Sony Corp.'s Blu-ray technology for high-definition DVDs has given the Japanese electronics giant an opportunity it hasn't had in 25 years: the chance to win a high-stakes format war and reap the benefits across its sprawling empire. However, its victory comes at a high cost and may be fleeting.
However, Sony's push for Blu-ray -- which analysts estimate as an investment of hundreds of millions of dollars -- has cost the company in areas such as the key videogame market.
Many analysts believe that Sony's insistence on putting Blu-ray on its PlayStation 3 players gave it just enough extra consumers to help tilt next-generation DVD sales toward Blu-ray.But complications related to the Blu-ray technology played a part in repeated delays of the PlayStation 3 release, giving Microsoft's Xbox a full year in stores before the PlayStation 3 came out in November 2006. The PlayStation also had a heftier price tag than the Xbox. In the U.S., the Xbox 360 has outsold the PlayStation 3 more than 3-to-1 from the time the consoles have been on the market through November.
Even with major studios on board, Sony must still win over consumers to Blu-ray. Consumers were arguably better off with HD DVD technology, which generally cost less to produce, contributing to HD DVD players selling for as little as $99 over the holidays. Meanwhile, Blu-ray players cost about $300 and up -- and movie titles issued in Blu-ray are often sold for twice the cost of a regular DVD.
Then there is the Internet. Sony is counting on sluggish development and slow consumer acceptance of technology that will allow for quick and easy downloads of movies at home, sending them directly to the TV set. If that snowballs faster than expected, Sony may never recoup the costs of its Blu-ray investments.
In any case, most home-entertainment chiefs see next-generation DVD as a temporary format that will last only as long as it takes for a superior technology to catch on. Most agree that while online movie distribution is still too clunky for the casual movie consumer, one day in the not too distant future it will dominate.
Now, Toshiba will have to focus more on other areas that can help broaden its consumer-electronic presence, such as technologies that copy movies directly onto USB flash drives. Those are tiny sticks that consumers can just plug into their computers, or in the future, directly into their TVs.
"You're going to see that hard drives and reusable flash are much more economical and green" compared to DVDs, says Warren Lieberfarb, a consultant to Toshiba and former head of home entertainment at Warner Bros. "You don't need packaging." He sees portable drives as an interim technology that will last the five or 10 years it takes for online movie distribution to rise to the fore.
