FAIL: Sony Spent $3B To Kill HD-DVD

How the Blu-ray war was won – Sony outspent, outsold Toshiba

Sony’s victory in the high-definition format war is a badly needed win for the Japanese electronics giant, after a series of humiliating failures that have left control of the music market with Apple. The question that Sony has yet to answer, however, is whether the price paid to see off Toshiba – at least $3 billion (£1.54 billion) – was worth it.

Blu-ray is more expensive to manufacture than Toshiba’s HD-DVD player. Toshiba players are on sale for as little as £149.99 this year, £120 less than the cheapest Blu-ray. Although some of that discounting reflected a last throw of the dice from Toshiba, for the moment consumers have been saddled with a more expensive format and Sony’s losses to make up.

The only way for Sony to distribute Blu-ray in large quantities was to build the technology into the PlayStation 3 and sell the games console at a discount. Sony’s console division ran up a $1.97 billion deficit in the year to March 31 last year, which it followed with a $991 million loss in the first three quarters of the current year. Yet the true costs of Blu-ray are probably much greater: early research and development expenses have not been included.

Analysts believe, however, that Sony will recoup its $3billion-plus investment eventually. Richard Hooper, an analyst with Screen Digest, said: “It is hard to estimate precisely what royalties Sony will generate, but we believe that they will be able to recoup far more than $3 billion over the lifetime of Blu-ray. It’s worth it.”

No, I disagree.

If the economy turns as sour as the experts predict, people aren’t going to have the money nor be in the mood to adopt another DVD technology.

Look at it this way. A Blu-Ray movie can cost $35-$40. That’s for one movie.

You can pay that much money for a month of high-speed Verizon FIOS service.

And trust me, after that monthly fee, there’s more than $40’s worth of video online to watch for free.

Sony, this is one war you should have lost.

Explore posts in the same categories: Tech - Sony

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: