So, Blu-ray sales are OK. They are 10% of new disc sales in NA, and maybe 5% of all sales in NA, and probably negligible marketshare elsewhere (certainly in mindshare, everyone in the UK is still at the "What's a Blu-ray?" phase).

These are the hypothetical advantages of Blu-ray over DVD to SONY AS A PROFIT-MAKING ENTERPRISE.

- Higher margins due to more expensive equipment

- Control of who makes Blu-ray titles and disc manufacturing, etc.

- DRM

- Able to use technology in own products to exclusion of competitors (PS3 over Wii, 360)

- More content on discs (games and movies)

Blu-ray discs have four obstacles to achieving mainstream success.

- Price

- Title availibility

- Flexibility

- Player install base

Price: If Blu-ray is going to replace DVD, both the disc and player needs to be as cheap as current DVD players - otherwise, most people will buy the DVD version of a film as they don't have the equipment, eyesight or enthusiasm (do people care whether a film is in higher resolution enough to pay a premium?) to take advantage of it. We will end up with a situation where Blu-ray stuff is about equal in price to current DVD stuff - where is the extra money for Sony? Sony will just be in the same situation they are with DVDs - small margins. Sony probably also lost money in the beginning with Blu-ray because of the price war with HD-DVD (Ten free Blu-ray titles? Free PS3 with an HDTV? That's got to lose them money in the short term...) Result: Blu-ray will not offer higher margins in the long run.

Secondly, I've listed more content on discs as an advantage for Sony, because it is an argument often put forward by PS3 fans. Is it really, though? As I've pointed out, competition with DVD and between Blu-ray manufacturers will cut prices to DVD levels. There will be no premium for this additional content, because every movie and game company will put content on, but consumers won't tolerate higher prices. Consumers expecting additional content on discs, at DVD prices, will actually reduce Sony's profits since production cost(for the content) will increase. We are seeing this with the increased budgets, but not increased sales, of HD games. Result: Blu-ray's additional content will not increase Sony's profit and may actually reduce it.

Title availibility: Consumers who see only DVD versions of a title can only buy the DVD version. Consumers who see both DVD and Blu-ray versions aren't overly inclined to buy all-new equipment just to watch the slightly-better version. If Sony wants higher market share for Blu-ray, they need universal, exclusive (that means agreeing not to publish movies on DVD, JUST Blu-ray) adoption by not only the major studios but also every company that currently publishes anything on a DVD. I have yet to see any indication of studios moving towards exclusive releasing on Blu-ray, not even Sony talking about it as a long-term goal. If Sony does want every company to exclusively move to Blu-ray, they have to open the standard like DVD. Royalties for full Blu-ray functionality need to be reduced to the DVD level to encourage universal adoption. Every company that wants to manufacture BD should be able to cheaply as DVD. All companies will need to be able to take advantaghe of the online and interactive features of Blu-ray. If any of that is to happen, Sony needs to make the specification a lot more open than present - and in doing so loses all control of what titles are published and how discs are distributed. A mainstream BD market will cause Sony to have about as much control as they currently do. Result: BD offers no advantage over DVD in terms of Sony's ability to control the market.

Flexibility: What consumers hate the most is not being able to do what they want with content they own. In these times of economic downturn, no consumer wants to buy 10 different versions of the same film: one DVD, one Blu-ray, one online, one for the mobile phone, one for the iPod... If Blu-ray is to replace DVD, it will need to perform all of the same functions as DVD does: be able to be played back on all devices (not just the ones Sony approves), to be able to be copied without being sued for breach of DMCA; people should be able to put any normal (e.g. homemade movies) content onto BDs and have them able to play back on all Blu-ray devices. BD's DRM must become irrelevant before mainstream adoption takes place. All current protection mechanisms have been compromised (BD+, AACS, ROM Mark). Result: Sony can't stop copying or unauthorised disc writing on current BD any more than DVD. Therefore they can't make additional money from restricting what people can do.

