Sony Pushes Blu-Ray Adoption With PS3 - AVS Forum
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post #1 of 220 Old 11-04-2005, 11:35 AM - Thread Starter
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Nothing really new here, but makes sense...

Sony Pushes Blu-Ray Adoption With PS3

High definition video player remains a selling point Sony may use for upcoming PS3

Tucked within Hollywood Reporter's discussions with Sony CEO Howard Stringer on next-generation, high-definition entertainment devices are some neat tidbits regarding his company's plans for the PlayStation 3 debut. The report suggests the PS3 will launch March 2006 in Japan, followed by North America in Q4 that year, at a $400 price range. As expected, the company will take a hit in profit during the first six months of the PS3's lifecycle thanks to the console's high manufacturing cost.

The PS3 is expected to be bundled with "pre-loaded" media like films, TV programs and games, which sounds strange since previous news reports already noted that a hard drive will not be included with the console at launch. Perhaps the media will come on the Blu-Ray optical disc format. Indeed, because there will be no other Blu-Ray devices in the market at the PS3's price range that time, Sony intends to use the console as a springboard for Blu-Ray adoption.


"'The reason Sony has suddenly gained support for Blu-ray is simple,' said a high-level studio executive close to the discussions. 'PS3 is a subsidized Blu-ray play that will sell 20 million units. The first HD player will be on the market for $1,000. PS3 could be at $300 or $400. Sony will be selling them at a loss the first six months to a year just to get Blu-ray players out in the market. So studios realize they need to have their content on it.'

The PS3 and portable new multimedia devices will feature original short-form content, Internet messaging and other functions.

In keeping with the PlayStation business model, PS3 will roll out at a loss for the first six months, then rapidly turn profits on game-license fees. PS3 will be bundled with a selection of preloaded films, TV programs and games and sell for between $300-$400."


It wouldn't be a surprising strategy on Sony's part, since the company has been pushing products to their leverage proprietary tech within the industry for years. Of course it remains to be seen whether the future of high-definition video rests with Blu-Ray.

http://www.neoseeker.com/news/story/5136/

Format war my A$$! I want one, and one only!
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post #2 of 220 Old 11-04-2005, 11:40 AM - Thread Starter
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And what if Toshiba were to do the same....

They could subsidize an "add-on" HD-DVD player for MS Xbox 360...

HHMMMM !!!!!!

Format war my A$$! I want one, and one only!
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post #3 of 220 Old 11-04-2005, 11:44 AM
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Anti-trust.
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post #4 of 220 Old 11-04-2005, 11:45 AM
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Shipping the first Blu Ray drive in a game console is silly. I don't know about you but I can easily forsee families fighting over the use of the PS.

Gamers will typically play for hours..where does that leave time for a family to watch the new fangled high def movies? It doesn't leave much time and you're going to see frustration with a $500 box that does too many functions but none simultaneously.
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post #5 of 220 Old 11-04-2005, 11:48 AM
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To expand, with a reply I gave in another thread:

I understand that cosnoles are released at pricepoints that lose money and make up for it by content sales.

But by adding the BR drive, and not making it optional, and selling it at a loss, the strategy here is not merely to make up for the loss on games and content. The strategy is to use the sales of PS3 to create a market dominance for BR and drive out their competition in BR.

I mean, how many times has it been said here and elsewhere that putting the BR in PS3 was going to give BR a big advantage in BR adoption? When they added the BR drive to the PS3, they didn't do it to help PS3 sales, they did it to help BR sales. They are selling the BR drive at a loss not to help the PS3, but to help BR.

That is text book predatory pricing and anti-trust, which if you were against MS doing it, logic would dictate that you should be against sony doing it as well.
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post #6 of 220 Old 11-04-2005, 12:09 PM
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It remains yet to be seen how many people who never play games will buy a game console to watch movies, and how many of the gamers who made their parents buy them the PS3 console will say - "Hey, dad, instead of the new game I want a $35 BluRay disc for Christmas, so that we can all together as a family sit and watch a movie on my new playstation!" :)
And, most importantly, will PS3 sales reach expectations. The numbers seem beleivable to me only if there is no game console competition.
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post #7 of 220 Old 11-04-2005, 12:19 PM
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I think there is the first threshold question - how many games will be on DVD instead of blu-ray for the PS3?

