It's getting REAL tiresome reading stuff like this from people who can't see the bigger picture. Yes, Sony spent a lot of money getting PS3 off the ground and technically those losses all get attributed to the gaming division. The bigger picture is that the PS3 helped Blu-ray become the next-gen standard for optical media. The royalties that Sony is reaping/will reap from Blu-ray will make that money back many times over. Sony is a multifaceted company, much like Microsoft. Sometimes one division has to take a loss in order for other divisions to profit. It's symbiosis.

BTW, before I get flamed for being a Sony fanboy, I own a PS3 and a Wii.

What are the per-disc royalties on a Blu-Ray disc? Being that promotion of the format is payed for through royalties, and there are multiple members in the Blu-Ray consortium what percentage of those royalties is Sony (really) entitled to?

People seem to forget that the Blu-Ray consortium has already spent Billions of dollars promoting the format and buying exclusive movie studios, and will continue spending hundreds of millions of dollars over the next couple of years, which will eat up most of the royalties. If Blu-Ray is like most formats, after they have broken even (due to upfront costs) they will lower their royalty fess (on discs and players) in order to encourage greater adoption. On top of this Sony will/may end up only receiving a small fraction (possibly 10% to 20%) of those royalties.

In other words, it is highly unlikely that Sony will earn enough money from Blu-Ray royalties in order to recover the costs associated with the PS3.

Please elaborate on the bolded as I believe you are talking garbage to strengthen your argument , as for Sony not fully recovering the costs of the PS3 with Blu-Ray , that is yet to be seen , if it is anything near as big as DVD was then i'd say your completley wrong but no one can be really certain . What I do understand is that blu-ray growth is faster than that of DVD in the same time period ( I think lol).

http://news.cnet.com/8301-10784_3-9874317-7.html

You are correct on many points Squirrel. BD isn't solely a Sony venture. According to the estimates of one analyst in this article, Sony has a bit less than 30% of the royalties. The entire PS3 "gameplan" so to speak was never a secret. Sacrifice a portion of the video game marketshare in order to get Blu-ray established and reap the associated royalties.

 A 360 price drop this year is almost a given. Not really a question of if, but when. Timing will be key.

Sony has some real problems here. First of all, I still maintain that Blu-Ray was a huge mistake. Blu-Ray is not going to penetrate the market the way DVD did. Ever. Apple and Amazon and Netflix and your cable companies will be providing affordable HD movies on demand whenever you want, whatever you want at an affordable price point within the next five years. I just don't think they are going to make enough money back - remember they are just a piece of the Blu-Ray group.

Also, they are also facing the prospects of just not selling software the way they did with PS2. They are selling more now than they did, surely, but they aren't selling crazy total numbers, and that's how they are going to make their money back. If they don't get that attach rate boosted, it could be a long generation for them indeed.

Remember that if they take 5 years to make this money back, they will already be in or will be nearing research and development of the PS4 by then, which is then a few billion more in costs.

Except that Microsoft is turning a profit in their games division. So they could drop the price. Especially considering the Jasper refresh will reduce the bill of materials much more than the Falcon refresh did. (They are shrinking all the chips on the board down to 65nm and reducing the size of the heatsink should save a bunch too)

There's alot of talk here, but I would like to know what the above means. Are they saying in 2008 to this point Sony has lost 1.16 Billion or that it is predicted in Fiscal 2008 (till the end of the year), they will lose that much. The article is misleading if one wants to read it in a fanboy's manner.

@doug

Blu-Ray is the standard? I though it shifted from DvD to bootlegs... unless your telling me Bootleg isn't a viable format!

For all intent's and purposes Bootleg won the format war at least in my pocket err eyes.

Well, I assume they will never get the money back
they will earn money for sure but not 3.3 billion !



@Krusnik,
""That said it still boggles the mind why they removed BC from the 40GB sku when the 60 GB was selling better at the same price.""

==> this is the best move so far from Sony :

- 60gb was selling like hot cake ONLY because there was games bundled and because it was limited in stock so people rushed into retailers to get the last ones.

- 40gb is selling very well AND cost less money to produce (I guess). Overall, it helped Sony to lose less money and increase their market share (more software sales for CoD4/GTA4/MGS4 and others).