Will Blu-Ray make the PS3?
 

Interesting article in the April 06 edition of Widescreen Review which questions whether or not the PS3 will come with a Blu-Ray player... or have two versions. One version with a standard DVD player w/optional BR-add-on-drive and another version with a built in BR player to be more in line with the estimated $900 production cost.

This would allow Sony to be competitive with the Xbox 360 and Nintendo Revolution while not taking the estimated $2 billion dollar loss on hardware if they include the BR player at $499.

This conjecture is based on some surveys that Sony has recently done which included this question:

In other words, they may be trying to see if people would be interested in a PS3 at half the price with a plain old DVD player in it.

They really are in a bad situation trying to be competitive in the gaming console market and the HD media market with both markets having different demands...

This has the Sony bomb smell all over it. Trojan horse, indeed.

If they don't include Blue Ray, and the rumored delays of Blue Ray in general are true, it may be the death knell for the format.

It has to be included. Sony has already said that all games will come on Blu-Ray discs. This is done mostly for piracy (Sony's biggest issue with their gaming arm). Sony will delay the PS3 another 3 years to get Blu-Ray in it rather than put a DVD drive in the machine.

Sony will not do it this way. Blu Ray winning is a must for Sony and PS3 is the Trojan Horse to get it in homes everywhere. PS3 is already a loss leader with Sony making money on software so why not include movie playback as well and make more money on Blu Ray movie software. Losses on PS3 hardware are a non issue for Sony. They are looking to beat Toshiba on the movie front and Microsoft on the gaming front and will spare no expense to do it.

Looks like you can pre-order a PS3 from buy-ps3.com.

It is on pre-order for 399.99 pounds ($695).

And if they delay the machine 3 more years, then the format will be deader than a doornail.

Their trojan horse is delayed until November, correct? That's a long wait to make sure it's in every household. And up until that point, consumers will have to spend at least $1000 to watch BR movies. That can't be a good thing.

Sony does not have the financial resources to out last MS taking a loss on each system. I agree, if they change direction and offer a DVD version of PS3, then BR is DOA. Perhaps even Sony is hedging their bets.

Although you may be correct about the games being based on Blu-Ray discs, that doesn't mean every console will come with the ability to play Blu-Ray movie discs out of the box. Sony may decide to offer "core" and "premium" versions of the console, one that can play Blu-Ray movies and one that can't.

Even though it's a valid strategy for videogame manufacturers to take a loss on their consoles that they plan to make up with software sales, Sony is a business and can only take so much of a loss. The company is simply not in a strong enough financial position to take the billions of dollars of loss in console sales that analysts are estimating. They're either going to have to cut back on the console's features or charge a lot more for it than people are expecting.

That article was written before the press conference during which Ken Kutaragi confirmed that the PS3 would be a Blu-ray movie player.

if it doesn't come with BR, I'm going to wait.

Would this be the same company that up until a few weeks ago was still insistent that the PS3 would ship in the spring?

Bingo.

What Sony says and what Sony does are usually two entirely different things.

I take everything that Sony says with a huge grain of salt.

So they delay the PS3 launch to ensure Blu-ray capability only to drop BD as a feature. -ohbfrank-

What Toshiba says and what Toshiba does are usually two entirely different things.

I take everything that Toshiba says with a huge grain of salt.

:sighs:

Cut it out.

While I can buy the idea that it would be a heavy blow to BR, it would be smart for the PS3 in general. Sony wants a PS3 to have BR for only two reasons....piracy (which won't really help since it will be cracked and there will be BR burners in computers) and to help launch Blue Ray as a movie medium. The idea of the extra storage doesn't really matter for video games. As it is, the biggest games won't take up the entire space of a dvd (unless the developers are just lazy). Microsoft understands that and is only going to have the HD-DVD drive as an add on to be able to "compete" with the marketing of BR. Sony would be at a huge disadvantage if the PS3 comes out at $799 or above. That would nearly kill it by itself.

So in doing this, they can keep a competitive price with X360 and still offer a super duper BR version for the hard core gamer.....actually, just the gamer with a lot of money.

BUT....in this world, a delay to November is an eternity. As such, they might as well just tell us it is delayed indefinately. You can't plan something that hasn't even started having the guts built yet that well. I would not be surprised to see another delay.

But hey...we'll have the movies out. :lol:

This discussion has been brought up before, and there are developers out there who are already going beyond the capacity of DVD. Even Team Ninja (the guys who made the DOA series and Ninja Gaiden for the Xbox) has mentioned that they need more storage than DVD can provide.

Yeah, but those complaints typically seemed to come from developers who use a lot of pre-rendered videos. That's more of a concern for Japanese developers like Team Ninja than it is for most. I would imagine it could keep Japanese-style RPGs off the 360, though.

A number of the Xbox 360 launch titles (like Condemned, Madden '06, and NBA '06) used less than half of the DVD's capacity.