If we know that very few (almost no) game manufacures are releasing titles on BR, but instead on DVD then we know that BR was not added to help in game functionality.

Instead it is transparently clear that Sony is leveraging their dominant position in gaming systems to force related markets to their technology. "Is it legal? Maybe. Is it in the best interests of the consumer? Rarely." (from Talkstr8ht in the main thread)
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post #8 of 220 Old 11-04-2005, 12:24 PM
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Quote:
Originally Posted by hmurchison
Gamers will typically play for hours..where does that leave time for a family to watch the new fangled high def movies? It doesn't leave much time and you're going to see frustration with a $500 box that does too many functions but none simultaneously.
I guess they'll go buy two PS3's then!

Quote:
Originally Posted by skogan
They are selling the BR drive at a loss not to help the PS3, but to help BR. That is text book predatory pricing and anti-trust
I think predatory pricing is only when a competitor is knocked out, the company raises the product price back to profitable levels. Not something Sony has ever done with the Playstation consoles. Anyways, weren't PS1, PS2, XBOX & XBOX 360 all sold at a loss? And it wasn't as if the first two Playstations were pushing a new format as well...
Anti-trust relates more to protecting companies and trade from being dominated by monopolies. Blu-Ray/HD-DVD are disc formats with many companies behind each, so not really a monopolistic situation. As primarily a game platform, the PS3 will have a healthy competition from XBox & XBox 360, Gamecube & Revolution, PS2, Gameboys and to an extent, the PC. Blu-Ray (in your case, Sony) has not implemented anything to unfairly restrict the marketplace. An example of possible anti-trust would be if Microsoft added specific code to Vista that would make it difficult to play Blu-Ray movies or told PC vendors they can't sell Blu-Ray drives if they want to install a Microsoft operating system on computers they ship out. Having loss-leaders to generate sales/gain market share is pretty common business practice.

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Originally Posted by skogan
If we know that very few (almost no) game manufacures are releasing titles on BR, but instead on DVD then we know that BR was not added to help in game functionality.
I'd say for the first two years, most games on the PS2 were on cds. Now it all pretty much dvds. Good thing they weren't being short-sighted in terms of capacity.

There's absolutely nothing wrong with upward pressure (ie develop a market demand) to win a format war. I think everyone here would argue that having only one dominate format, be it BR or HD-DVD is best for the consumer.
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post #9 of 220 Old 11-04-2005, 12:43 PM
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PS3 will be bundled with a selection of preloaded films, TV programs and games and sell for between $300-$400."
Now this is interesting.

And I don't agree with the anti-trust suggestion. Sony isn't even close to having a monopoly position in any area.

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post #10 of 220 Old 11-04-2005, 01:12 PM
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Wonder if you could yank it out of the PS3 and put it into your computer :)

I want HDTV 'cause I'm nearsighted !
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post #11 of 220 Old 11-04-2005, 01:21 PM
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Quote:
Originally Posted by samiam95124
Wonder if you could yank it out of the PS3 and put it into your computer :)
Are you talking about the drive or the preloaded material :D

Yes, moving the drive to a PC would be fun ... except you can probably get a BR PC drive for less than $500 and it may not work.

BTW, the rumoured price on PS3 (300 to 400) is less than what most people expected. There seems to be some credibility to this number since we have seen it in multiple sources (hopefully not all copying from the same location).
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post #12 of 220 Old 11-04-2005, 01:21 PM
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Quote:
Originally Posted by skogan
I think there is the first threshold question - how many games will be on DVD instead of blu-ray for the PS3?

If we know that very few (almost no) game manufacures are releasing titles on BR, but instead on DVD then we know that BR was not added to help in game functionality.

