Blu-ray sinks the PS3

Blu-ray sinks the PS3

Summary: Sony's Blu-ray fiasco is the gift that keeps on giving. The latest gift: handing the game console market to Microsoft and Nintendo.

TOPICS: Hardware, Mobility

Sony's Blu-ray fiasco is the gift that keeps on giving. The latest gift: handing the game console market to Microsoft and Nintendo.

The Blu-ray albatross The Wall Street Journal (subscription may be required) reports that US sales of the PS3 fell 19% last month from a year earlier - while rivals Wii and Xbox are likely to see a rise.

The money quote:

Sony's strategy of selling a pricey game machine with advanced features and cutting-edge components appears to be backfiring as a deepening recession has U.S. consumers more price sensitive than ever.

If Sony doesn't close the gap with its rivals, it could risk making the PS3 an afterthought to game publishers. . . . At the end of September, the Wii had a wide lead with nearly 35 million units sold since its launch in 2006 compared with about 22 million Xbox 360 consoles and 17 million PS3 machines. Nintendo last month sold 2 million Wii machines in the U.S., while Microsoft sold 836,000 Xbox 360s and Sony sold 378,000 PS3s . . . .

A high price for Blu-ray The PS3's problem is price: $399 vs $250 for Wii and $199 for Xbox Arcade. Even at $399, Sony loses money on every PS3 sold!

The included Blu-ray player is a big chunk of that cost. Key to Blu-ray's victory over Toshiba's HD DVD, Blu-ray is now sinking the PS3 - in a more lucrative market.

Blu-ray also slowed the PS3 introduction as it raised costs. Who OK'd risking a multi-billion dollar game business to win an optical disk format war?

Feature creep or Christmas tree? All tech companies place big bets on new technology. The trick is to choose tech that will result in a visible customer benefit.

To be fair to Blu-ray, the PS3 was festooned with technoporn like the broadband cell processor - great on paper, hell to develop for - and a large disk that hurt sales. As the Wii proves, most people want to have fun, not geek bragging rights.

If an engineer is someone who can do for a nickel what any fool can do for a dollar, the PS3 designers weren't engineers, or marketers either. They crammed the PS3 with technology that didn't make a difference on the screen - all potential, no kinetic.

The Storage Bits take Sony's battling fiefdoms have created the worst of both worlds: a struggling 3rd place finish in the game market; and an optical format that has so many self-inflicted wounds that it won't succeed before better - faster, higher capacity and cheaper - optical storage arrives.

Blu-ray's costly licensing requirements mean that small producers won't move to it anytime soon. That keeps media volumes low and media prices high: at $0.40/GB it is 4x what magnetic disk costs and only a quarter of what the far more convenient flash thumb drives are running.

Meanwhile, the download market keeps moving forward as codecs improve, broadband speeds rise and studio execs learn about the Internet. The bricks-and-mortar crowd wants Blu-ray to succeed, but Sony has driven itself into a ditch during an economic hurricane.

Fixing that problem will take more intelligence and creativity - and I'm not talking root kits - than Sony has shown in years. Time to focus, guys. Taking back market share from Microsoft isn't easy, but it can be done. Good luck.

Comments welcome, of course.

Topics: Hardware, Mobility

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  • Correction...

    [i]Taking back market share from Microsoft isn?t easy, but it can be done.[/i]

    It can be done, but not by the current crew of the TIsonyTANIC.
  • Joystiq and Kotaku scared to comment...

    Why are Joystiq and Kotaku so incredibly afraid to talk about what
    is going on with Sony. They post very few articles that speak
    about Sony's struggles and mistakes of the Playstation and when
    they do they those sites always feel the need to preface any
    statements with some comment poo pooing any idea that Sony is
    in trouble. These are supposed to be two top gaming news sites
    but they don't have the balls to comment against Sony. I challenge
    all to seek out the commentary their writers add to storys they
    bring over from other papers speaking about Sony's failings all
    slant the negative Sony articles as not being accurate or being too
    strong against Sony. Why have neither site written a review yet of
    how bad Home is or written a story talking about how many major
    metropolitan newspapers nationwide are talking about the
    Playstation 3 as a possibly dying console.
    • It is against the Otaku code to disparage Sony... nt

