a far better chance to win the war, since they could sell 1 million of them out of the gate on launch day (which they did) and catch up instantly to HD DVD.
Lest you not forget, HD DVD was MURDERING Blu-Ray in market share for the first 12 months of the war. Until PS3 came along. No PS3 and HD DVD is the new standard high def format.
That because the enthusiasts/early adopters knew how crippled early BR players were esp. compared to the PS3 thus most of us waited for the PS3 to come out before jumping in BR. Couple that with Sony trying to pass off crap as high quality encodes, BR was off to a rough start.
Could someone explain to me what does the Blu-HD war have to do with the January NPD report?
If you guys want to discuss the history of the format war and what could have been if <insert something here> was different, go ahead and create a(nother) thread about it. Don't anybody take this personally but this reminds me of a Battle of Gettysburg reenactment.
If you guys want to discuss the history of the format war and what could have been if <insert something here> was different, go ahead and create a(nother) thread about it. Don't anybody take this personally but this reminds me of a Battle of Gettysburg reenactment.
ShadowRunner
Veteran
I appologise for my part. It stemmed from whether future bluray profits should be taken into account when looking at PS3s sales/profits/loss, which is itself a relevent question IMO.
I'll try
To put it simply it could be that too many of them are taking red pills
(See Carl B pool)
A lot more.
RRPs
Arcade: £129.99
Pro: £169.99
Elite: £229.99
These RRPs also include VAT at 15%. At today's rate, net of tax, these prices equate to:
Arcade: $161.24 (-$38.75, compared to the US MSRP)
Pro: $210.86 (-$89.13)
Elite: $285.29 (-$114.70)
For completeness:
PS3: $372.11
Wii: $223.32