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- The Best Decision Sony Ever Made — I told you so.
- Posted 7 months, 4 weeks ago by risenphoenix
So this is my first ever blog post on here. I'll likely be just copying my video game related posts from my actual blog. Anyway this a relatively old post but I figured I'd put it up and see what people think.
http://www.news.com/8301-10784_3-9874808-7.html?tag=nefd.lede
:-D. I like being right.
Here was my old post:
It was only a year ago that social networking sites like digg were alive with the great upset: Nintendo outsells giant PS3. The result was incredible, especially considering the huge initial demand for PS3, selling for thousands of dollars on auction sites like ebay. But Nintendo had a good business strategy. They tapped new markets while Sony, thirsty for more revenue, had already saturated base consumers with their successful PlayStation2.
The critics were abuzz with talk of what was perhaps the greatest technological market blunder of 2007. How could the PS3 possibly do so poorly when it was so highly anticipated? One answer was immediately clear: price. It was because of price that many consumers and initial buyers into the next-gen market chose Xbox 360 and Nintendo Wii. Sony’s insistence that the PS3 include their new Blu-ray HD disc technology force prices up immensely, and caused initial shortages due to blue laser diode manufacturing problems. It seemed like Sony’s appeal to the high technological base of hardcore gamers was backfiring as Nintendo dominated the new market and 360 emerged as a seasoned veteran with an incredible game line-up. In fact, of the current Playstation 3 owners, only 40% knew about the Blu-ray player at all (1).
But then something changed. Sony dropped the price, introduced new models, cut manufacturing costs. Sales began to pick up, and games like Heavenly Sword and Warhawk — which had been featured on the PS3 box — were finally released, adding some much needed flavor to the system. By a year into its release, PS3 had sold about as many units as the Xbox 360 in the same time period (worldwide that is — it still lagged behind the 360 in the US). But we now began to see something even more interesting. This time it was the Wii that was facing shortages during Christmas season, and the PS3 which may have benefited.
So that brings me to the title of the article — The best decision Sony ever made…why? Because despite being in third place in the next generation video game console battle, they will end up making more money than Xbox 360 and Wii combined. Since the turnover of Warner Bros. to Blu-ray, as well as numerous others (New Line, loss of Universal/Paramount exclusivity), it seems that HD-DVD is all but dead. This means that Sony has successfully leveraged their built up video game market and third party support behind the Blu-ray format. In turn they sacrificed initial sales of their console to become the creators of the next generation optical disc which is likely to become the standard for the next decade or so. In other words, they used the typical Japanese robust business model (many parts to insulate losses from certain divisions) to stay afloat while millions of blu-ray players were placed on the market, overshadowing its rival. And the HD-DVD attachment for Xbox, which was nothing more than an expensive accessory to most, lost out on the potential profits from having introduced the system a full year earlier. Sony may have marketed to those with more dispensable incomes, but those were the individuals that would actually buy HD technology this early in the game, and in turn decide the winner of the format war before the mass public ever had a say.
It’ll be interesting to see what happens in the next two years as HD begins to shift towards the norm consumers look towards more and more HD content. Will the PS3, which will certainly face at least more price cut before then, be more appealing then the Xbox 360 with a possible Blu-ray attachment? Will the SD Nintendo Wii still be selling units? More importantly, will Nintendo release another system to compete.
One thing is for certain, Sony will be apart of the HD entertainment business, in a big way.
Sources:
(1) http://www.1up.com/do/newsStory?cId=3161833
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Comments
Risen: I personally own a PS3 myself, it doesn't get much use other than the times I watch movies on it in my bedroom. I used to be all about the Playstation, but since I found a games like Halo and Splinter Cell: I started favoring the Xbox more. I'm still waiting for Little Big Planet to come out so I can wake the sleeping beast....
I didn't read it. Sorry. I'm being lazy.
@Mellow: I don't know that they're success was for the PS3, but the certainly introduced the players into the market. I personally bought blu-ray movies because I now had a Blu-ray player with my PS3. I'm not sure that the PS3 sold more or less units because it was a cheap blu-ray player...rather it was forcing Blu-ray down their throats (good old sony proprietary technology).
Nice, im kinda glad to see blu-ray winning. My PS3 is Finding its uses. But on a side not, sony should have done what microsoft has done with the exclusive content for GTA IV. Think about it, anyone waiting to buy a system now is going to make their decision based on that game ( for the most part) and if sony had gotten the exclusive content, then that would have swayed some consumers.
I just heard over the weekend that since the death of HD-DVD, Blu-ray players have seen an average 5% price increase. So people who are buying the PS3 at a lower price are not only proving you right phoenix, they're also bucking a trend towards higher prices.
Sony said from the outset that they had a two-year strategy for the PS3. At the time, I thought it was just corporate damage control. But it seems that they did know what they were doing.
But was Sony's success really because of the fact you could get a thousand dollar blu ray player for four hundred bucks?