Are other Blu-ray HW makers pressuring Sony against PS3 price cuts?

[Tyrannical]

Are other Blu-Ray HW makers pressuring Sony against PS3 price cuts?
It must be difficult selling blu-ray players at a profit when the PS3 is still sold at a loss.

A $199 PS3 might sound great to you, but to every manufacturer not named Sony it could be a reason to bail out on the format. Samsung is already clearly not happy with blu-ray, predicting it's demise in five years. I bet a big part of this negatism is they can't make any money off of blu-ray when the PS3 is sold at a loss.

So, could the other HW makers just bail on the format because they aren't making money off of it, and can it survive against DVDs with just Sony backing it with hardware. I'm sure to the movie studios, they don't care if you choose blu-ray or DVD, as long as you still buy one of them.

[sjy1969]

Originally Posted by Tyrannical

A $199 PS3 might sound great to you, but to every manufacturer not named Sony it could be a reason to bail out on the format.

Who said anything about a $199 PS3?

[Blu Jacket]

Originally Posted by Tyrannical

I'm sure to the movie studios, they don't care if you choose blu-ray or DVD, as long as you still buy one of them.

I'm sure that, given the choice, the studios would rather you buy the Blu-ray over the DVD since their profit margins are higher.

[Slec]

Originally Posted by Tyrannical

Are other Blu-Ray HW makers pressuring Sony against PS3 price cuts?

Can you say 'anti-trust' ?

It must be difficult selling blu-ray players at a profit when the PS3 is still sold at a loss.

Sony has gone all in to make blu-ray a success. Everytime a new market arises, you will lose money before you make money. As the format spreads, economies of scale will take over and everyone will make money. blu-ray is a luxury item, not a necessity. The other companies are choosing to make profits on their players now at the expense of mass adoption because there is always some risk in moving from a mature market to an unknown.

A $199 PS3 might sound great to you, but to every manufacturer not named Sony it could be a reason to bail out on the format. Samsung is already clearly not happy with blu-ray, predicting it's demise in five years. I bet a big part of this negatism is they can't make any money off of blu-ray when the PS3 is sold at a loss.

The sky is falling! Samsung's previous projection. I guess all I'm trying to say is that its so early that projections from anyone simply have too many assumptions forming their base and not enough facts because its too early in product life. Remember, there has only been 1 format since Feb, and wasn't it only April when the B&M stores started phasing out the other format?

Also are you referring to the $199 Xbox? without a blu-ray drive or some of the other amenities the PS3 has? If Sony were to lower their prices again, it would be because the smaller chips they are using are allowing them to do so. Each new model is moving the PS3 where it needs to go in terms of return. Licensing is probably where they are balancing out the hardware costs

[Tyrannical]

No, I am not talking about the 360 at all. I'm talking about the blu-ray business model and how a hypothetical PS3 price cut would affect it.


Every blu-ray OEM is trying to sell their player at a profit, with the sole exception being Sony with it's PS3. Sony selling a PS3 at a loss artificaly lowers the value of a blu-ray player and makes it more difficult for other companies to make a profit. The cheaper the PS3 is relattive to other blu-ray players, the more difficult this becomes. At some price point, the PS3 could make mass market dedicated blu-ray players totaly irrelevant.

Blu-ray doesn't win just because it may be the "coolest" or the "best", it wins or looses based on how profitable it is to it's supporters. Who is making money off of blu-ray? None of the OEMs when the PS3 is the dominant seller. They may have large profit margins on their high end players, but overall sales at that end are low.

Do movie studios make more money off of blu-ray then DVD? I know the HW OEMs have paid them money to relase movies on their format. But with the DVD patents expiring in a few years, blu-ray discs may be sold at a significant premium over DVDs. A higher gross margin alone means nothing when it's only 5% of the market.

[JadedRaverLA]

Even putting aside the fact that price collusion is illegal, I don't think that other manufacturer's have any influence over the price of the PS3. To people on the internet, who know that the PS3 is a surprising terrific Blu-ray player, it may seem like the price of one should directly influence the other, but to manufacturers and SCE there's just two completely different business models in play.

If the PS3's sales were still regularly below the 360s (as they were last year in the U.S.), then you can bet SCE would go to Sir Howard and beg for Sony corp. to take an even bigger hit and allow a price cut on the PS3. It's not selling below the 360, though, so they don't have to. The only major connection between the PS3 price and BD-player standalone price is that Sony and SCE want to sell the PS3 to gamers... or at the very least to those who may occaisonally game on it.

