Sony CEO Uncertain of Blu-ray Future

aberkowitz

aberkowitz

Audioholic Field Marshall
I must now copywrite corporate dumbf*ckery©
Haha- I think you should!!!

Btw- when I was discussing costs I was talking more from a fixed cost perspective. These products are still in the early adopter phase, and historically companies will justify higher prices by including R&D and equipment fixed costs into their calculations. I agree that the incremental cost to press another DVD isn't that high, but until HD catches on past the 5% of the world that stalks these boards (I'm guilty as charged) upfront investment costs will drive higher prices.
 
I agree that HD could do A LOT for themselves if they lowered disc prices a bit. $28 is crazy for most of the offerings out there right now.
If they were smart (and they aren't) they would have kept the pricing compatible (or lower) than Blu-ray and packaged ALL titles as dual disc. That way, people who bought their DVDs would also be getting HD DVD and thus have an incentive to buy a new player.

But that would have cost them an additional $0.35 per disc in bulk so it was obviously out of the question.
 
Matt34

Matt34

Moderator
If they were smart (and they aren't) they would have kept the pricing compatible (or lower) than Blu-ray and packaged ALL titles as dual disc. That way, people who bought their DVDs would also be getting HD DVD and thus have an incentive to buy a new player.

But that would have cost them an additional $0.35 per disc in bulk so it was obviously out of the question.

That might have been the difference between the CEO's son getting his own Leer Jet.

Jeez Clint, think about the children!!
 
Alamar

Alamar

Full Audioholic
If they were smart (and they aren't) they would have kept the pricing compatible (or lower) than Blu-ray and packaged ALL titles as dual disc. That way, people who bought their DVDs would also be getting HD DVD and thus have an incentive to buy a new player.

But that would have cost them an additional $0.35 per disc in bulk so it was obviously out of the question.
Exactly my point ....
 
sholling

sholling

Audioholic Ninja
At only 420,000 players after 1 1/2 years, they are a long way from being set.
90,000plus of them added in a single day... Things can change overnight just by meeting Joe and Jane Sixpack's requirement for the best bang for $125. I'm not ready to pick a winner and will still be pleasantly surprised if either survives, but the $125 price point is all that matters to the 99.9% of the population that are not audioholics.

HD DVD doesn't stand a chance against all the powers in the Blu-ray camp. Panasonic, Disney, Fox, Samsung, Sharp, JVC, Mitsubishi, Hitachi, Denon, Marantz, Pioneer, Sony, Philips; they're not going to let Blu-ray lose.
See above about Joe and Jane. It don't matter what Sony or Toshiba or anybody else wants. It matters that Joe and Jane are willing to take a chance on what in a worst case scenario (both formats die) is still good $125 up converting SD DVD player. Most including me would never take that chance on a $500 player. We can all rant and rave about the esoterics of studio support and electronics industry powerhouses until the bad place freezes over but $125 is still the magic number that will make or break either or both formats. Oh and one other teeny tiny thing. There are more Walmarts than Target, CompUSA, Best Buys, Circuit Citys combined with about 5,000 to spare... Who is the real 800lb gorilla in the room?
 
E

Electone

Audioholic
Bill Hunt is a Blu-ray shill

You should read the whole article at Digitalbits.com by Bill Hunt in the "My two cents" section. He is not quite saying what was just reported.
Please don't quote Bill Hunt. His opinions always have a Blu-ray bias to them and his website has lost many loyal readers because of this. What used to be a great place to read dvd reviews and industry news has become a joke. His tirades and rants against anything positive for HD DVD are amusing at best and insulting at worst.
 
patnshan

patnshan

Senior Audioholic
If they were smart (and they aren't) they would have kept the pricing compatible (or lower) than Blu-ray and packaged ALL titles as dual disc. That way, people who bought their DVDs would also be getting HD DVD and thus have an incentive to buy a new player.