Player install base: Another way Sony could profit more from Blu-ray is by using the technology in their own products to the exclusion of others.The best example of this is its use in the PS3 and not the Wii or 360. This would have worked, but the PS3 is currently third in 7th generation home console installed base, with only 22.4% of the market and in terms of video game share (factoring in the time spent with previous-gen consoles) is probably a lot less. They are not in a position to force competitors to do anything. The inclusion of Blu-ray in the PS3 has probably cost Sony more than any advantage of including it up until this point (additional cost of internal hardware, delay in launching due to component shortages, less margin on each game because physical medium costs more), and in the future people will not be compelled to buy Blu-ray equipment since the PS3 is not a dominant force in the market. Result: Sony's attempts to lock out other products using BD have failed to earn them additional money so far.

So, I think I have shown that BD has not shown any advantage to Sony's bottom line since its introduction, and may even have damaged it. If Blu-ray becomes mainstream, Sony will profit from it... just not any more than they would have done had they stuck with DVD or HD-DVD if it became necessary.

What is the advantage of Blu-ray to Sony now?

The advantage is space... a LOT of space. DVD is 9 gig, they have 400 gig BD's in development.

As to the OP, Sony does not control BD, they are part of a consortium, and probably come in 3rd when it comes to power on that board.

Sony will make money off of BD, but that's about it. They didn't gain the ability to completely limit what goes on a BD, or who uses them in the future. If MS wants to put a BD in there next console, they will.

But disc are much cheaper to produce then tapes were, I really see 3 profitable outlets simultaneously.

DVD - Profitable because it is mass market and oodles are sold.

Blu-ray- Profitable because it is high end, will level off at a moderate pricing structure allowing margins.

Digital Distribution - Profitable because of low barriers to entry.

Laser discs were still profitable for years after they failed to become the Mass Market product.

Part of understanding business is that profit is all that matters.  "Winning", beating the competition, etc. do not mean that you'll necessarily have profit.

big,yeah big advantage

I think you have to remember that every format will be more costly at the time of introduction compared to the time where they are the single mainstream format. Blu-ray prices will naturally lower as time goes by, and so will the eqiupment needed to play blu-ray's.
Also, on the gaming note. When a developer chooses to better utilize the blu-ray by including additional content in the game, this will (assuming the developer knows what they are doing and the extra content adds to the overall quality of the game) result in higher sales, leading to more profit (assuming the sales make up for the money invested in the development). Sony doesn't get any more or any less from a game with more content compared to one that does not have something extra.

The only real advantage Blu-Ray offers is being able to make TV show season collections alot more convenient, but will the industry actually take advantage of that and lose money? I don't think so.

Clearly Blu-Ray is superior to DVD, but the improvemetns are superficial at best for the consumer painting it more as a luxury item than a true step forward. This by no means implies that Blu-Ray will fail, but its contribution to the market may have more damaging effects for how the consumer views media storage.

Sony owns the highest percentage of the blu-ray IP. 30%.  So I'd think they would be at the top when it comes to power... it's just one company can't do enough with that kind of power to suit it's own ends vs the others on the board.

Umm, Sony made nothing off of the DVD standard. They will make ALOT of money off of BR.

@Onimusha - your kidding right? I mean if you have an HDTV, it's a no brainer to get BR. It looks amazing. This Christmas should be HUGE for HDTVs and the PS3. I think it will outsell the 360 in all regions.

BR is about the only thing Sony has done right so far this gen.

What? Surely the Blu-ray disc association has control over licensing. Microsoft or Nintendo could include blu-ray in their products if they so wished to license it.

 So all in all, the most you can say for Blu-Ray is that it is pretty, which I fail to see how such a claim was in contrast to my allegations of its contributions being superficial and those of a luxury item.

DVD
- Shows improved picture and sound over that of VHS on any TV.
- Was a non-degradeable format unlike VHS.
- Allowed for easy navigation thus eliminating the inconvenience of Rewinding or aimless fast forwarding.
- Allowed for extra content and disc menus which were impossible on VHS.

Blu-Ray
- Shows improved picture and sound over that of DVD noticeably only on expensive HD TVs.
- Has more space than a DVD for reasons yet to be realized.

Somehow the leap from one format to the next is less impressive for Blu-Ray as oppossed to DVD's emergence as the replacement for VHS. Blu-Ray's improvements are fairly superficial and vain, while not bad improvements they don't really beckon the notion we've become familiar with as being a true step forward in formats.