Selling the PS3 at an even bigger loss to those who want to use it only for Blu-ray screws Sony far more than "other manufacturers," especially since Sony is the biggest player in the standalone market. They'd likely be the ones taking a hit by losing the standalone player sale, and then taking a second hit by selling a PS3 at a loss to someone who isn't going to buy any games to help make up the lost revenue.

So, while they may look at standalone pricing when debating a PS3 price cut, that has everything to do with SCE and Sony corp. not wanting to lose more money, and nothing to do with other manufacturers pricing models.

[Elandyll]

I think Sony knows that a price drop to $349 would not have a significant effect on the PS3 sales. It would take a full $100 drop to see it having any significant impact, to reach the sub $300 range.

At this point, they would trump their own S350, and go back to non profit levels (like MS is currently doing), which I think they want to avoid at all cost for FY 2008.

Now, that doesn't mean they can't have very good offers to trump MS in areas where MS has 0 added value, because MS is essentially a Software company.

I am talking about LCD+PS3 combos, PS3 + game packs (Sony properties), PS3 +HTiB, etc.

[MotionBlurr]

I hope they keep the price up for a little longer. I like showing off the toy to friends and family who come over and see something they don't have yet.

[WriteSimply]

Originally Posted by Tyrannical

Are other Blu-Ray HW makers pressuring Sony against PS3 price cuts?
It must be difficult selling blu-ray players at a profit when the PS3 is still sold at a loss.

First and foremost: I can't tell if you're creating FUD or are ASSUMING AND PROJECTING too much. Both of your posts in this thread so far are full of incorrect "facts".

A $199 PS3 might sound great to you, but to every manufacturer not named Sony it could be a reason to bail out on the format.

Sure a US$200 PS3 is great but that's not going to happen this year or next year. SCE will only price it that low if they've got PS4 in development and the PS3 hardware is not sold at a loss at that price point.

Samsung is already clearly not happy with blu-ray, predicting it's demise in five years. I bet a big part of this negatism is they can't make any money off of blu-ray when the PS3 is sold at a loss.

ONE Samsung exec from UK said that and it doesn't sound like the interview was coherent to begin with. That said, according to the BDA, the sales of PLAYERS in the US are very brisk.

So, could the other HW makers just bail on the format because they aren't making money off of it, and can it survive against DVDs with just Sony backing it with hardware. I'm sure to the movie studios, they don't care if you choose blu-ray or DVD, as long as you still buy one of them.

Pricing is not the sole reason why people buy hardware. Brand name is the other draw.

If you looked at the other side of this forum, some people shy away from buying a PS3 because it's not a standalone player. And that's just one reason.

If anything, the other CEs are not making MUCH money on their DVD players since competition there with cheap US$80 non-brand DVD players is tough. Non-brand BD players is still not here so that means the competition that exists in the BD market is still healthy.

Originally Posted by Tyrannical

No, I am not talking about the 360 at all. I'm talking about the blu-ray business model and how a hypothetical PS3 price cut would affect it.

If you're talking about hypothetical, don't just set up the price cut. Set up where in the time line of BD you are talking about.

Before the PS3 was released, the DVD market was flourishing and almost the same situation exist between branded DVD players, non-brand players and the PS2. The CEs didn't see the PS2 as a threat at all.

The case for your hypothetical scenario is not strong.

Every blu-ray OEM is trying to sell their player at a profit, with the sole exception being Sony with it's PS3. Sony selling a PS3 at a loss artificaly lowers the value of a blu-ray player and makes it more difficult for other companies to make a profit. The cheaper the PS3 is relattive to other blu-ray players, the more difficult this becomes. At some price point, the PS3 could make mass market dedicated blu-ray players totaly irrelevant.

Read the above.

Blu-ray doesn't win just because it may be the "coolest" or the "best", it wins or looses based on how profitable it is to it's supporters. Who is making money off of blu-ray? None of the OEMs when the PS3 is the dominant seller. They may have large profit margins on their high end players, but overall sales at that end are low.

Compared to the PS3, standalone sales are low but they EXPECTED that. With that expectation and with a healthy margin, their net revenue is still pretty good. Again, the BDA said that sales of players (and this is not counting PS3s) are very good. That means healthy revenues.