But that would have cost them an additional $0.35 per disc in bulk so it was obviously out of the question.
I agree. I would actually go one step further to say that all HD DVD's should actually contain the DVD as well. That way there would be no problems with dual disc technology, customers would be happy, and they would be out about $0.35 each package (heck, they could put it in the price and nobody would know). I for one would like this especially for the kids discs, I'd give them the DVD and keep the HD DVD in the basement theater, out of their reach.

Pat
 
A

aarond

Full Audioholic
at this point in time it cost much less to produce an hd-dvd disc than a blue-ray disc. production cost to put a dvd & hd-dvd in the same package should be less than stand alone blue disc. its stupid that some hd-dvd titles cost more than blue of same title.
 
patnshan

patnshan

Senior Audioholic
Blockbuster's on-line rental service rents HD DVDs too. My understanding is the Blockbuster BD exclusive is only for the corporate owned stores. Franchisee owned stores can carry HD DVD. http://www.blockbuster.com/browse/collections/hdDvdPackage
This is true. I rent HD DVD's exclusively from BB online. They have them all and for now, get them out fast.

I am quite certain when the payoff contract from Blu Ray ends, they will carry both in stores.

Pat
 
aberkowitz

aberkowitz

Audioholic Field Marshall
I agree. I would actually go one step further to say that all HD DVD's should actually contain the DVD as well. That way there would be no problems with dual disc technology, customers would be happy, and they would be out about $0.35 each package (heck, they could put it in the price and nobody would know). I for one would like this especially for the kids discs, I'd give them the DVD and keep the HD DVD in the basement theater, out of their reach.

Pat
From a consumer point of view- sure... but why would a company do that when they can get people to pay one price for one product and a totally different price for virtually the same product (going on the hypothetical that 99.9% of people cannot tell the difference between HD and SD dvds). In this case you could get a consumer to pay two different prices so they can have 2 copies of the same movie- one for the kids and one for the basement theater. Makes perfect sense from the perspective of the studio.

In fact, it makes even more sense if you think that you can get a consumer to buy an SD disc now and then get the same customer to buy the HD version of the movie later when they finally get their HDDVD player. If you subscribe to that theory (which is how I think Sony is operating) then offering combo discs makes no sense because you'll end up cannibalizing away potential revenue.

In economics there's a concept called price discrimination which states that only in a monopoly/oligopoly situation can you sell the same good for different prices to different customers. Absent the monopoly/oligopoly you have to let the market dictate prices or else consumers will arbitrage away your advantage. While I wouldn't say that this situation perfectly fits- think about it what is the studio doing: It's able to sell a product (a movie), that is virtually identical (see my above caveat), to different consumers who hold a different value of the worth of the movie (HD adopters are willing to pay more), at two different prices, and the incremental cost difference to them (if you discount R&D/new investment) is virtually zero! I admit this is a bit of a stretch, but this is also the way that companies think.

My biggest problem with the whole BD/HD debate is that most audiophile consumers believe that toshiba/sony/studios should be acting in the best interest of the customers. I think that's a load of BS- toshiba/sony/studios will act in the best interests of themselves, and they will only end up acting in the best interest of the customers when their interests converge. CDs are a great example- when did CD prices start to fall? Not when Napster was giving away music for free, but when iTunes and other music services built up huge catalogs and started to threaten the existence of CDs. Finally now I can get a new release on a CD for $9.99 instead of paying the ridiculous $16-20 I used to pay for years. Prices weren't dropped because consumers demanded it, they were dropped because of new competition.

Why did Toshiba really drop the prices on the A2? You could make the argument that they wanted to penetrate the market with lots of players and "win the war"- but that's more of a consumer viewpoint. Toshiba knew that they were coming out with new technology that would make the A2 virtually obsolete. Not only would they have trouble selling the rest of the A2 inventory, but they'd have more trouble selling new products at higher prices with such a large supply of cheaper products on the market. So quite ingeniously they drop the price on the A2 for a couple of days, sell out of inventory, generate a huge buzz, then pull whatever leftover stock exists and offer up new products (and I would say that the A2 & A3 are similar enough to each other) at a higher price. Sony did the exact same thing a few months ago with the PS3.