Instead it is transparently clear that Sony is leveraging their dominant position in gaming systems to force related markets to their technology. "Is it legal? Maybe. Is it in the best interests of the consumer? Rarely." (from Talkstr8ht in the main thread)
Sometimes a little knowledge is a dangerous thing. The use of the BD drive in a PS3 is light years away from resembling a monopoly. Would you have the same issue if the X-box came only with an HD DVD drive ? If not, how come? And could you explain how the interests of the consumer would be harmed as a result?

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post #13 of 220 Old 11-04-2005, 01:33 PM
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Quote:
Originally Posted by chefboy1
I guess they'll go buy two PS3's then!


I think predatory pricing is only when a competitor is knocked out, the company raises the product price back to profitable levels. Not something Sony has ever done with the Playstation consoles. Anyways, weren't PS1, PS2, XBOX & XBOX 360 all sold at a loss? And it wasn't as if the first two Playstations were pushing a new format as well...
.
A price below marginal or average variable cost provides a sufficient condition for concluding that there is predatory behaviour. While subsequently raising the price on the same product later is one form of predatory pricing, it is not the only form. If by lowering price you knock out your competition and therefore recieve some other anti-competitve advantage, (increased revenues through IP for example) that is predatory as well.

Quote:
Originally Posted by chefboy1
Anti-trust relates more to protecting companies and trade from being dominated by monopolies. Blu-Ray/HD-DVD are disc formats with many companies behind each, so not really a monopolistic situation. .
Groups can form monopolies just as individual companies can. BR group is attempting form a monopoly, which to be fair, so is HD-DVD. The question is, are they doing it through competitve or anti-competitive means?
Quote:
Originally Posted by chefboy1
As primarily a game platform, the PS3 will have a healthy competition from XBox & XBox 360, Gamecube & Revolution, PS2, Gameboys and to an extent, the PC. Blu-Ray (in your case, Sony) has not implemented anything to unfairly restrict the marketplace. An example of possible anti-trust would be if Microsoft added specific code to Vista that would make it difficult to play Blu-Ray movies or told PC vendors they can't sell Blu-Ray drives if they want to install a Microsoft operating system on computers they ship out. Having loss-leaders to generate sales/gain market share is pretty common business practice.
PS3 isn't the the monopoly founded on anti-competitive behavior, BR is. Br will be a partial monopoly if HD-DVD fails.
Quote:
Originally Posted by chefboy1
I think everyone here would argue that having only one dominate format, be it BR or HD-DVD is best for the consumer.
I agree, I just want the dominate format to be decided by competitive rather than anti-competitive tactics.
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post #14 of 220 Old 11-04-2005, 01:43 PM
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If there is one message in the article/interview (more accurately - lack of it), it would be "No Unified Format".
Too bad.

Diogen.
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post #15 of 220 Old 11-04-2005, 01:44 PM
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Originally Posted by Palladin
Sometimes a little knowledge is a dangerous thing.
True. The question is who does it apply to - you or skogen ;)

For all you know he is a lawyer ...
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post #16 of 220 Old 11-04-2005, 01:50 PM
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Quote:
Originally Posted by Palladin
Sometimes a little knowledge is a dangerous thing. The use of the BD drive in a PS3 is light years away from resembling a monopoly. Would you have the same issue if the X-box came only with an HD DVD drive ? If not, how come? And could you explain how the interests of the consumer would be harmed as a result?

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First, it's not PS3 that is the monopoly, its what BR is attempting to create for BR technology. PS3 is simply the means of creating the monopoly. That is not the problem in and of itself, the problem is that it is creating it through anti-competitve business practices.

If XBoX had included an HD-DVD drive, selling it at a loss, for no real purpose other than to kill BR early and thus have an anti-competitve advantage, the issues would be the same.

The consumers interest are harmed because a temporary surplus of HD-DVD drives would result in destroying its competition, which has nothing to do with which technology is superior.
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post #17 of 220 Old 11-04-2005, 02:19 PM - Thread Starter
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Quote:
Originally Posted by skogan
First, it's not PS3 that is the monopoly, its what BR is attempting to create for BR technology. PS3 is simply the means of creating the monopoly. That is not the problem in and of itself, the problem is that it is creating it through anti-competitve business practices.

If XBoX had included an HD-DVD drive, selling it at a loss, for no real purpose other than to kill BR early and thus have an anti-competitve advantage, the issues would be the same.

The consumers interest are harmed because a temporary surplus of HD-DVD drives would result in destroying its competition, which has nothing to do with which technology is superior.

So if Toshiba were to supply MS with HD-DVD drives at subsidized cost as well, there would NOT be an issue on either side... :D

Format war my A$$! I want one, and one only!
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post #18 of 220 Old 11-04-2005, 02:22 PM
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Sorry Skogan, you're not even close on this one. Sony has a valid business case for selling even the BD-players at a loss, as they make profits on the sale of disks (both their own content and licensees), profits that would exist whether they created a high-definition format monopoly or not (they are allowed to assume up to 70% penetration.) Therefore there is no regulatory basis for a monopolization or unfair competition complaint, and predatory pricing has been held to not apply to new product classes (of course, given that we don't even enforce it against folks like gasoline dealers where it is done regularly makes one think we don't apply it anywhere these days.) You can complain all you want, but legally Sony is in the clear.
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post #19 of 220 Old 11-04-2005, 02:28 PM
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Quote:
Originally Posted by jsm88
Sorry Skogan, you're not even close on this one. Sony has a valid business case for selling even the BD-players at a loss, as they make profits on the sale of disks (both their own content and licensees), profits that would exist whether they created a high-definition format monopoly or not (they are allowed to assume up to 70% penetration.) Therefore there is no regulatory basis for a monopolization or unfair competition complaint, and predatory pricing has been held to not apply to new product classes (of course, given that we don't even enforce it against folks like gasoline dealers where it is done regularly makes one think we don't apply it anywhere these days.) You can complain all you want, but legally Sony is in the clear.
I don't know if what you are saying is correct or not ... but I guess this applies only in the US. How about EU ?
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post #20 of 220 Old 11-04-2005, 02:34 PM
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Quote:
Originally Posted by nataraj
I don't know if what you are saying is correct or not ... but I guess this applies only in the US. How about EU ?
Actually, good point, it certainly covers the US regulatory position (both FTC and Justice), but the EU is another can of worms entirely - they a rapidly gaining a reputation for using their anti-trust and patent system for a merchantilist industrial policy, ie. helping european companies. It probably depends a great deal on where Thompson and Philips com down on this fight.
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post #21 of 220 Old 11-04-2005, 02:37 PM
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skogan, quit while you are behind.

Edit as for the xbox 360 with HD-DVD, very unlikely to happen.
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post #22 of 220 Old 11-04-2005, 02:43 PM
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My observation is that anti-monopoly laws are written in a way that is open to multiple interpretations and creates billions of revenue for all law firms dealing with the subject. It looks to me that all comes to this - every business practice is OK until it hurts badly interests of businesses having substantial lobby groups in the governement. Despite the anti-competitive practices of Microsoft, lawsuits and consequent rulings against the company did not occur until their competition was so badly decimated, that some really huge business interests, well represented in the US and EU governemnts, felt the carpet being pulled from under thier feet and came crying to the legislators for protection. Until the market for hi-def optical disc devices becomes as big as computer OS and multimedia, and one of the sides as dominant as Microsoft, I don't expect any anti-monopoly lawsuits. That most probably means never.
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post #23 of 220 Old 11-04-2005, 03:43 PM
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Quote:
Originally Posted by nataraj
True. The question is who does it apply to - you or skogen ;)

For all you know he is a lawyer ...
I couldn't care less if he was a lawyer, or a law student, or the kid who serves slurpees behind the counter at the 7-11. I know enough attorneys to be aware that anti-trust litigation is a highly specialized field with a very limited number of experts in that area becuase of its complexity. Now if Skogan is one of that elite group, I'll be happy to hear what his conclusion (as opposed to speculative opinion cast as a conclusion) is, based upon his comprehensive understanding of the subject.

