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Pach-Attack- How Much is Microsoft Paying Sony?

GT:On this week's Pach-Attack, Michael Pachter looks at how much Sony stands to gain from Blu-Ray implementation in the Xbox One

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Marcello1091d ago

Hey Pach forgot to mention a buck for every bluray disc sold for xbox one, that will run into 100`s of millions !!

blackmagic1091d ago (Edited 1091d ago )

Sony only gets a small fraction of the royalties from the blu-ray standard, they are only one of the nine major electronics firms that founded the Blu-ray standard and they are only one of the eighteen firms making up the Blu-ray Disc Association which continues to develop and collect royalties on the Blu-ray standard and there are dozens of other companies that own and collect royalties from the BDA on the critical patents that the blu-ray standard requires, ironically, Microsoft being one of them for their proprietary VC-1 video codec.

Pach, once again, showing his very limited knowledge.

kneon1091d ago

Out of all the members Sony and Phillips hold the most IP used in bluray so I expect they get more than the others. But it's still not as much as people might think. Besides, Sony and Phillips also are the main owners for the CD and DVD IP so Microsoft has been giving them money all along. Switching to bluray is likely only a small bump up in royalty payments.

Also these kinds of tech royalty deals usually have maximum limits and sliding scales that reduce the per unit royalty after certain targets are met.

greenlantern28141090d ago

but they do get some of every blu-ray sold so he has a point, may not be accurate on the numbers but i am sure sony is happy to have more people buying blu-rays. of course this is assuming people that are buying the xb1 dont already have blu-ray players. which they most likely do. so his speculation could be very pointless

AmazingBrian1090d ago

@greenlantern2814 blu-rays aren't just movies dude.... the games will be on blu-ray format too

magicted1090d ago

Even though Sony is on the Blu-ray board the own most of the patents for Blu-ray disc and Panasonic own most of the patents for Blu-ray players. Both those companies do get a little more in royalties then the rest.

HOLLYWOODLAND1090d ago SpamShow
pixelsword1090d ago (Edited 1090d ago )

Dear xbone fans:

Thanks for the cash to fund our "gamez".

Signed,

PS4 fans

j/k

ALLWRONG1090d ago

I love watching people pretend to know what they're talking about.

Minute Man 7211090d ago

No one used VC - 1 anymore, thou it gives a softer 3D'ish look to films

blackmagic1090d ago

@Hollywoodland
I didn't say sony didn't get any money from blu-ray nor did I say that microsoft makes more money, I said sony is not the sole beneficiary and only recieves a fraction of the total royalty paid as a result.

SMPTE is a standards association. MPEG LA, an intellectual property rights management firm, is the entity which collects on behalf of the codec patent holders.

page 8
2% or $0.02 per title
http://www.mpegla.com/main/...

@minute man 721
There are 8 blu-ray releases using VC-1 this week (July 9th).
http://www.blu-ray.com/movi...
http://www.blu-ray.com/movi...
http://www.blu-ray.com/movi...
http://www.blu-ray.com/movi...
http://www.blu-ray.com/movi...
http://www.blu-ray.com/movi...
http://www.blu-ray.com/movi...
http://www.blu-ray.com/movi...

Tsar4ever011090d ago (Edited 1090d ago )

Yeah, this is probably true, Sony's getting a little something out of this. But on the other side of the coin. Sony may be paying some patient royalties to MS cuz their console is every bit of AMD hardware as MS's console, also PS4 officially supports MS's DX 11.1 api, it been confirmed on many sites already. Whether or not devs utilize dx11 for sony games or not doesn't matter, the FACT is ps4 could run it may be enough to have to pay MS. Even though sony has upgraded it's own api that presumes to surpass the the limitations of dx 11 & opengl named PSL/PlayStation Shader Language but we won't see any graphical effects of psl till later in the console life cycle.

So the lesson of this post is patient royalties in biz sometimes SWINGS BOTH WAYS, ya'll.

SniperControl1090d ago

@HOLLYWOODLAND

Not sure about this Hollywood, maybe you can correct me, but didnt the studios decide to drop the VC-1 codec and go for the H264 codec instead due to a higher compression rate?

I am sure i heard this somewhere? but i could be wrong.

+ Show (9) more repliesLast reply 1090d ago
dedicatedtogamers1091d ago

What Sony will gain is reputation, not necessarily money. For every Blu Ray that sells on X1, it will be a vindication for the PS3. It also means that more cross-gen games will appear on PS3 for a longer period of time.

And if/when another format war arises, people will say "Remember how BR versus HD-DVD turned out? I'm buying whatever Sony supports".

Sitdown1091d ago

Just like they did with betamax ehh?

dedicatedtogamers1091d ago

@ Sitdown

If the best "zinger" you can muster is a failure from the late '70s, that kinda proves my point, doesn't it?

I mean, you could've gone with something like UMD or minidisc, but betamax? C'mon...

Heartnet1090d ago

i think the average Consumer has completely forgotton Hd-Dvd..

Sitdown1090d ago

@dedicatedtigamers

Since my post went over your head it's evident that you don't even understand your own rant.....as you prove my point; you think people will now automatically blindly go with Sony just because bluray won out over hd-dvd, when history has shown the market has regularly turned down products that Sony has supported regarding formats. Can you explain your ps3 vindication theory? Also your cross gen logic.

