Originally Posted by plazman
My point is that you gotta have a business model that works:
1. IF PS3 is a game console then you need to make money by selling games. So far, it does not seem Sony is really doing that.
2. IF the PS3 is a video player then Sony needs to make money off of the hardware, since the margin on BD movies are probably very slim - if any at all.
3. IF it is both. Then the subsidy on the player needs to be smaller than a game only device since it is expected that x% of consoles will be used primarily as a video player and hence will have a lower game attachment rate.
4. IF Sony is able to subsidize a game console as a video player since their margin on movies is high. Then it is total craziness for any hardware vendor to sign up for BD! How do they make money??
5. IF you are a movie studio and you know that the primary hardware is a subsizied player where the vendor is hoping to make money out of royalties, what does it do from a pricing perspective? Games cost $60, will movie prices also approach that?
I am not sure how things are rosier with BD for Sony? Price competition is going to get more aggressive, not less. Would people buy BD movies IF they cost 2x and HD DVD one? We already know people won't buy players that cost 2x as much....so where is the money (profits going to come from?) Will Sony continue to subsidize hardware and software until HD DVD goes away? Will HD DVD go away, if they are aware of this achilles heel?
I guess we haven't seen the end of the game yet. Let's see how the next Q turns out for Sony. No holiday buying, no yen depreciation, with 4x as many PS3 consoles....If they show profit growth and cut losses in their game division, I'll admit it's all rosey for sony