Sony’s proprietary pratfall, continued

Here’s more reason to be very afraid that the Blu-ray debacle is behind the PlayStation 3 problems and may ultimately be a deal-killer: UMD movies for the PlayStation Portable are basically done (hat tip: Game/Life). Sales down to a trickle. Movie studios pulling out completely.

This Hollywood Reporter story comes on the heels of a Variety story last month that warned of slowing UMD movie sales. Here’s a nice quote from an unnamed Hollywood executive: “It’s awful. Sales are near zilch. It’s another Sony bomb — like Blu-ray.”

It costs virtually nothing to mass-produce digital disc media. Negligible manufacturing costs, low packaging costs. And yet nobody can make money off of PSP movies, which should be pure profit. That’s why proprietary formats are so dangerous. The company that owns the format can charge so much to use it that what seems like a no-brainer becomes untenable for the companies that need to pay that licensing fee. If your proprietary format is ubiquitous, popular, and unique, then you can get away with that. But Sony has continually screwed up in the past 10 years by assuming that just because it was Sony, and just because it introduced some new proprietary technology, that anyone cares. They were wrong, as James Surowiecki writes:

“Not Invented Here” is an old problem at Sony. The Betamax video tape recorder failed in part because the company refused to coöperate with other companies. But in recent years the problem got worse. Sony was late in making flat-screen TVs and DVD recorders, because its engineers believed that, even though customers loved these devices, the available technologies were not up to Sony’s standards. Sony’s cameras and computers weren’t compatible with the most popular form of memory, because Sony wanted people to use its overpriced Memory Sticks. Sony’s online music service sold files in a Sony-only format. And Sony’s digital music players didn’t play MP3s, which is a big reason that the iPod became the Walkman’s true successor. Again and again, Sony’s desire to control everything kept it from controlling anything.

So Sony’s proprietary obsessions are finally killing off what looked like a doomed format from the start but could have been a great new revenue stream for everyone involved. At this point, anyone want to bet the outcome will be different with Blu-ray?

– March 30, 2006

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