Alternatively, nataraj, as you are an employee of MS, a company which should be fully familiar with anti-trust charges based upon its personal experiences, perhaps you could offer some limited expertise in the matter, based upon the discussions around the water cooler. ;)

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post #24 of 220 Old 11-04-2005, 03:45 PM
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Quote:
Originally Posted by jsm88
Sorry Skogan, you're not even close on this one. Sony has a valid business case for selling even the BD-players at a loss, as they make profits on the sale of disks (both their own content and licensees), profits that would exist whether they created a high-definition format monopoly or not (they are allowed to assume up to 70% penetration.) .
And how does this profit exist if they had not created a high-definition format monopoly? Or are you saying that HD-DVD would naturally fail even without BD selling at losses.

Let me ask it this way:
If Sony were able to kill HD-DVD drives by selling at a loss, may they later sell BD for a substantially higher amount now that there is no HD-DVD to compete with, or are they tied into their discount?

For example, if PS3 should only stay around for a year or so, may Sony sell the BD at the new stand alone units at full price? Do you think that Sony intends to sell Stand alone boxes if HD-DVD fails, and do you think they will have a discount?
Quote:
Originally Posted by jsm88

predatory pricing has been held to not apply to new product classes .
In every jurisdiction? Or do you mean only the Federal statutes?
Quote:
Originally Posted by jsm88
(of course, given that we don't even enforce it against folks like gasoline dealers where it is done regularly makes one think we don't apply it anywhere these days.) .
True

.[/quote] You can complain all you want, but legally Sony is in the clear.[/quote]
Probably true as well.


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Originally Posted by tpigeon2003
skogan, quit while you are behind.
NEVER!
(Well maybe, and maybe soon.) :) I'm going to look at the state statutes on preditory pricing first, as I think JSM was only referring to Federal anti-competitve business practice laws.
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post #25 of 220 Old 11-04-2005, 03:59 PM
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Quote:
Originally Posted by Palladin
I couldn't care less if he was a lawyer, or a law student, or the kid who serves slurpees behind the counter at the 7-11. I know enough attorneys to be aware that anti-trust litigation is a highly specialized field with a very limited number of experts in that area becuase of its complexity. Now if Skogan is one of that elite group, I'll be happy to hear what his conclusion (as opposed to speculative opinion cast as a conclusion) is, based upon his comprehensive understanding of the subject.
You definitely seem to know less than him ... so it was ironic you were preaching him "Sometimes a little knowledge is a dangerous thing". Can you tell us why your knowledge is vast but his is little on this matter ?

Quote:
Alternatively, nataraj, as you are an employee of MS, a company which should be fully familiar with anti-trust charges based upon its personal experiences, perhaps you could offer some limited expertise in the matter, based upon the discussions around the water cooler. ;)
At that time I was in St Louis working mostly on Oracle+Unix, incidentally in a company which had some anti-trust experience :D
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post #26 of 220 Old 11-04-2005, 04:17 PM
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Quote:
Originally Posted by jsm88
Actually, good point, it certainly covers the US regulatory position (both FTC and Justice), but the EU is another can of worms entirely - they a rapidly gaining a reputation for using their anti-trust and patent system for a merchantilist industrial policy, ie. helping european companies. It probably depends a great deal on where Thompson and Philips com down on this fight.
Yeah, I've noticed that, and it seems to have become more expansive in the past two decades. At first, I thought it was intended to be paternalistic, but now it seems more oriented toward promoting their own economy.

Quote:
Originally Posted by nataraj
You definitely seem to know less than him ... so it was ironic you were preaching him "Sometimes a little knowledge is a dangerous thing". Can you tell us why your knowledge is vast but his is little on this matter ?
I don't claim to have great proficiency in it. Let's just say that I've learned enough about the subject to know that it is complex, and is best left to expert analysis, as opposed to summaries and sound bites on the web. jsm88 seems to know more than either of us.

Quote:
At that time I was in St Louis working mostly on Oracle+Unix, incidentally in a company which had some anti-trust experience :D
Just can't stay out of trouble, can you? :D

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post #27 of 220 Old 11-04-2005, 05:13 PM
 
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That article is pretty old and is debated to death. Having said that, it reveals the flaws of Sony's strategy of tieing PlayStation 3 and BR-ROM together.

Quote:
"The reason Sony has suddenly gained support for Blu-ray is simple," said a high-level studio executive close to the discussions. "PS3 is a subsidized Blu-ray play that will sell 20 million units. The first HD player will be on the market for $1,000. PS3 could be at $300 or $400. Sony will be selling them at a loss the first six months to a year just to get Blu-ray players out in the market. So studios realize they need to have their content on it."
This quote is from a 3rd party Hollywood executive, not from Sony. This is the general expectation of Hollywood based on what happened; which does not reflect the general mood within the gaming industry, where Xbox 360 is expected to beat out PlayStation 3 by a wide margin.

With half as many titles in development and a manufacturing cost twice as high as that of Xbox 360 at any given time frame, it just isn't possible for SCEI to catch up to Xbox 360's market lead with the package they have now. People are amazed how Microsoft managed to put together such a compelling hardware/software tools/online package in such a short time, but they did. They have an exceptionally balanced hardware, best documented and most stable API, the best development tools in the industry, and the biggest marketting dollars. The pasture is so much greener on Xbox 360's side that developers are coming by flocks. Never was the 3rd party development support so one-sided in videogame history, but there you have it.

Consider, Xbox 360 Core System will be priced $200 with a hundred titles when PlayStation 3 launches for $500 with half a dozen titles in November 2006. Now, how is SCEI even be able to compete with that? SCEI should realize that they are in a serious trouble when their 10-year long partner Square's developers grumble that "Sony is making a mistake here" over poor-quality and overpriced tools while EA is betting its farm on Xbox 360.

Now that PlayStation 3 isn't going to make the kind of impact that PlayStation 2 did at launch, BR-ROM goes down with PlayStation 3 since BR-ROM camp has no backup plans; there are no cheap Chinese BR-ROM players and MediaCenter PCs to rescue the format in case PlayStation 3 fails, BR-ROM just sinks with PlayStation 3.
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post #28 of 220 Old 11-04-2005, 07:24 PM
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Consider, Xbox 360 Core System will be priced $200 with a hundred titles when PlayStation 3 launches for $500 with half a dozen titles in November 2006. Now, how is SCEI even be able to compete with that?
********, you have to one of the most die hard Microsoft fans I have ever known if you actually believe what you are posting. I have to admit some of them are rather funny in how overboard they go but I am genuinely curious to know if you believe them or if your just flaming Sony for the fun of it?
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post #29 of 220 Old 11-04-2005, 07:41 PM
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@Skogan,

From what you have been saying, it seems like you want a format war to go on indefinitely? :confused:

I feel that whichever formats wins, fine. But to think that having two competing formats for many years would keep from monopolistic style pricing seems far fetched. Look at SACD and DVD-A, those two formats stayed in competition, and now (for reasons in addition to two formats...) both formats are basically dead.

And Chefboy was right. I know for sure that the last generation consoles - PS2, Xbox, Gamecube - were all sold at a loss or no profit during their initial product launch. Later on, they made profit from these consoles, but probably not until a year or so later when manufacturing costs were cheaper. So, Sony is not doing predatory pricing anymore than MS is. It is similar to how cable companies give away free digital boxes, then make money on the monthly service fees. Only difference is that instead of monthly service fees, Sony, MS, and Nintendo charge extra for the games (license fees).

Furthermore, as far as I know nobody has restrictions on what price they can sell a BD or HD-DVD player once they have paid licensing fees. Sony may very well sell their standalone BD players at $1000 for some time, but that is not stopping LG or some other CE from selling a player at $300 in a year or two.
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post #30 of 220 Old 11-04-2005, 07:50 PM
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Originally Posted by Richard Paul
********, you have to one of the most die hard Microsoft fans I have ever known if you actually believe what you are posting. I have to admit some of them are rather funny in how overboard they go but I am genuinely curious to know if you believe them or if your just flaming Sony for the fun of it?
I personally read them as if the voice is the HAL 9000. You should try it! :)
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