Is Blu-Ray Actually Microsoft's Victory?

So Sony (SNE) have won the format war for HD TV content distribution. The Blu-Ray disk has beaten HD DVD to become the new standard. The first Sony media victory since the Microfloppy of 1982.

But it has cost Sony dearly. Difficulties mass producing Blu-Ray drives in 2005/6 delayed the PS3 getting to market. And when it did, the high cost of the drives compared with DVDs contributed to Sony having to charge a premium price for the console, which stunted sales. These factors may possibly result in Sony coming third in this generation of the console wars. For certain, they haven’t dominated like they did in the last generation with PS2, a very high cost to pay.

Meanwhile Microsoft (MSFT) did not build an HD drive into the Xbox 360. This enabled them to get their console to market more quickly and for a lower price. So they have maintained a significant lead over Sony in this generation of console. By having the HD drive as an external add on Microsoft hedged its bets. It didn’t bother them or affect them commercially whichever format won. They would just make external drives using whichever format won. And so they will.

Of course none of this has any impact on Nintendo (NTDOY.PK). They, quite literally, are playing a different game.

Comments

[Tom B:]

Bruce: The XBox sales advantage will probably wane pretty fast. Most people who want Halo 3 probably already have it. Also, some XBox "sales" may reflect replacement of overheating units.

Demand for Blu Ray may see a small uptick now that the people who weren't paying attention the past 12 months now understand that Blu Ray was inevitable-- and maybe investing in player isn't such a bad idea.

2008 Feb 19 09:07 AM

[ianp:]

So MS had a small advantage in the Game Console war - primarily in the US alone.
The bigger picture is in the HD_DVD market proper - much bigger in both HW and SW revenues. Sony have a hand in that - Microsoft doesn't.
Look also at the technology behind HD-DVD - MS an Intel were in that. They have no current stake in the Blu Ray platform. They've lost big time on that.
MS unusually just lost a rather large battle.
It'll be interesting to see how it gets back in the game - other than as a reseller of someone elses hardware.

2008 Feb 19 12:26 PM

[Digital-Nit...:]

Interesting article, but like so many other misinformed articles, the PS3 sales rate since launch is tracking closely to PS2 sales since launch. Sure the Wii is selling much much faster than either, but they are very different machines with distinctly different target markets. As an example, if you look at software sales of multiplatform games available for both the Wii and the PS3, despite having far fewer consoles in the market, the PS3 versions almost always sell far more copies than the Wii versions.

In addition, many people seem to forget that Sony is still selling the PS2, and PS2 sales have regularly outsold even the Xbox 360... so in effect, Sony is selling two consols, and combined represent the vast majority of the gaming market.

So it would be incredibly foolish to even suggest that the PS3 and Blu-ray has cost Sony dearly. Quite the contrary. The PS3 and Blu-ray's victory are very closely tied together and puts Sony is a vastly superior position than Microsoft and even Nintendo.

Let us not forget that the problem with Microsoft not having come out with a console that supports games on HD DVD or Blu-ray gives Sony a huge advantage over time - especially when you take the time to track the exponential growth in the disc size of games being made over the last ten years. Three years ago game developers were already releasing games that fill a standard DVD, and with the popularity of non-linear games and the lack of cheap large HDDs and the inconvenience of saving games to a hard drive, releasing multi-disc games is extremely rare to non-existent.

As an example, there are already four games out on the PS3 that use over 16MB of disc space, and several in the works that are reportedly going to need more than 25GB. To release such a game on the 360 you'd need four or more discs (as each can only store 7GB of game data, 1.5 GB is for system files).

For Microsoft to continue to lure developers into releasing full feature next gen games, they'll either have to convince their existing user base to swap discs during gameplay, or buy large hard drives and copy their games to them, or release yet another new console with support for games on Blu-ray - although that last option would seriously alienate their current ~15 million user base... assuming that number doesn't include any of the 15-30% of 360 units that have experience the complete system failure known simply as the Red Ring of Death. *sigh*

2008 Feb 19 01:07 PM

[izomax:]

Playstation 3 outselled Xbox 360 world wide last year , what do you mean it's MSFT victory?

January's NPD data shows Playstation 3 trashing Xbox 360.

Get you fact straight.

2008 Feb 19 02:03 PM

[TA:]

And to think, if PS3 can actually get some decent games, there will be a reason to buy one!

2008 Feb 19 02:33 PM

[KenC:]

As pointed out, PS3 with PS2 sales added up to almost 50% of the game console market, worldwide, last year. Sony may have been delayed, but it hasn't suffered as badly as you and others think. Already, this first month of the year, MS announced they had only shipped 200k units, which was 3rd and last, as some sort of anomaly. Strangely, last year, they only shipped about 1.2M units in the first 6 months of the year, which means they were shipping about 200k units per month. Sounds like a normal month to me. In other words, MS has been stuffing the channel for the Xmas quarter, in order to meet pre-announced shipping target goals. Very much like the funny math used to announce Vista licenses.

2008 Feb 19 03:23 PM

[Jon T:]

Wake me up when Xbox is discontinued - as it surely will be.

2008 Feb 20 09:30 AM

[contreras:]

It's clear that XBOX is losing grip as in one way, or another, it's associated to HD-DVD failure. In the other hand PS3 came slow, but is catching up, and with the Blu-Ray victory, now has space to grow, while XBOX needs to catch up now. It's Sony's victory, and even if it isn't a big drawback for MSFT's XBOX, they will now be the ones catching up.

2008 Feb 21 06:46 AM