Does the Wii prove that the HD razor/blade model is flawed?

[MaxwellGT2000]

Grimes said:

ThProcrastinato said:

MaxwellGT2000 said:

While that proves nothing, because the topic is the razor model being flawed and you point out it worked for them when they were the highest selling, its obvious it's majorly flawed because now they're not on top and lost billions.

As for what I highlighted, 360 has similar specs, followed the same razor concept, lower price point, but their company is making money now, so obviously it's not just a engineering problem more of they made it way too expensive to produce.

Maxwell's argument has some erroneous, simplistic assumptions -- namely he's ignoring the fact that Sony makes about $9 in royalties off each BD drive produced (which is $270M for PS3 drives alone) which are reported in another division as revenue, and that money is spent by the game division, in purchasing BD drives from 3rd parties (which is part of the reported expenses), and that the cost-of-goods for all of Sony's software is reported as losses in the games division, and as gains in the disc manufacturing division (again, hundreds of millions of dollars).

Still, he's fundamentally correct in his base assumption -- the same things I mention above were true during the "PS2 era" (except DVD royalties for Sony are far lesser per unit), and thus the PS2 was actually much more profitable than it appears from reading the games division reports directly, and the PS3 is not as profitable thusfar... at least not directly.  You might put forth that BD royalties will eventually sum to billions of USD for Sony alone (i.e. not inclusive of the rest of the BDA), during the format's lifetime.

The Wii is just plain a cash cow for Nintendo -- they have created a no-lose scenario for themselves, by creating hardware which is cheap enough for consumers to afford, and yet profitable enough for Nintendo to rake in money from hardware alone.  On top of that, the plethora of cheap software available for the platform ensures its continued existance, and although the profits are spread too thinly amongst 3rd parties to make them happy, Nintendo sees money from every single title licensed for their hardware -- DS and Wii alike.  Much like Apple's iStore, actually...

This is incorrect. The BDA gets the revenue from blu-ray royalties. If there is any profits after the BDA has taken it's operating share, then any leftover money will be divided amongst various partners including Sony, Panasonic, Pioneer and others.

Indeed, so it's not a total cash cow for the rest of the company.

Also Procrast took this from a games division discussion which is what my argument was based in, to a Sony as a whole, which if he even read some of my other posts in this thread I said blu-ray could help Sony out in the long run but it hurt their console and thats painfully obvious, but blu-ray being as big as DVD is questionable since digital distribution, streaming, the fact that most applications and data don't take more than a DL DVD, etc are cutting into the effectiveness of Blu-Ray, but it could be great for gaming next gen since games have started to max out on 360 on a normal basis, and next gen the tech might come around where its not needed to have all those installs or long load times.

So is it correct to say that Sony needed Blu-ray to succeed since they invested so much and it might make the company money in the end, indeed, did it sacrifice the games division? Absolutely the numbers don't lie.  On top of this if procrast wants to bring Blu-Ray into the debate he might want to show how it's helped out sales of its division since the claim right now has nothing to back it up and he already forgot that other companies get the royalty money for the format as well.