Would the CEs want some of the pie that the PS3 got? Sure, but they'll have to catch up with the bells and whistles that the PS3 has, and that's not that tough to do. Remember that PS3's core hardware cannot change because that would be disastrous for the game component. Standalones can add any new feature because the features are not standard.

Do movie studios make more money off of blu-ray then DVD?

Yes but not all titles break even. DVD titles break even easier since the cost is cheaper.

I know the HW OEMs have paid them money to relase movies on their format.

Prove it.

But with the DVD patents expiring in a few years, blu-ray discs may be sold at a significant premium over DVDs. A higher gross margin alone means nothing when it's only 5% of the market.

The first sentence spells doom for DVD but the second sentence spells doom for BD? Your inconsistencies are showing.

If patents expire, it means that the products made with the patent gets CHEAPER. But that doesn't mean that the cost is passed down to the consumer. If DVD patents expire, studios still can charge US$15 for a movie and still generate more revenue. In the meanwhile, they ALREADY charge more for BD and they do get more as they should.

BD is moving slowly into the mainstream. The fast growth will start this upcoming holiday season.


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[richieb1971]

AV specialists have hated the PS3 since day 1 because they can't compete with PS3 so I feel their pain. The other argument is that if Blu dies in 5 years what will take its place and will Samsung make any more money from that format?

I have friends that would rather watch a good copy of an AVI than watch any of my blu-rays, suggesting that people are unwilling to spend any money on movies at all. The fact is that brining in competing formats forces the consumer away because they don't want movies they own to become worthless.

Blu-ray in theory should be the last disc based medium for movies on the grandest of scales. I can't see what benefit having a 500gb disc would give you in movies and most people wouldn't buy a more expensive format than blu-ray. Blu-ray in my eyes is the last stand for the movie industry.

Until every single person has to register to upload movie content onto the internet (anything above 200mb) I don't see the industry as a whole lasting more than 10 years outside the USA.

If Blu-ray is to become a real contender it needs to kill of DVD ASAP. DVDrips are so easy to do its ridiculous, so by releasing them its doing more harm than good. I think Samsung and other manufacturers have more to worry about than just the PS3. Thats all !

[Tyrannical]

If patents expire, it means that the products made with the patent gets CHEAPER. But that doesn't mean that the cost is passed down to the consumer. If DVD patents expire, studios still can charge US$15 for a movie and still generate more revenue. In the meanwhile, they ALREADY charge more for BD and they do get more as they should.

I was actualy refering to the profit margins that the film studios would make. With DVD patents expiring, the studio's margin would increase without having to increase consumer prices.

I know the HW OEMs have paid them money to relase movies on their format.

Prove it.

I know when the Blu-Ray/HDDVD format war was in full swing, some stuidos were exclusively supporting one format. Are you saying money did not change hands to pick sides or to support the new format? Maybe cheap introductory royalty rates? Didn't Toshiba pay a lot of money to secure some HD-Dvd support (with an escape clause)?

Remember that PS3's core hardware cannot change because that would be disastrous for the game component. Standalones can add any new feature because the features are not standard.

Sure it can change, and it already has twice so far by removing the integrated HW to allow backwards compatability with the PS2. Obviously the one feature that can't change is ability to play PS3 games. MS added HDMI to all 360's ~ two years after launch, and then there was the optional HD-DVD drive. I'm sure it's much easier to software update a PS3 then a stand alone blu-ray player.

Before the PS3 was released, the DVD market was flourishing and almost the same situation exist between branded DVD players, non-brand players and the PS2. The CEs didn't see the PS2 as a threat at all.

I assume you are talking about the launch of the DVD enabled PS2 and how it affected DVD OEMs.

Very different situation I think.
DVDs had already established themselves by the time the PS2 launched. The PS2 was certainly a good value if you were looking for a gaming machine and a DVD player. But it was priced at $299 and I beleive DVD players were around the $199 mark and falling then. The PS2 also wasn't a great DVD player.

The PS3 came out much earlier in the blu-ray cycle then the PS2 did in the DVD cycle. The PS3 unlike the PS2 is at least as cheap and as good as comparable blu-ray players so I've heard. I haven't heard too many people unhappy with their PS3's blu-ray capability. The PS3 also seems to be setting the price for inexpensive blu-ray players, something the PS2 never did.

[phranctoast]

I guess the question is, how much does it cost the manufacturers to make blu ray machines? I was under the impression that the cost of technology in the machines came down a lot. I find it hard to be sorry for the others CE companies, if it means they aren't going to be able to rip off the consumer as much as they used to due to Sony undercutting them with the ps3.

[mikejet]

Isn't Sony still losing money with each sale of the PS3?

[quexos]

This clearly shows that this issue is more complex than meets the eye.
A balance must be found between too cheap and too expensive for all those brands.

[Luis_A51]

Well they cant do it without fear of anti-trust/collusion laws. But that doesnt mean it cant happen.

I think sony will cut prices by atleast $50 before the holidays. They arent gonna let MS ride their price-cut boost all the way through the holidays. My bet is Sony will wait until closer to the holidays, so that the news is fresher in holiday shoppers' minds. But im positive they'll do it.

Im sure all BD manufacturers are making healthy profits on 1.1 models. Theres no question they should also cut prices for the holidays.

[WriteSimply]

Originally Posted by Tyrannical

I was actualy refering to the profit margins that the film studios would make. With DVD patents expiring, the studio's margin would increase without having to increase consumer prices.

That is true. On the flipside, the same is true for CEs making DVD players. They don't have to go as low as the non-brand name ones. They just have to price it where THEIR brand is supposed to be priced and people will buy. People will be suspicious of a US$50 Sony/Panasonic/Pioneer DVD player.

I know when the Blu-Ray/HDDVD format war was in full swing, some stuidos were exclusively supporting one format. Are you saying money did not change hands to pick sides or to support the new format? Maybe cheap introductory royalty rates? Didn't Toshiba pay a lot of money to secure some HD-Dvd support (with an escape clause)?

The BDA still maintains that they provided incentives but no actual money changed hands. Incentives promotes you to get into business by saving money you don't have to spend but you still have to EARN your revenue by releasing your products. Bribes gets you into business by giving you revenue upfront without you worrying about earning revenue through your products.

Don't confuse Toshiba, Microsoft and the efforts of the DVD Forum with the BDA.

Sure it can change, and it already has twice so far by removing the integrated HW to allow backwards compatability with the PS2. Obviously the one feature that can't change is ability to play PS3 games. MS added HDMI to all 360's ~ two years after launch, and then there was the optional HD-DVD drive. I'm sure it's much easier to software update a PS3 then a stand alone blu-ray player.

The bold text above is what I mean by CORE HARDWARE but it's not JUST about playing PS3 games. The core hardware components are: 2.5" SATA HDD, USB ports, BD/DVD/CD drive, PSOne compatibility, Bluetooth, the Multi-Out Port, the optical output, the HDMI output, the RSX and the Cell chips. (Wifi was made standard when the 20GB was retired.) These components MUST be there in every future versions of the PS3 so that games and other multimedia formats supported now will be supported later.

Software updates ONLY work if there is hardware in there to begin with, and that is true for BD players. BD players that have enough EPROM RAM and hardware decoding capability can be software updated to decode Divx for example, just as the PS3's Divx capability was added later because of the strength of the Cell. BD players and PS3s without the SACD chips can't be software upgraded to play SACDs.

I assume you are talking about the launch of the DVD enabled PS2 and how it affected DVD OEMs.

Yes.

Very different situation I think. DVDs had already established themselves by the time the PS2 launched. The PS2 was certainly a good value if you were looking for a gaming machine and a DVD player. But it was priced at $299 and I beleive DVD players were around the $199 mark and falling then. The PS2 also wasn't a great DVD player.

The only difference is in the timing. At the time PS2 was launched in 2000, DVD was already three years in and it still wasn't even in the mainstream partly due to the short-lived DVD vs. DIVX wars (where hardware pricing wasn't an issue). Consumers were still skeptical about a format that they can't record on, unlike VHS. DVDs in 2000 was what well-off and well-informed cousins, uncles and neighbors have but not the average consumer. People were ONLY buying it in droves about a year or two later.

By the time the PS2 was released, DVD players were NOT sold at MSRP US$199; it was still hovering ABOVE the US$500 mark MSRP. There were no non-brand players, only ones from the established brands.For example, Panasonic's DVD-A320 DVD Player has an MSRP of $499.95 and the lowest it went was for US$350. I still remember those times because a friend had to replace Sony's first DVD player (DVD-S7000) he had due to burglary about A YEAR after he got it with its second model (DVD-S7700) - both costs about US$1,000 (MSRP US$1299).

