Perry: "Sony has no chance of making money on the PS3"

[bbsin]

HappySqurriel said:

bbsin said:

25% is not optimistic at all, I'd imagine Sony would have 30%.

Anyways, I'm not getting your math here. You're saying that:

200b - 20b = 180 * .25 = 45billion = not enough to brake even on the PS3?

If things go good for BluRay, many studios predict 30billion dollars of revenue by 2010. A good chunk of those movie sales will come from Sony/Columbia pictures. And SCEI would be getting money thier own way by reducing hardware costs and sales royalties. That would equate to around 6-7 billion dollars to Sony (if I went by your formula) without adding anything but disk sales.

 

No, your math is screwed ...

$200 Billion = Gross Revenue
$20 Billion = Licencing Revenue
$5 Billion = Sony's cut of licencing revenue

Now ... The 10% is amazingly optimistic because most formats (in particular new formats) have very large margins at retail to encourage stores to stock the discs (we're talking in the 100% mark up range), and companies eventually can find a way to sell movies and make a profit at a very low price ($5).

The 25% take home off of licencing fees is amazingly optimistic because as a licencee you gain the rights to use all of the technologies that are licenced by the Blu-Ray consortium to make the Blu-Ray format. If you look at the Blu-Ray specifications there are hundreds of patents that are owned by various companies who each get a cut of the Blu-Ray licencing fee. On top of that there are dozens of companies who are also heavily involved with promoting the Blu-Ray format who are (likely) going to get a cut of the fees.

Let's look at it another way.

First thing is first, we are basing this assumption off the possibility that by 2010. BluRay will have generated 30 billion in revenue.

30 billion x 10 percent licensing.

3 billion x .25 (assumed Sony's BOD cut) = 750 million.

So there we have it. Sony would get 750 million based off of BluRay licensing alone.... but the BluRay royalties (as you said earlier) is not enough to cover the process of research, promotion and transitions it took to implement the format to almost everyone of their products. Which brings me to this.

As of 2007 Sony accounted for 20% of the BluRay market share and will in all likely hood increase.

Sony says they plan to get 50% market share, we all know that's nigh impossible. I'll go with a honest 32% market share because they're banking on the format more than anyone else. So if we count 30% from the 30 billion dollars of revenue as Sony's market share, we'd be getting 9 billion dollars of revenue. I'm not sure how much profit is in that 9billion, but I'm guessing that the PS3 costs would be worth it given the potential profits they can get from BluRay in general. Also, none of this includes PS3 game royalties, PS2, and PSP sales. Sony expects 1 trillion yen of total sales with items implemented with BluRay tech by march 2009.