Black and Blu-ray
By Paul Sweeting -- Video Business, 5/12/2006
LOS ANGELES—“People can have any color Model T they want,” Henry Ford once famously declared, “so long as it’s black.”
It was a policy that worked well, at least as far as Model Ts are concerned.
With few other choices available to consumers, Ford’s line of uniformly black automobiles was an epoch-making success that transformed the art of industrial mass production and ushered in the era of mass-market luxuries.
Whether the same imperious approach to market segmentation is likely to work as well in today’s videogame console business is the question facing Sony as it gets ready to roll out its keenly anticipated new game platform, PlayStation 3.
At the 12th annual E3 conference here last week, Sony unveiled two versions of the PS3: a $499 model equipped with a 20GB hard drive and a $599 version with a 60GB drive.
While that’s one more flavor than Ford offered in Model Ts, the “choice” Sony is offering PS3 buyers still bears the stamp of a strategy designed as much with Sony’s needs in mind as with consumers’.
At $499, even Sony’s lowest priced model will cost $100 more than the most expensive version of Microsoft’s Xbox 360 and at least $200 more than Nintendo’s Wii.
Sony officials argue the price premium is justified because, in PlayStation, consumers are getting much more than just a game console.
Both versions of PS3 include a Blu-ray Disc drive capable of playing back movies in the new high-definition format, in keeping with Sony’s strategy of positioning PS3 as the hub of a home-entertainment network.
All the more curious, then, that the 20GB model would not come equipped with an HDMI connection.
Without a secure digital output, the Blu-ray player in the low-end PS3 could be forced to down-convert high-def movies to something closer to standard definition should the studios choose to invoke their right under the AACS license agreement governing copy-protection issues for Blu-ray and its rival, HD DVD.
Even if the studios don’t force a down-conversion, the AACS license does not permit a full 1080p high-def signal to pass over analog connections under any circumstances. That puts the 20GB PS3 console at odds with the broader Blu-ray promotional strategy of emphasizing BD devices’ support for 1080p from the beginning.
By itself, the HDMI connection on the high-end version does not account for the $100 price difference.
The more likely explanation is that, in deference to its Blu-ray hardware partners, as well as its own consumer electronics division, Sony Computer Entertainment hopes to steer those looking to the PS3 primarily for the Blu-ray drive toward the high-end model.
Once retailers bundle in a couple of games and an accessory or two, the real price for a fully functional PS3 Blu-ray player is likely to come out fairly close to stand-alone players, which start at $1,000.
If you’re going to force avid Blu-ray buyers to pony up for the more expensive model anyway, however, why shackle low-end buyers with the added cost of a Blu-ray drive?
Equipping the 20GB model with a standard DVD drive could easily knock $100 off the retail price, making PS3 more competitive with the Xbox.
But that would put Sony at odds with its Blu-ray studio partners, who have been promised a flood of low-priced Blu-ray devices to create demand for their movies and help drive down the cost of replication.
“The next generation doesn’t start until we say it starts,” SCE America president Kazuo Hirai said at E3, sounding like a latter-day Henry Ford.
But the Model T faced little competition at the time, a luxury neither PS3 nor Blu-ray enjoys.
By insisting consumers buy both, Sony has left itself precious little room to maneuver against the competition for either.