    • You do not know Kotaku

      You are completely wrong. Kotaku has had it in for Sony since the infamous Home incident where Kotaku was asked not to report the news they had uncovered about a product called "Home" until Sony was able to announce. Kotaku told Sony to screw themselves and blew the announcement. Every day sees some new article from Kotaku remarking on Sony's shortcomings. You are the only person in the world that thinks the way you do. Even known EA developers at Neogaf were laughing about Kotaku's relentless attacks on Sony. You need to come out of you hiding place and look at the facts. Kotaku never forgot what happened and continue this day with snide articles decrying the doom and gloom of Sony.
      • Broad generalizations and name calling....

        "You are the only person in the world that thinks the way you do." Damn, so you have spoken to every person in the world? I am impressed.

        The latest example of how Kotaku, ever since the Home incident, feels they must go out of their way to show they do not have anything against Sony by forever dismissing the hard facts stated by legititimate news organizations about a possible Playstation decline...

        Quotes from Kotaku's latest story-

        "Orlando Sentinel: Blu-Ray is a Needless

        [i]Kotaku's comments added to story follow[/i]

        "Is Blu-ray a tech destined to be out maneuvered by digital movies and downloadable content or [u]are we just witnesses the bitterness of former HD-DVD supporters?"[/u]
  • Sony can fix this by fixing the licensing.

    If they can reduce the cost of blue-rays for movie producers then they can increase the number of titles that are in Blue-Ray format. Once blue-ray is abundant and desirable the prices will come down.

    Also, while the PS3 is pricey Apple has already shown the world with their iPhones that over pricing a product does not hinder success, poorly marketing it does. Although it's true that many see the iPhone as not having competitors, as far as blue-ray goes the PS3 doesn't have competitors either.
    • unique?

      The iPhone is unique. As a console PS 3 is not, it's a wash with the xbox with xbox probably getting the nod because of Live and more and better games. Sure Xbox has no Blu ray but who says a game system should be tied to a movie player. I get a console for playing games, anything else is gravy. You can buy an Xbox and then get a dedicated Blu ray player if you really want Blu Ray and with Blu Ray players down under $200 you have the luxury of doing so with little or no price penalty. That's problem 1. Problem 2 is not enough ppl care about Blu Ray period.
      • Silly sheep.

        The iPhone is just a touch screen phone. Touch screen phone's existed long before the iPhone. There is nothing about the iPhone that makes it more unique than the PS3. The PS3 has the Cell processor and Blue Ray, both of those are entirely new technology that appeared first in the PS3. Every technology in the iPhone existed in other devices that pre-date it.

        Irregardless, the point stands if pricey iPhones can be sold then so can pricey PS3's. It is all in the marketing.
      • Why buy the xbox and player and spend more?

        First off, the xbox is not a wash with the PS3. I own both, and I have plenty of friends with XBOX's. Microsoft continues to have plenty of hardware issues, not a big problem when your console is still under warranty. But it's $100.00 every time you send it in after the warranty expires.

        Secondly, and more inportant to this conversation, if you buy a 360 that more closely matches the specs of a PS3, or pay for the added features such as large HDD, wireless networking, and rechargable batteries for your controller, you've payed as much for a PS3 that had the blu-ray disc in it. Even without purchasing up to make it equivalent to the PS3, you'll spend the same money on the cheapest 360 and cheapest blu-ray player that you would have on the PS3. How does that make sense monetarily. How is the prescription Live service better than the no cost PSN. And "More better games"??
    • You make a good point . . .

      " over pricing a product does not hinder success, poorly
      marketing it does."

      As far as the marketing goes there's the product definition
      and the product promotion. On the product def side, Sony
      threw a lot of technology at the problem - including Blu-
      ray - figuring something would stick.

      The problem with software-driven markets though is that
      volume creates apps - or games - and it is the games that
      people want to play that drive sales. Blu-ray could have
      been an enabler if someone could have come up with a
      great reason to have a 40 GB of game stuff.

      But Sony's larger problem is that for the price, the PS3
      doesn't offer much, if any, advantage over the Xbox. In
      theory all that tech could - but it doesn't. Therefore the
      extra cost is wasted.

