Off to NXTcomm

I'll be at NXTcomm in Chicago next week for Multimedia Research Group, covering IPTV and Internet video-related announcements. I'll keep you informed on some of the interesting new products and services I see.

More on Playstation 3...

Paul Sweeting of Video Business Magazine has some interesting insights into Sony's recent announcement of layoffs at Sony Computer Entertainment, the division responsible for the Playstation 3. He chalks the layoffs up to a fundamental misreading of the market by Sony, and suggests that Sony has two choices:

1. Position the PS3 as an advanced digital media center for the living room that just happens to play games (which is pretty much what Ken Kutaragi said last year when he announced the PS3's pricing), or
2. Dramatically lower the price of the PS3 to compete more effectively with the Xbox 36o and Wii.

Option 1 doesn't solve Sony's competitiveness problems--in addition to the Xbox 360, which to my eyes has much better media management capabilities, the PS3 would have to compete with Apple TV, which sells at half the price.

For option 2, Sweeting suggests that Sony may have to replace the Blu-Ray drive in the PS3 with a DVD drive in order to get the cost down enough for Sony to compete with Microsoft and Nintendo.

After reading some of the cost breakdowns for the PS3, I think that deleting the Blu-Ray drive alone isn't going to do the trick--they're going to have to radically remove features in order to compete on price. From one of my posts from last year, the manufacturing cost of the PS3 was estimated to be $900. Even assuming that deleting the Blu-Ray drive and replacing it with a DVD drive saves Sony $300, they still have very little room to move on price.

One of the key sales points for the PS3 when it was priced last year was that at $599, it was still at least $400 cheaper than the least-expensive Blu-Ray player, so it was a "bargain." Well, scratch that advantage--Sony's latest Blu-Ray player will sell for $499 later this year, and several other companies (Panasonic, Samsung, LG, etc.) are also shipping Blu-Ray players and will have to be at least as competitive on price.

So, where does Sony go with the PS3? Really, the only option is more and better games. Right now, the only thing that will dramatically increase sales, even if they lower the price, is a better assortment of games--titles that are so much better on the PS3 that hardcore gamers can't afford to play them on anything else. Unless Sony can fix its game shortage soon, the PS3 risks becoming this game console generation's Gamecube--the third player in a market that can at best support 2 1/2.

HD DVD and Blu-Ray Continue to Struggle

According to this article from Reuters, Toshiba has cut its calendar year 2007 forecast for HD DVD player sales in the U.S. by 44 percent, from 1.8 million players to one million,even though some Toshiba players are selling for as little as $249. (They had forecast worldwide sales of three million players by March 2008; clearly they won't make that number.) The Blu-Ray team hasn't announced comparable sales numbers, but we do know that Sony is well behind in sales of the Playstation 3; to date, they've sold 1.3 million in the U.S., one million in Europe and Australia combined and 911,000 in Japan. They claim to have shipped 5.5 million units, which means that approximately 1.8 million units are sitting around in stores and warehouses.

As for disc sales, the biggest seller (depending on which figures you believe) is either Sony's "Casino Royale" or Warner Brothers' "The Departed," both with around 100,000 units. Now, sales of 100,000 units aren't bad, but in DVD terms it's comparable to a relatively successful independent film release--nothing like what a major studio release should expect to sell.

The Price of Not Updating Your Blog

First of all, I want to thank DailyIPTV for being named one of their top 40 IPTV Movers and Shakers! I'm in the rarified company of the guys who do "Ask a Ninja"--for that alone, I can die happy. However, since I haven't updated this blog in months, I need to make one correction. I left Safari Books Online and the wilds of Sebastopol last January, when I moved back to Silicon Valley to become the Director of IPTV Analysis for Multimedia Research Group. My cat loved Sebastopol; he had the run of a 7 1/2 acre apple orchard that we lived on. However, I was simply way too isolated in Sonoma County, where a late-night restuarant is one that stays open until 9 p.m. Also, I suffered from Fry's withdrawl. But that's another story.

So, with that correction, I'm going to try (really, really try) to update this blog on a regular basis again.