Consumers see these actions as corporate dumbf*ckery© (Rock & Roll, your $.15 is in the mail for usage of the term :D), but as long as the company makes money the board and the stockholders could care less what consumers think.
 
Tomorrow

Tomorrow

Audioholic Ninja
Sorry if this has been discussed, already. I don't have the time right now to wade through the entirety of this thread.

The Blu-Ray vs. HD-DVD seems to me to closely resemble the Apple vs. PC platform marketing battles of the 80's. Apple had a better product, much like the Blu-Ray, but lost the war. Why? Apple kept all its patents and charged more for its hardware, the ultimate goal in protecting its software. IBM licensed every gramma who wanted a piece of the hardware action (manufacturing competition), ending up almost giving away the hardware but nailing the money back on bundled software applications and improvements over many lifetimes of PC usage.

This is a tried and true marketing strategy that has now given HD-DVD the upper hand. And THAT is also the reason HD-DVD titles cost consumers more...not because they cost more to press. (Priced a copy of Windows lately?)
 
Rock&Roll Ninja

Rock&Roll Ninja

Audioholic Field Marshall
my slathering the corporate dumb****ery© gravy wasn't about not giving away free media to a buying public. It concerned a short term cost to ensure long term gains. Potentially missing a minor revenue stream from a niche market (triple dippers), only to cause a much larger market to adopt the wait-and-see mindset, ensuring no new revenue at all. And as soon as Joe Average learns about downloading DVDs from Pirate Bay the studios are gonna be real disappointed they didn't use the time they had to select a unified format and get as many titles as the could behind a more secure format (which neither current format does terribly well).
 
aberkowitz

aberkowitz

Audioholic Field Marshall
Sorry if this has been discussed, already. I don't have the time right now to wade through the entirety of this thread.

The Blu-Ray vs. HD-DVD seems to me to closely resemble the Apple vs. PC platform marketing battles of the 80's. Apple had a better product, much like the Blu-Ray, but lost the war. Why? Apple kept all its patents and charged more for its hardware, the ultimate goal in protecting its software. IBM licensed every gramma who wanted a piece of the hardware action (manufacturing competition), ending up almost giving away the hardware but nailing the money back on bundled software applications and improvements over many lifetimes of PC usage.
I actually did a great case on Apple in business school, and I agree with most of what you wrote regarding licensing- however Apple at the time didn't want to be IBM, they wanted to be different. I think the other problem with Apple was that most of their products from the late 80s until the mid-90s were absolute crap. The Newton was a failed idea, and I remember buying one of their computers (Performa Series) and being totally underwhelmed- I think we had that computer for 1 year before the thing self-destructed from the inside out.

Apple is successful now for 2 reasons: 1) They've embraced a niche customer base and decided not to try and be microsoft, and 2) They make superior products and have realized that there's nothing wrong with charging a higher price for a superior product. When you can differentiate quality the way that they have (e.g. ease of use, lack of viruses, the sheer ingenious of the iPhone and iPod), people will pay more money.
 
aberkowitz

aberkowitz

Audioholic Field Marshall
Rock & Roll- I wasn't trying to use the term in the same context, I just wanted to make sure you didn't sue me for not acknowledging your copyright! :cool:
 
aberkowitz

aberkowitz

Audioholic Field Marshall
PS3 Sales Figures

Supposedly Sony sold over 100,000 PS3s for the week of 11/4-11/11. This increased from 75,000 for the last week of October and from 30-40,000 a week prior to the price cut and new model introduction.

If Sony is going to have any shot of coming out successful in the BD/HD battle the PS3 will have to take a major role. IT's the only player that's actually worth the money!

http://www.cnn.com/2007/TECH/ptech/11/15/playstation.sales.ap/index.html
 
Gotta Read Between the Lines

When I read that article I noted a couple of things:

"Sony said it sold more than 100,000 consoles of all types in the week ending November 11."