Good points. If you do a lot of non game stuff in a game, you could eat it up. Just because I don't have lots of time to play, I hate what Final Fantasy has become, but I can see that it is probably huge for Japan.

An interesting thing about piracy. Nintendo did a great job of getting rid of it with the gamecube. They made a medium that has no applications elsewhere, but still got rid of the carts. I don't believe Sony truly believes that they can defeat piracy by making a medium for which there will also be burners available.

There's a method of playing Gamecube games without buying them so saying Nintendo got rid of piracy isn't completely true.

Sony maybe have a software ready for it's Blu Ray Games.If you put a non original or copied game and each time you connect to the net,it will try to check the serial number,just like Microsoft and they would detect it if it's not registered.That could be a way,but I may be wrong.

They can always put games on multiple discs if the need is there, so it's really a non issue.


As for the PS3...

I'm torn on wanting BR in the PS3 and it all boils down to price. If the PS3 is $499 and includes BR then I'm fine with it. I look at it as getting a BR player for an extra $100 over the 360.

If it's over $499, Sony is going to make their customer base pay out the ass to trojan horse a format into their homes. Especially considering that 90% of people who buy one won't have a HDTV or give a crap about BR movies anyways.

But we hate that, so they don't want to do that.

If it's over $499, it isn't a trojan horse.

From a radio interview with the VP of Sony Computer Entertainment Europe:

500 Euros ~= $615.

IMHO, that's their whole problem.

From a gamer's POV (who has no interest in watching movies in HD), they're paying more for less... If there was a standard DVD drive (~$20) in it, the PS3 price would be in line with the competition's price. Since the BR drive that PS3 uses costs around $200, it adds a lot of cost that doesn't need to be there for these people. (The manufacturing cost of a PS3 will be about $800 with more than 33% coming from the BR drive itself.)

From a movie collector's POV (who has no interest in gaming), they're kind of getting a deal vs. a stand alone player, but the downside is the PS3 won't be the best movie player vs. a stand alone player. So they'll probably be planning to upgrade in the future... but it won't be worth the upgrade until the stand alone player is around $400 (because they could have bought a stand alone BR player for $1000 instead of a $615 PS3 + $400 stand alone player). Meanwhile, an HD-DVD player starts at $500 (cheaper than the PS3) and by the time a BR player reaches $400, an HD-DVD player will probably be $200 or less.

Now, I realize these two groups can overlap and good for them. But not for those who have no interest in gaming. For the "trojan horse" strategy to work, I believe they have to appeal to both groups and I'm not sure this is going to work out.

I think they're trying to please two different market segments and the problem is they can't be truly competitive in either market by doing this. This wouldn't be such a problem except HD-DVD is going to prove a fierce competitor and put a lot of price pressure on BR.

I also found it interesting that a key reason BR was backed by so many studios was because they were going to have 10 million BR players in homes via the PS3 in the first year and a half. The latest delay has called that into question:

From Sound and Vision:

I agree with that. The Home Theater buyer is already an upper end buyer because it is an upgrade over regular DVD, so they will want a very good player. If Sony puts the stuff in it to make it a very good player, it will cost, and the gamer will suffer because of the price. Definately makes me think they should just put in a dvd and compete on price. If they did, they would outsell the 360 in a hearbeat. But they want to overlap, and I don't think that if the PS3 is as subpar as a movie machine as the PS2 was that they will get far with that as the selling point.

While multiple discs aren't ideal, most people won't care if it's a good game. You never heard complaints about Final Fantasy and other RPGs on the PS1. No complaints over the handful of multi game discs on the Gamecube either.

Regardless of whatever you want to call it, the people who are forced to pay more for a feature they don't want are getting fucked.

If it's over $499 that is.

Then don't buy one. However, the games are supposed to be in BD format, as well. RPG players need the feature of greater storage space. And so does Japan for almost everything. Huge market over there, the US is really a secondary game market in the world. A big one, no doubt. But don't make the mistake of assuming every game or technological advance is because of the USA. Most are not. I guess if greater storage space means you get fucked, I'll sell you my PSOne to make you feel better.

But most of the discussions here this year are about the format wars. MOVIE format wars. The PS3 is a game machine first, and a potential wrench in the BD/HD-DVD movie war 2nd. That is why it is called a trojan horse, or whatever term people like. The question is, will the millions who buy this for the games take advantage of the new movie format and turn the movie war on its ear and win the battle for BD?

500 Euros = $500 in the gaming universe.

That is the way its been for over 10 years.

The Euro was introduced to financial markets on January 1, 1999 and was launched as a currency on January 1, 2002.

I don't see how Sony can put a decent BR player into the PS3 and sell it for as low as $600. If the first-gen BR players cost $1000, how on earth can Sony sell the PS3 for $600? The answer that occurs to me is the same as for the PS2 - the unit will be an awful, damn near unusable BR player.

Sony (nor Samsung) have ever said they needed to charge $1000 or what the cost to manufacture these players is. Perhaps there is a decent margain on the first-generation Blu-Ray players. It's not like this is an uncommon practice to gouge the early adopters.

