Xbox, PS3 Lead Way in High-Def Movie Adoption

[Damion Chaplin]

<div class='os_post_top_link'><a href='http://www.pro-g.co.uk/news/08-01-2007-4419.html' target='_blank'>http://www.pro-g.co.uk/news/08-01-2007-4419.html</a><br /><br /></div><i>"According to a report by Tom Adams of Adams Media Research, sales of Blue-ray and HD DVD players have reached 695,000. Of those 695,000 units, the vast majority comes from the PlayStation 3, with 400,000 consumers able to enjoy Blu-ray thanks to the PS3's built-in player. Sales of standalone Blu-ray players stand at only 25,000 units. On the HD DVD front Adams reports that 120,000 units of standalone players have been sold, but this has been eclipsed by the Xbox 360 HD DVD Player add-on, which has shifted an impressive 150,000 units since its launch late in 2006."</i><br /><br /> <img src="http://www.digitalmediathoughts.com/images/hd_dvd_player1111.jpg" /> <br /><br />Very interesting news, though not entirely surprising. I think most of us that are interested in a standalone HD player are waiting until the prices drop some more. It's also unknown if these PS3 and Xbox owners are actually using their HD drive to watch movies. Also, as the author pointed out, Sony just announced that they've sold a million PS3s in North America. That means around 600,000 units still sitting on shelves somewhere, if the numbers from Adams and Sony are to be believed.

[Chris Gohlke]

I'd say that the Xbox unit are most likely being used to watch movies as there would really be no other reason for someone to buy this as an add on. I was hoping that they would announce a unit with the HD drive built-in, but since they didn't, I probably bite the bullet in the next month or so and get a 360 and the HD drive.

[jeffd]

exactly what chris said. You dont buy the xbox hd drive unless your watching movies on it, while sony users are stuck with it from the start.

Unfortunatly those figures for total players puts blue ray way ahead of hd dvd. :(

[Felix Torres]

exactly what chris said. You dont buy the xbox hd drive unless your watching movies on it, while sony users are stuck with it from the start.

Unfortunatly those figures for total players puts blue ray way ahead of hd dvd. :(

Which is why the BD-Camp has always talked about the expected number of BD-capable players while the HD-DVD camp talks about movie sales. Ultimately, it doesn't matter how many theoretical users BD accumulates, but rather what movie-buying customers are buying.

Doesn't help BD much to claim a million players if the movies only sell by the thousand, right?

And yes, the PS3 numbers look funny.
Quoted NorthAm sales at 750K vs Sony claimed shipment humbers (presumably counted at the shipping dock) suggest there are a lot of PS3 halfway across the Pacific on slow boats from China.

Judging by the sudden availability of PS3 at retailers (local EB Games has six, walMart 2) and the sudden shortage of 360's, I'm guessing a Sony price cut is imminent. (March? In time to try to salvage the euro-launch?)

Especially since the 360 price cut is due by May...
Sony has a lot of work ahead of them in both the BD and gaming fronts and fighting two-front wars rarely ends well.

Happy New Years, Sony.
Watch out for giant crabs!

[Felix Torres]

I guess Microsoft may be heavily considering replacing the current XBOX360's with one that has a built-in HD-DVD drive. Currently it might be too expensive for them to bother with however. All depends on which is more important to Microsoft; Insuring HD-DVD wins over Blu-Ray OR insuring that Microsoft can sell XBOX360's cheaper then PS3's.....

Anybody want to be which is which?
Ms really doesn't care that much about the blue laser wars.
Only reason they jumped on the HD-DVD camp was Sony's adoption of a second-layer of user-hostile DRM and PC-hostile Java-based scripting.
MS would happily sell an external BD-drive for 360 if they could make money at it.
But, ultimately, MS intends to sell 100 million 360's by 2010 and to get there they need to drive 360 pricing as low as possible as fast as possible. They've *told* us this. Over and over.

Easy prediction: we'll see the 360 core hit $149 long before the blue laser wars are settled.
In fact, its a tossup whether more HD movies will have been watched via HD-DVD, BD, or Video Marketplace rentals.

MS doesn't *want* a winner; they want a stalemate.

Simple question: when was the *last* time a japanese CE company (or for that matter, group of companies) established an industry standard and made it stick?

The Blue laser wars are the last chance for Japan, Inc to matter.

[ploeg]

Doesn't help BD much to claim a million players if the movies only sell by the thousand, right?

If the competition is also only selling movies by the thousand and taking a loss for its troubles, that's not so bad. The market for blue-laser discs is still new and small. The name of the game is to get players into your customers' homes so that you're well-positioned for when the mass market develops and customers want to start a blue-laser disc collection. HD-DVD is trying to do that by competing on price, Blu-ray by cannibalizing Playstation sales, in effect. It is debatable whether cannibalizing current Playstation sales for future blue-laser sales was a smart move on Sony's part, but from the standpoint of moving Blu-ray players into customers' homes, Sony didn't do that badly this holiday season.

