It is all a numbers game.  Sony is very willing to sell PS3 at a loss, in return they gain market penetration and buyers for Blu-Ray media and games.  I am sure the Bean Counters at Sony have figured out that the profit from media sales will cover the loss on the hardware (long term).

HD-DVD is not taking a huge hit per player like Blu-Ray is, Sony is losing BILLIONS no the PS3 and while not as much, they are losing money on standalone players.  Sony only see’s the profit from their own movies and when you compare sales, the difference is not as great as you make it out to be, being sales are not all that great for HD media on either system.  The amount of players in the market in the end is going to make all the difference in the world.. and now that Walmart has sold a ton of these HD-DVD players for $98 a pop, and the PS3 is still NOT selling… in the long run HD-DVD has a huge advantage (not to mention the absolution abomination that Sony has commited with the whole BD Profile 1.1).

Unless you’re selling Leer Jets or Cruise Ships there are very few businesses that would agree that selling 4 items at $2.5mil is a better approach than 10mi; at $1.00. It might be less work, if you’re a great salesperson, but…

As for loss leaders, Sony posted a loss of $876 (or so) MILLION in loss form their gaming (read: PS3/BluRay Gaming Console) Division. Selling a PS3 for $3-499 is a HUGE loss per unit. Selling BDM for the same or less than a HD DVD may not be as significant -BUT, we don’t know what the kick backs to the studio’s are on those exclusive titles, that may very well decide the loss or gain. As to HD DVD hardware @ <$200, it simply must be a even draw, or a profit to some small degree. Why would Toshiba sell the HD-A2 for $200 and lose money? They’re not making $$ on disc sales - Just hardware. Sony, however, can’t seem to get production of BR drives to fall into a cost effective place, so they sell at a loss to penetrate the market. If I was Sony’s co-conspirators (IE: other BR hardware makers) I would be a bit p.o.ed at them for slashing prices on HW when they can’t afford to follow suit. Other than open box returns I have yet to see a BR player (non-ps3) for under $500. Don’t get me wrong here, IF BR starts putting out a player for $200 or less, I’ll get that TOO. I don’t particularly care who wins, I simply can’t ignore that in business you attempt to turn a profit, and you do that with low overhead and accessible products. I just feel like HD HDVD has got closer to that concept faster than BR has. I feel like HD DVD’s business model = longevity despite the war, and BR’s = “go all in even if it’s a bluff”

“Anyone with a lick of sense knows it’s more business savvy to to sell 10,000,000 things for $1 than to try and sell 10 things for $1,000,000 each.”

Lick of sense or not, either way you have $10,000,000. Money talks. I’d much rather have to produce four items at $2.5m each than to make 10 million of anything, but maybe that’s just me.

How can you say Blu-ray media is a loss leader when it sells for the same price as HD-DVD media? I don’t buy that anyone’s losing money on any HD media at $25-$35 a pop. The losses are more likely to happen by selling HD hardware for under $200.

It could also be that the average income of people buying Blu-ray discs is higher so they have more disposable income. I hope Blu-ray media continues to sell the socks off of HD-DVD media. It will force Paramount and Dreamworks to re-thnk their decision if they stand to make more money because Blu-ray owners are buying more media.

I’m spending like mad and am very happy with the Blu-ray releases I’m seeing. The Die Hard boxed set, Edward Scissorhands, Robocop, Spider-Man trilogy, Harry Potter box set, Close Encounters. I’m buying because they’re releasing stuff I really want.

Soundzilla,

That’s the trouble right there. Instead of lowering cost on hardware and gaining a bigger following, Blu Ray has “captured” studios and offered loss leader sales on media. Anyone with a lick of sense knows it’s more business savvy to to sell 10,000,000 things for $1 that to try and sell 10 things for $1,000,000 each. So instead of (a lot) of Blu Ray players on the market they have enticed the owners to buy more movies (they may or may not want, due to BOGO type deals). I also (conspiratorially) suggest that part of the reason there are NO really killer games for the PS3 is that having nothing to play nudges the PS3 owner toward BR movie purchases rather than letting the console sit idle, thus offering BR a sale, banking on the inherent longevity of the console regardless.