      Even losing money on each one the PS3 isn't attractive
      enough. And looking at the success of the Wii, both
      Microsoft and Sony need to go back to the drawing board
      to tap the casual gamer market.

      Robin Harris
      • hit the nail on the head

        I agree with you Robin.
        I bought the Wii because it is intuitive and easy
        to learn compared to pressing "circle" "square" or "triangle" to actuate my characters.

        My brother has all three current systems.
        The graphics on the Sony is wonderful.
        But the gameplay is nothing like real life,
        despite the great video. Swing a tennis racket to play tennis is great! Plus I actually get some exercise with it!
      • While all of that is nice, the PS3 hardware is not going to change.

        Sony cannot change the hardware at this point, but they can still make the PS3 and blue-ray a success. They have not lost yet, although they seem utterly determined to fail.
      • As I pointed out in another reply...

        For the price, Sony offers everything above the 360. Everyone that I know that buys a 360, buys all of the peripherals and add-ons to make their 360 better and more closely to what the PS3 has on it out of the box, and by the time they are done they spent more than they would have on a PS3. Even when they buy the highest priced 360 they still have to buy rechargeable batteries and the wireless headset, and if they want wireless connectivity that really sets it up. Yes some PS3 owners buy specific headsets, but in reality, most don't have to.

        In my opinion, what is still killing blu-rays is that the movies are still overpriced. I can afford $30.00 a movie, but I'm not going to spend the money when there is no real production reason for them to cost so much. Case in point, blu-rays flew off the shelves in my area during the Christmas sells because they were the same price as a standard dvd.
    • But...

      "Also, while the PS3 is pricey Apple has already shown the world with their iPhones that over pricing a product does not hinder success, poorly marketing it does"

      They don't offer discounts on PS3's with a two year contract. Phones and game consoles are marketed differently and cannot be accurately compared.

      Unlike Apple, Sony is known for cheap built crap (for which they still overcharge for) and not well engineered luxury items. Say what you will about your experiences with the products they build but their history has proven they aren't worthy of such high prices.

      Defending this company will only make them worse.
  • RE: Blu-ray sinks the PS3

    I enjoy my PS3 for movies and gaming. I figure as the world falls apart I can just hook up my PS3 and TV to my Generac generator and "fiddle while Rome burns".
    • Hooking up the generator...

      Funnily enough, December 2007 we had a major ice storm that knocked power out for a week. I hooked up my generator which powered my tv, ps3 and wireless broadband. I then proceeded to play Resistance:Fall of Man for as long as I wanted.
  • It was more than Blu-ray

    What is being mostly ignored is that the Nintento Wii is
    also hugely outselling the Xbox (at better than 2:1), even
    in Microsoft's heartland USA.

    While MS and Sony fought over the existing gamer market,
    Nintendo went for entirely new markets - who'd have
    thought that games targeting middle aged women would
    be a huge success!

    Congratulations Nintendo.
    Fred Fredrickson
    • You are ignoring the razor blade

      Traditionally speaking, console makers have either lost, broken even, or made a very small profit from the sale of the console. The bulk of their profits come from game sales. I know Nintendo does make larger than average profit on the Wii hardware itself but what you are ignoring is that MS's model relies more on game sales than Nintendo's and in that respect, the XBox is doing fantastically well. Google "attachment rate xbox" [url=] (one example) [/url] and you will see that XBox owners buy far more games than either Wii owners or PS3 owners. While Nintendo is certainly seeing great success with the Wii and, like you, I congratulate them for that, you are totally missing MS's success by ignoring game sales.

      So, congratulations to Nintendo and MS! :)
      • True.

        But also Nintendo is now making more money from selling more hardware (wii fit, additional controllers, steering wheels, etc).

        Nintendo went for the Apple approach (even copying the white styling), and it has paid off.
      • Dude, you'r delusional.

        How much does MS pay you to talk lies?

        <i><b>"you will see that XBox owners buy far more
        games than either Wii owners or PS3 owners"

        Then how you can you explain that 4 of the top 5 selling
        game titles are for Wii and xBox does not have a single
        title in the top 5?

        Wii is kicking both MS's and PS3's (especially PS3's)
        proverbial arse to the curb and back in BOTH hardware
        sales and software sales leaving both to simply scratch
        their heads wondering where they messed up so badly.