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

[bbsin]

HappySqurriel said:

bbsin said:

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 of 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 by BluRay in general. Also, none of this includes PS3 game royalties, PS2, and PSP sales.

 

Didn't you have a problem with my quote:

"The reason companies like Sony push formats like Blu-Ray has nothing to do with the money they make (directly) from Blu-Ray. The reason they push it is because a new format provides a need for new hardware (like Televisions and surround sound systems), and encourages people to re-buy the same movies they already own ..."

I did have a problem with your quote and I still do. Every assumption that we've been doing so far is only based up to 2010. Sony is trying to do the same thing as Matsushita when they took charge of the DVD format, and Matsushita made an insane amout of money based off of DVD royalties alone (and their fee was only 5% + ? cents/disk opposed to the much steeper BluRay license). You were basically assuming that the only reason Sony championed the format was just to find a way to promote their other products indirectly, which is not completely true.

Now, being that most Blu-Ray hardware that is sold is the PS3 then it is unlikely that the sales of Blu-Ray hardware will help much towards making the PS3 profitable. This means that the sales of movies and related hardware are the primary factors for Sony to be profitable off of Blu-Ray; since its fair to assume that they only make slightly more money off of selling new movies on Blu-Ray compared to selling the same movies on DVD it would be fair to say that the most profit is generated off of selling old movies that people (may) already own.

Do you not understand the concept of: more PS3/blu players = more movies/games sold = more profit? I fail to see your reasoning behind the whole "since the most bluray hardware being sold is the PS3, it won't help the PS3 become profitible" assumption. It really makes no sense. No one knows how far Sony has gotten with reducing manufacturing costs, but the only thing that's certain is that it'll only get cheaper. Also, Sony racking up profit by selling movies that people already owned is a bad theory. Sure, there's alot of profit in that, but it doesn't mean anything if no one wants to buy a movie that haven't been in demand for years. Sony made more money on new titles such as Spiderman3, and 007, than they did on old rehashes like Terminator 1.

Basically, WHAT I SAID INITIALLY WAS TRUE and you objected because it was not amazingly optimistic about the value of Blu-Ray.

Wrong, what you said can be true only given a short window of time. No one knows the value of BluRay since it's too early to tell. The difference is that I understand the pitfalls and potentials, you only seem to know the pitfalls. That's the reason why i objected to your post. There's alot of "if" and "buts" in relation to how far BluRay can go, you don't seem to recognize that.

The interesting thing is that these profits would have been generated by Sony regardless of which HD format became popular so it was moronic for them to push Blu-Ray so hard.

The royalties alone can end up being massive. The only way to recieve the largest rights to royalties and most importantly, brand name promotion, is by pushing the format. I'm starting to think that you believe Sony's BluRay support is based on a shortterm plan... But please, go into more detail.