There is some reason for gouging early adopters. It is so the business doesn't go under. Although someone as large as Sony could take a large hit. Here's some exciting accounting....

Most companies making products like this (call it Z) assume a certain number of sales at first, perhaps using a 2 or 3 year period where they have to make the assumption that Z might fail and never be made again. They then take most/all of their R&D costs and hammer the pricing for the first couple years of Z's existence. If they don't and it fails, they've just lost millions on R&D. Plus manufacturing costs will be higher at first, too. Pricing will be high because they try to recoup as much of that R&D cost as possible, even if the product fails.

If Z takes off (ie: DVD), prices will come way down in a couple years because the huge R&D is already paid off. Plus manufacturing demands will go up, and cost per unit will go down since they are making so many, eventually lowering price as well. DVD took off better than almost anything ever has, that's why we see such low prices these days, machines for $30, etc.

If Z never becomes that mainstream, or they don't want it to (ie: pro SLR camera lenses), it will stay high priced forever. The R&D will get paid off, probably in that same time period as a mass market product, but manufacturing runs will be limited so per unit cost remains high. So cost goes down somewhat, but price may never change. The somewhat lower costs will raise the margin (markup) from a tiny amount (or even from a loss, like the PS2) to the 45% that is common with most electronics.

I don't doubt that the margins may be high on the first-gen players, but even assuming the margin is 100%, then cost for a basic BR player is $500. The console parts cost of the PS3 is over $500 (cell processor, RAM, HD, video card, etc.). Can Sony take a $500 hit to sell this thing at $500? I don't think so. So that leaves us a crappy BR player in the PS3.

I'm just speculating based on the cost estimates that have been flying around and my experience with the PS2 as a DVD player. I'd love to be proven wrong!

CNET news says they estimate the cost of the PS3 (Bill-of-Materials cost) to be about $790: article here.

That is very interesting. They show MS taking about a $100 hit on each 360 currently. If that were similar for Sony, it would put the PS3 at around $699. There may be some decline in the price of the BR drives by the time Sony actually gets around to releasing the PS3 and they do have an added incentive in getting the BR drives into as many homes as possible, so maybe they can justify a $200 hit. That still puts it at $599.

Seems high for a console, but not bad for a BR device, assuming it is a better movie box than the PS2 was.

It seems like you might be mistaking my comments to be anti Sony or anti PS3. I'm not, I always buy all consoles and will own a PS3 and most likely watch BR movies on it. I was just stating that people who only want it to play games are going to have to pay more for their console when in reality it's not needed.

If you think Sony is putting games on BR discs so devs have more space, you are wrong. It's all about getting the format into homes. They aren't going to lose substantial money on putting a BR drive in so people can avoid playing multi disc games.

The US is the biggest market for gaming BTW.

There's only three ways I see the PS3 having a real effect on the format wars.

1. If there's a dramatic increase in HDTV sales by PS3 owners.

2. If the extra content on BR discs excites non HD equipped consumers to the point of buying the more expensive disc.

3. The format wars last long enough that HDTVs dominate SDTVs and there's a massive install base of PS3s. I think this is most likely what Sony is going for, but this depends on HD-DVD adoption rates as well.

Yeah, both these formats are going to need some balls to keep going. The opposite of Cablevision's Voom, for example. It's still relatively early in the HD era and they will need some staying power to survive. It's almost too early for HD discs to come out, due to the meager number of HDTVs actually in homes. They are going to be in the red for awhile.

This is one reason I tend to lean toward the BD side, I know Sony will continue to throw money at it for a long, long time. See Beta, MD, etc. If nothing else, they could outlast Toshiba. They have the egotistical tenacity and the PS3 to help that along.

Depending on how they relate their accounting, $200 under cost may be perfectly ok and still give them a profit overall. Accounting is semi-fictional, even when it is done legally. You use one set of calculations for figuring wholesale prices and then consumer prices. And other numbers come into play once actual costs and revenues happen.

But half the time with companies like Sony/Microsoft, they own the smaller company that they are "paying" for some of the parts. Obviously, not the graphics in this case, since ATI/Nvidia are separate, AFAIK. But the $2-300 for the BD drive is probably an internal transaction in Sony's case. This means there is some profit in another division that is not reflected in the cost/price of the PS3.

So, Division Playstation claims they are paying $800 for the parts and they are making sales prices and marketing releases off that. And, with current accounting law, that is correct and legal. But reality to Sony Corporate's overall bottom line may end up being more like $600 once you factor in certain ICs from different divisions. If it is $600 sales price on the shelf at Walmart, Sony is barely losing any money on day one. And once the cost goes down in 2007, they start making money real fast.

And, because this is all semi-fictional, I could be completely wrong. Everything I've just said could already be factored into the prices estimated in that article. Don't really know unless I get into the right drawer somewhere at Sony and check out some numbers. Which wouldn't happen.