Maybe in the States where margins are so low that shops even have to rely on this extra money. This is definitely NOT the case in Europe (where I happen to live). I should not exclude that "renting shelf space" may exist inofficially but none of my colleagues (some of wich work/ed in retail business) have seen that.

Well, retailers also want to push the hell out of blu ray, so I don't think even wth lower market share they will be getting rid of it. Especially since Sony is paying for its product placement. But, that does not mean sales will increase.

@Dodece: The alternative for Sony is to lose hundreds of millions / billions in a few months by doing another big price cut. I guess they chose the lesser of two evils.

@drkohler

I think they are referring to vending rather then renting. Renting entitles an entity to an amount of space. Vending is a contractual agreement between a retailer and a supplier. For the supplying of shelf space by the retailer the supplier assumes liability. That liability is usually responsibility for unsold goods. In compensation the retailer takes a percentage of profit from sales. While it may seem like renting it is not. The supplier has few entitlements, and the agreement is subject to profitability. The allotted space can be reduced, removed, or relocated. The store can acquire space for their purposes, or provide the space to another vendor.

To my knowledge globally all console manufacturers at least vend their software. Otherwise stores would be incapable of carrying software. Basically a manufacturer defers the risk, because if the product does not sell they are merely out two dollars in production cost. Compared to a retailer which may be out fifty dollars for an unsold copy of a game. We must be mindful that regardless of geography games have a small profit margin. Thus it is not cost effective to obtain small margins at the risk of very large losses.

That does not mean that renting does not take place, but it is usually a this for that arrangement. The retailer may receive decorations, advertising, or an increased profit margin in compensation for prime placement. However the majority of placement is most definitely at the retailers discretion. So the profitability of a product to a retailer is of primary concern. I seriously doubt any manufacturer could afford to consistently take the losses of a cash up front agreement.

Dodece, so 2009 is the real make or break year for the PS3?

@JGarret

I would say more sink or swim. At least for the next few months in North America. Sony has courted these low market shares before. Going right up to the brink only to climb back up the sales ladder to safety. Given the economic situation, and their competition pouring it on strong. Well Sony may think they can tempt fate once more, but that may prove foolhardy. They seem to have forgotten that whenever something can go wrong there is a very real possibility it will go wrong. When that happens you do not want to be anywhere near the ledge that separates a live console from a dead console. That is like getting drunk and running across a rush hour freeway. Why even take the risk.

@NJ5

I cannot argue the point that Sony has worked itself into a money pit. However if they lose their console in a critical market their situation gets many times worse. To my thinking its better for them to eat that loss, and sell off assets to pay the piper. You lose this console, and you stand to lose a hell of a lot more. I do find it hard to feel sorry for Sony. After all they got themselves into this mess. Where it is an economic disaster to buoy their console. They should never have let themselves be cordoned off into a position where they have no influence over their own future.

Right here right now I would say Sony should sell off three or four software developers to float the needed money towards an imminent price reduction in North America. First priority should be to save their console. Lest it buys the farm, and those very same studios are reduced to square one.

@Dodece: Selling off assets is probably going to happen whether they do a price cut or not. The first to go are likely to be some of their employees if the exchange rates and the recession don't stop hurting their revenue from their "cash cows". I use the term cash cows loosely because Sony doesn't have any divisions with great profit margins.

Still on the assets issue, who are they going to sell assets to? Virtually every company is hunkering down and saving money. It's hard to see good deals coming.

Amazing X360 sales!!

Only $100 drop in price in three years, and yet people flock to buy the X360.

PS3 has just two years and already dropped $200.

The X360 is a monster seller. The big winner of this (HD) gen.

@NJ5

Perhaps as strange as it sounds their main competitors are likely buyers. Sony does have some prime studios that would appeal to both Nintendo and Microsoft. The real problem with this is Sony must make a compelling pitch. They need to offer up a world premier studio with its intellectual properties attached at a reasonable price. They could then play Microsoft and Nintendo off against one another.

Unfortunately I seriously wouldn't give Sony credit for being brilliant. They would probably throw up a third rate developer, retain the intellectual properties, and try to overcharge. Which will not result in a bidding war, and will encourage prospective buyers to lay idle. Sony could do well if only they were smart enough to play that which is coveted out onto the market. Hell if they were to throw God of War out on the field for sale they may even get a four way bidding war.

Obviously not an ideal situation, but which is more important at this juncture the hardware or the software. You can survive on the hardware, but the software cannot survive without hardware.