Ms really doesn't care that much about the blue laser wars.

Spot on. Microsoft doesn't want to sell hardware. Microsoft wants to sell services. The only reason that Microsoft is selling HD-DVD is to match one of PS3's bullet points, so that Microsoft can sell more 360s. The only reason why Microsoft wants to sell 360s is to get revenue from licensing, online gaming services, IPTV, etc. Sony wants to continue selling discs, Microsoft wants to continue selling bits.

[Felix Torres]

It is debatable whether cannibalizing current Playstation sales for future blue-laser sales was a smart move on Sony's part, but from the standpoint of moving Blu-ray players into customers' homes, Sony didn't do that badly this holiday season.

Sony wants to continue selling discs, Microsoft wants to continue selling bits.

1- The problem is nobody knows how many BD players are actually in use. As pointed out, 100% of the HD-DVD players sold were sold to people who want to watch HD movies on disk. The actual percentage of PS3 purchased as BD players or that will be used regularly as BD players (as opposed to playing Talladega Nights once a year) is unknown and not guessable with current sales data. The profile of the customer base matters; pre-PS3, HD-DVD movies were outselling the BD catalog 10-to-1 because the early adopters found BD players and movies wanting. Putting a bunch of PS3s into the hands of gamers and casual viewers isn't going to change those numbers much any time soon. You may see a spike around the holidays as the casual viewers try out the BD capability but given the PS3s output failings, many of those are not going to see much improvement over regular DVDs. There's a lot of smoke and mirrors in the BD installed base numbers that most studios are going to take with a pound of salt.

2- Sony, is of course, working off a last-century playbook on BD. MS, is trying to build a 21st Century business. Sony has tough competition on all front, while MS most likely has a clear field for the rest of 07, AppleTV (hah!) notwithstanding. It'll be interesting to see how big a business they can grow in that time. Its no slam dunk. But the 360 is definitely establishing itself as a full-function entertainment console. If they can eat a big enough chunk of the STB business they can get to some truly scary installed-base numbers in a year or two and really become the dominant delivery vehicle for HD content, regardless of who--if anybody--wins the blue laser war.

MS has a not-so-big gamble on the table (360 is already a success as a gaming console) but they face a huge payoff if they become the dominant STB and start to eat into Cisco's Scientific Atlanta business.

[Jeremy Charette]

The problem I see with this is modifying the general consumer's perception that the 360 is a "game console". Now, we know better, but you'll have a hard time convincing "mom and dad" otherwise. Technically, they can do it, but replacing Scientific Atlanta and well-established Cable service providers (think Time Warner) as the STB of choice will be near impossible.

The market isn't ready yet. This is a better challenge for the Xbox whatever-the-hell-they-call-it-next, looking at 2010 and beyond. In the meantime, they can take a small slice of market share, capture the early adopters, and get a foothold in the marketplace.

[Felix Torres]

Oh, anybody moving into the STB markets (hello, Apple?) shouldn't expect a cakewalk. But, with the FCC CableCard mandate kicking in this summer, the rules of the game are going to drastically change. And the majority market leaders (Scientic Atlanta, Motorola, RCA, etc) are facing a transition from what has been essentially a OEM business to a consumer business. By XMAS, not only will 360 be in the STB business (and its worth remembering the MS IPTV tech works over cable as well as telco data lines), but TiVO will be a player, as will Moxi, Apple, Disney, Sling, and a dozen or so wannabes. Add in Cablecard-equipped TVs, DVRs, MCE PCs, DVD players, etc, and consumers are looking at a broad range of choices for STB services.
In this fragmented field the 360 will shine with its gaming and connectivity options.

Since the market for consumer STBs is just launching, it will likely be at least 09 before *anybody* racks up measurable sales.

But the advantage 360 offers is that it comes with game console economics to this new market. The deals MS can negotiate with the content providers can be really clever (will, say, AT&amp;T offer "free" 360s to customers? Will MS finance 360 STB deployment, so the cableco/telco cost is essentially zero?) What would it do to the gaming market if casual gamers can "rent" 360 consoles from their Telco for $10 a month?
What would that do to the STB market?

The thing to keep in mind is PS2 has 50% US household penetration; most of those were purchased after it hit $199. 360 will get there a lot sooner than any comparable STB or gaming console on the market or horizon so this move hits at the heart of the Sony installed base while at the same time pre-empting the other competitors to the consumer STB business.

And, of course, this all loops back to where we started:
Anybody with the bandwidth to get 360-based IPTV has the banddwidth for Video Marketplace rentals. Which in turns makes the bare 360 an alternative to both BD and HD-DVD.

If the blue laser vendors want to establish their wares in the market, they need to break out of the console war or risk getting marginalized into golden-eyebal turf (LaserDisk, anybody?).

[Jason Dunn]

I saw some *very* cool stuff with an Xbox 360 acting as a STB for IPTV - that blew my mind. Got a video of it with Jake Ludington, hoping he'll have it up soon so you guys can check it out...