Audio Video News

It's incredibly common for Hollywood blockbusters to come in way late and over budget, so perhaps we shouldn't be surprised since Sony owns its own movie studio. An industry analysis by Merrill Lynch predicts that Sony's PlayStation3 could not only be delayed 6-12 months, putting off its US launch until late 2006 or early 2007, but also estimates that the gaming consoles are going to cost Sony nearly $900 per unit to build. These predictions started a firestorm across broad segments of the industry, as such delays would not only hurt Sony in the gaming space, but also would undoubtedly cost Blu-ray Disc some critical momentum in the next-gen disc format war. HD DVD players and discs are currently on schedule to hit retail stores next month.

Sony has already refuted Merrill Lynch's prediction of the delay, and is officially sticking with the Spring 2006 launch mantra. But so far Sony hasn't issued any denials of the cost involved in building the Blu-ray Disc based consoles. The Lynch report pegged the raw parts cost of each Blu-ray Disc drive for PS3 at $350, and the complex new processor- dubbed "the Cell"- at $230 per unit. Sony CEO Howard Stringer has stated in interviews that Sony is willing to lose money on PS3 in order to sell them at $300-$400 at retail and build the PS3 and Blu-ray as brands. The Lynch report predicted that in three years time the cost of building PS3 could drop as low as $320 per unit.

The drawing power of the PlayStation is believed to have been a major factor in luring Warner Brothers and Paramount, two major Hollywood studios that were exclusively supporting HD DVD a year ago, into the Blu-ray camp. With a Spring 2006 launch Sony believed it could sell 20 million PS3 consoles in 2006 in the US alone. Since this console will allegedly cost consumers only $300-$400 and also play back Blu-ray Disc movies, PS3 is considered as offering a big jumpstart for the Blu-ray format since it's now apparent that standalone BD players will start at $1000 per machine and go up from there.

A PlayStation3 delay into late 2006 or early 2007 undoubtedly opens the window of opportunity a little wider for HD DVD. Toshiba is touring HD DVD to mass-market retailers around the country right now in preparation for its late March launch. Toshiba's entry-level HD DVD player will cost only $500. If the PS3 launch is delayed and things remain as they are now, there would be no price-competitive Blu-ray player. Consumers would be faced with the proposition of choosing cheaper players from a format with the support of only three major Hollywood studios, and players starting at $1000 with the support of those three studios plus four more. I don’t' suppose it would help anyone remember that the first stereo VCRs cost nearly $1000 when they were introduced in the early 1980s?