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 The High Definition DVD Studio Support Petition Campaign |
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Should Sony be making contingency plans ? September 19th 2007 What Might Warner be considering? We have covered this HD "format war" with our observations and opinions for over a year, now. While we can hardly be called experts, we have honestly been surprised that much of the Bluray "plan" appears, from the outside at least, to have depended almost entirely on only a few key successes. While on the surface, much of the plans would make sense to any student, it appears that complications to these plans should have been better considered and the plans better adjusted. We can't help but wonder if contingency plans should have been developed also, to better react to events turning out "less than desired" at key points. From the outside, it really does appear that an "all or nothing" approach was taken, that has left little room for an exit strategy. The "quick win" Bluray strategy seems to have been dependent on showing higher sales this year due to PS3 owners, keeping the studios neutral or BD-Exclusive long enough for reported BD manufacturing and software issues to be sorted out, and isolating the HD DVD format. Now that it seems almost a certainty that HD DVD has survived this gauntlet, and is almost certain to surpass Bluray in sales in the coming future - just what are Sony's options to save the game for the company and protect it's strengths in key revenue areas affected by the format battle? For instance, anyone could see that, on the surface, launching the PS3 with Bluray drives could potentially have boosted the BD format, but the volumes of PS3s required for this impact depended greatly on HIGH volumes of PS3s getting out early in the start of the "war". When the PS3 was delayed till November (quite likely due to the problems getting Bluray working satisfactorily) they lost the "early out" advantage. When the inclusion of the Bluray drive helped drive the cost of the PS3 to very high reported levels, it undermined their ability to make it cost-competitive enough to drive the demand needed, in my opinion. Certainly, anyone can recognize, in retrospect, that the cost of the PS3 due to Bluray have damaged the ability of the PS3 to compete in it's OWN space, that of being a game machine. The Playstation franchise has been very successful for Sony for two product generations, and reportedly accounts for 12% of their overall business. Did Sony consider how to save the Playstation franchise should the Bluray gamble fail? On the surface it doesn't appear that this potential outcome was seriously considered - after all, all PS3 games are reportedly distributed on Bluray discs. If a lower priced PS3, without a Bluray drive were seen to be necessary to revive sales (which I personally think is absolutely necessary to save the franchise at this point), Sony would probably have to foot the bill for its developers to re-publish existing titles on DVDs. There is speculation that the costs of subsidizing the PS3 and also the Bluray format have cost Sony entities a lot more than what was originally anticipated and budgeted. This speculation has been given extra legs by Sony's announcement that they will be selling their Sony Finance division for about $3 billion, as this arm apparently accounted for 8% of the overall Sony empire. Added to the PS franchise, that seems to show 20% of the company is at risk. Not insignificant, in my view, and it seems to indicate that they are looking for extra funds to cover extra unanticipated costs of the "format war". If another 12% of Sony is made up of the Sony Pictures division, what plans are being made to ensure it's success is not also dependent on the exclusive "victory" of the Bluray format over HD DVD? Is it time to consider these issues?
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