thinglets: Why Blu-Ray Player Prices Aren't Dropping

“The pain I feel now is the happiness I had before. That's the deal.” C.S. Lewis

(The following is not based on ANY proof. It is simply a collection of inferred conclusions from a tenuously logical construct.)

The Premise...

Snakebitten by a generation-old loss in the VCR market when Beta loses out to VHS, Sony vows that they will not lose again in the High Definition DVD war. They are willing to cut ANY and all deals necessary to ensure the success of the format. They set upon contacting major electronics manufacturers and studios to ensure a buy-in to the Blu-Ray format. The resulting cost: selling out on the hope for Playstation 3 marketshare.

Connecting the dots...

Sony (the king of proprieta ry technology) tries to buy the battle against HD-DVD, which the Xbox 360 had already bought into, in the hopes of taking a stab Microsoft. With several Southeast Asian manufacturing powerhouses they open up manufacturing specs for Blu-Ray while assembling the following partners:

Apple Inc.
Dell Inc.
Hitachi, Ltd.
Intel Corporation
LG Electronics (Lucky GoldStar)
Mitsubishi Electric
Panasonic (Matsushita Electric Industrial)
Pioneer Corporation
Royal Philips Electronics
Samsung Electronics
Sharp Corporation
Sony Corporation
Sun Microsystems
TDK Corporation (Tokyo Denki Kagaku)
Thomson SA
20th Century Fox
Walt Disney Motion Pictures Group
Warner Bros. Entertainment, Inc.

Missing, of course, from the above list are Microsoft (Sony's only real gaming competitor at the time) and Toshiba, the last supporter of HD-DVD. Presumably Sony believes that by assembling this coalition, it can ensure a win in the HD media war, and, in the long term, put up a real battle against the Xbox 360 for gaming supremacy.

Flies in the Ointment...

Broadband: The ability to download content and get it to a gaming system has saved Microsoft from a higher demand for removable media with greater space. Removable media is seen by many to be dead or dying. The successes of interactive "live" gaming over networks has also shifted the core demand of gaming systems to better network play. Console gaming is becoming network gaming.

Upscaling DVD Players: People are happy with "good enough". Upscaling DVD players have given new "leases on lives" to old DVDs. They're not as good as Blu-Ray, but when you don't have a Blu-Ray, you'll never know it. Also, you don't have to re-buy your entire collection. The lower than anticipated demand for Blu-Ray players and discs further ups the options for upscaling DVD players which every low end player manufacturer pumps out with glee.

Risk of Mass Production Locks Prices: All of the manufacturers in the list above start to worry about taking the plunge. Sony WANTS everyone to take the plunge. If the Blu-Ray component prices go down through increased manufacturing, players will shoot down to $100 and the PS3 can follow to a $200 price point which would threaten the Xbox 360 market share. I honestly think Sony was ready to go there over a year ago and take the loss, but knew that the Blu-Ray coalition would ostracize them. If the PS3 drops to $200, no one else can sell a player for above $100 - EVER! This formidable corporate assembly could kill the Blu-Ray format in six months if they wanted to; Sony takes the hit, instead, by not being able to reduce PS3 prices and losing the gaming war.

Nintendo Wii: Coming out of nowhere, Nintendo reopens the console gaming war to a three ring circus with the Wii (notice how they're not on the list either). Nintendo not only kicks Sony's ass, but kicks the Xbox 360's ass as well: (as of June 30th, 2009 - units sold)
Wii – 102.49 million
Xbox 360 – 33.20 million
PlayStation 3 – 27.73 million

The Oven Timer Rings...

Blu-Ray has largely been a flop from a market share perspective. That's not to knock the technology, but, as with any removable media, technology, it's transitory, and the evolution of networking may render removable media obsolete altogether. And the final, perhaps the most disturbing, death knell to Blu-Ray could be that people really just DON'T CARE about HD for much of their "disposable" content. For the same reason that tens of thousands of people watch pirated film downloads from a shaky camcorder, or watch on their iPhone, is a pretty strong indication that there are a number of people who prefer quantity and free availability to cost and quality.

If Sony and the coalition could afford to make the $100 player, Blu-Ray would evolve and take. Until that happens: stagnancy.

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