Translation: This number includes PSPs and PS2s.

"Stringer said Sony is poised to benefit from the difficulty Nintendo has had producing Wii consoles fast enough to keep up with demand."

Translation: Gee, now that Nintendo has sold so many consoles it can't keep up with demand, we might actually sell a few more to people who simply cannot wait for inventories to restock. How this is good for Sony is beyond me. It's like saying "Boy, Jim makes 10x more money than I do, but he's taking a two week unpaid vacation so that's great news for me!"

I read the article and simply cannot believe these people are even opening their mouths. They started with their foot last week and, in my opinion, are way past their ankles at this point. Somebody needs to issue an all-points-bulletin for Sony people to shut up and stop talking to the press...
 
aberkowitz

aberkowitz

Audioholic Field Marshall
When I read that article I noted a couple of things:

"Sony said it sold more than 100,000 consoles of all types in the week ending November 11."

Translation: This number includes PSPs and PS2s.

"Stringer said Sony is poised to benefit from the difficulty Nintendo has had producing Wii consoles fast enough to keep up with demand."

Translation: Gee, now that Nintendo has sold so many consoles it can't keep up with demand, we might actually sell a few more to people who simply cannot wait for inventories to restock. How this is good for Sony is beyond me. It's like saying "Boy, Jim makes 10x more money than I do, but he's taking a two week unpaid vacation so that's great news for me!"

I read the article and simply cannot believe these people are even opening their mouths. They started with their foot last week and, in my opinion, are way past their ankles at this point. Somebody needs to issue an all-points-bulletin for Sony people to shut up and stop talking to the press...
I don't disagree- I thought the Wii statement was absolutely ridiculous....

I did interpret the "console" comment differently- I thought it was referring to both the 40 & 80 GB types of PS3, but I certainly see how you could be right in that respect. I kinda took CNN for granted on this one, as they tend to be a bit more skeptical when it comes to reporting corporate announcements.
 
B

buzzy

Audioholic Intern
It's interesting though, because the strategy of penetration pricing rarely works out the long run unless the company can afford to sustain that level of pricing. [snip]
That analysis is stock Economics 101 textbook analysis, but doesn't apply to this situation and doesn't begin to capture the key issues.
 
aberkowitz

aberkowitz

Audioholic Field Marshall
That analysis is stock Economics 101 textbook analysis, but doesn't apply to this situation and doesn't begin to capture the key issues.
A) Actually, you'll rarely find the concept of penetration pricing in your standard economics texts (certainly not 101). Pricing as a whole is more of a marketing concept.

B) Why doesn't it apply here? Pretty sure half of the conversation on this thread is regarding penetration pricing. If you're going to be snarky towards me, then it would be nice if you at least provided some sort of logical reasoning.
 
Polygon

Polygon

Audioholic
I posted in another thread (the last BD player review that, (IMHO) HD has all but won the war. Reason being, the players are at a price point where most folks can afford one. Maybe that is too simple an approach but it "appears" to be the case. 400 bucks for a "budget" player is still a lot. Also there are to little letters that are all the rage today, HD, most everyone recognizes those too little letters. that ladies and gentleman is just my open. Still wont but one just yet though maybe in the spring, I need a SVS sub first :D
This is what I predicted from the beginning. I almost with both would fade away like DVDA and SACD but if one wins out I would rather have it be HD-DVD. It seems that Sony never learns from the past. They had a hit with the PS1 and PS2 but the PS3 was marketed all wrong to start with and sales aren't even close to the other two. They don't realize that people don't want to pay $600 for, what they consider, a toy. The same is for any market. Blu-Ray is tailored to high end consumers, not the other 90% of the public that could care less about technical aspects. All they care about is cost. Believe me, I know, I live in a state full of these people, Utah. MY brother in law is one of the worst.

The nail was in the coffin from the beginning IMO because of their price point. This is just adding insult to injury.

If this does kill off Blu-Ray, then good riddance.
 

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