CEs then with the PS2 and now with the PS3 are not worried because of the nature of PEOPLE who just want to press Play. To date, 6.5 million players were sold in the United States and that's not counting the PS3, which is hovering at around 5.8 million in the US alone. That's almost 1:1 ratio.

Note that by 2000, Denon, Theta, Proceed, Runco and CAL had released their DVD players that were VERY high end. We are almost two years in BD's life cycle and Theta, Proceed, Runco and CAL have not even announced a BD player.

The PS3 came out much earlier in the blu-ray cycle then the PS2 did in the DVD cycle. The PS3 unlike the PS2 is at least as cheap and as good as comparable blu-ray players so I've heard. I haven't heard too many people unhappy with their PS3's blu-ray capability. The PS3 also seems to be setting the price for inexpensive blu-ray players, something the PS2 never did.

For pricing, read above.

As for PS2 playback quality, I don't know because I didn't own a PS2 at that time or ever. Even on standalone DVDs at the time, the standards of DVD playback among players were not uniform. For RSDL discs, the high-end players like the Sony paused for one second while for others three seconds or longer. BD fixed this layer-change problem.

Originally Posted by Luis_A51

I think sony will cut prices by atleast $50 before the holidays.

Two big PS3-exclusive games coming in October and November - LBP and R2. I don't think a price-cut is what we'll see. An LBP-/R2 bundle, I predict.

Originally Posted by Luis_A51

Im sure all BD manufacturers are making healthy profits on 1.1 models. Theres no question they should also cut prices for the holidays.

Sony's BDP-S350 is now selling for about US$350. It is a BD-Live upgradeable player. It's BDP-S300 is selling for US$229. Best Buy's Insignia player is also US$229.


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[Tyrannical]

By the time the PS2 was released, DVD players were NOT sold at MSRP US$199; it was still hovering ABOVE the US$500 mark MSRP. There were no non-brand players, only ones from the established brands.For example, Panasonic's DVD-A320 DVD Player has an MSRP of $499.95 and the lowest it went was for US$350.

Really? I distinctly remember some stores offering a Sega Dreamcast bundled with a standalone DVD player for the same price as a PS2. Might have even been backed by Sega. This would have been a few months after the PS2 launched, as the dreamcast was canned shortly afterwards. It was a non-brand player, and I think at the time it retailed for about $150. Time frame was probably Nov-Dec 2000.

[WriteSimply]

Originally Posted by Tyrannical

Really? I distinctly remember some stores offering a Sega Dreamcast bundled with a standalone DVD player for the same price as a PS2. Might have even been backed by Sega. This would have been a few months after the PS2 launched, as the dreamcast was canned shortly afterwards. It was a non-brand player, and I think at the time it retailed for about $150. Time frame was probably Nov-Dec 2000.

The PS2 was launched in the US on October 26th 2000 with an earlier March release for Japan.

Sega announced in January 31st 2001 that the last Dreamcast to go into production will be in March 2000. It was only after this announcement that massive price cuts were announced.


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[Blu Jacket]

Originally Posted by WriteSimply

By the time the PS2 was released, DVD players were NOT sold at MSRP US$199; it was still hovering ABOVE the US$500 mark MSRP. There were no non-brand players, only ones from the established brands.For example, Panasonic's DVD-A320 DVD Player has an MSRP of $499.95 and the lowest it went was for US$350. I still remember those times because a friend had to replace Sony's first DVD player (DVD-S7000) he had due to burglary about A YEAR after he got it with its second model (DVD-S7700) - both costs about US$1,000 (MSRP US$1299).

I don't know about MSRPs because I didn't pay attention to that at the time. All I cared about, and all I really care about now, is how much it's ACTUALLY selling for. In regards to that, you are wrong. The PS2 was not my first DVD player, and I was far from well off. I bought my first DVD player when certain movies I wanted badly were only available for purchase on DVD and weren't released on VHS until later. My first DVD player was not on sale and was only $199. I remember seeing models at that price at other places too and that price point was a large motivating factor that allowed me to take the plunge into DVD. It was months later that I got my PS2 and retired my DVD player (which I gave to my great Aunt, who still uses it). Your inflated MSRPs are likely only for high end models of the day.

[Monkey]

I can't see why Sony would sell the PS3 for $199 any time soon. Most likely it costs much more to make a PS3 than any of the other blu-ray players, well maybe not the ultra Denon and Pioneer models.