@Heartnet
Exactly, and I doubt most people automatically think Sony when discussing bluray.

madpuppy1090d ago

@Sitdown

regarding Betamax, it was (is) a better format than VHS, but, not enough for the average consumer to care and spend more on it, also, VHS had an 8hr recording time and betamax, being smaller only had a 6hr recording time on it's slowest recording mode. so, a more expensive price and shorter record time over was a deal breaker for the consumer that didn't mind the degradation in quality in comparison, a win for JVC for sure.
But, Betamax was VERY popular in the professional sector and is still used in the television industry, (although, digital media eg: HD and solid state) is replacing it now.

HugoDrax1090d ago (Edited 1090d ago )

I remember how it turned out. It's funny because at the time the more affordable/consumer friendly product was HDDVD. It was cheaper to manufacture and cost less than Blu Ray. The deciding factor was Universal Studios which was supporting HDDVD format at the time. I recall reading an article that stated Toshiba could only fork over approx 180Million to Universal and Sony countered that offer with 300-380 Million. Once that was decided, it was a done deal. Blu Ray format was the victor. I'll look for the articles online, may take a while but I do remember the war as being Sony vs Toshiba not necessarily Sony VS Microsoft.

mwjw6961090d ago

@madpuppy Betamax has not been used in the industry for 10+ years. I don't know what backwoods tech place you know of. Digital and DVD has been the base for a long time.

You also forgot the main reason VHS took off vs Betamax. PORN! VHS was the only ones that would let the porn industry use their tech. It almost single handily won that war.

loulou1090d ago (Edited 1090d ago )

dedicated to fanboys. wtf? seriously? you just write any nonsense to get bubbles.

if anything, ps3s blu-ray what sort of vindicated by the lack of multi-disc games on. that is all.

saying that the x1s blu-ray inclusion is the vindication is utter nonsense. and wtf is this cross gen sh#t you are talking about????

and like i said, your typical pathetic bubble fishing comment. you truely are the worst troll on here

badz1491090d ago

Sony never countered the $180m given to Universal and Paramount by Microsoft. It was a bold move but worked to delay the inevitable as Transformers was mad exclusive to HD DVD at that time.

the deciding factor was Warner who up until that time, released on both formats but ultimately decided to side with BD, possibly convinced by the sale ratio of BD which was always higher than HD DVD. following that announcement, all major studios except Paramount and Universal are on the BD bandwagon. they had to jump ship and then Toshiba announced the discontinuation.

DigitalRaptor1090d ago

@ loulou

Pot. Kettle. I hope you know the rest.

truthteller1090d ago (Edited 1090d ago )

@dedicatedtogamers

I agree. Sony does have an edge at cross-platform games but only with first-party studios. Third-party will most likely make for all consoles ( current gen and next, not excluding 360 - example Destiny ) or only next-gen. But I also doubt Sony will let it's studios make cross-gen titles b/c they want PS4 to sell. Maybe Japan studios.

loulou1090d ago

ofcourse i know the rest raptor. i dont suck sonys bell, so automatically i am an xbox fanboy... even though i have a ps4 on pre-order

+ Show (9) more repliesLast reply 1090d ago
Heartnet1090d ago

a buck for every disc? way to high me thinkz.. 2 dollars royaltys for the drive.. ur looking at pennies if that per disc

HugoDrax1090d ago (Edited 1090d ago )

How about how much is SONY paying Microsoft for use of Direct X11 in the PS4?

Both companies are paying one another. Microsoft is paying SONY a small fraction for Blu-Ray, and SONY is paying Microsoft a small fraction for use of Direct X11.

*EDIT*
What ignorant Sony fanboy clicked Disagree, but didn't reply? without doing research to see I stated facts? Not rumors, but facts. It is a fact that Direct X is a component of Microsoft Windows. It is used by a plethora of software applications for graphics visualization. Also used for games developed on the Dreamcast, Xbox, X360. Now it will be used by Sony on the PS4.

Microsoft Source:
http://www.bit-tech.net/new...

Sony Source:
http://www.geek.com/games/s...

sak5001090d ago (Edited 1090d ago )

Well said Auric...

LOL, Sony uses Windows in their notebooks. Only to fanboys it's like a victory if X1 uses bluray but for those two big conglomerates it's nature of business and they are not mortal enemies to each other. They have been collaborating on many things for tons of years and only started against each other over consoles.

mwjw6961090d ago PersonalAttacksShow
Persistantthug1090d ago (Edited 1090d ago )

DirectX is not something anyone needs or has to use.
DirectX is an API tool, and its main purpose is to consolidate many different devices, so that, for example, an ATI GPU can effectively be programed the same as an NVIDIA GPU. This is used so that is makes it easier, primarily for PC programers.

One downside of DirectX, is the fact that developers can't ever really get the full potential of said device.

None of Sony's consoles or handhelds have ever used or needed DirectX.

YNWA961090d ago

Remember, Sony are not in this for the money....

latoya12kimber1090d ago SpamShow
pixelsword1090d ago (Edited 1090d ago )

At any rate, yeah, whether people will admit it or not, Xbone purchases will go to sony; nothing wrong with that, it's just the way it is.

I guess blu-ray is needed this gen.

showtimefolks1090d ago

It's some good pocket change but nothing major

Sony computers use windows

It's the fanboys who think about this stuff, end of the day ps4 has build a lot of momentum and I expect Sony to roar back into #1 from day one. As someone who bought ps1 this time around reminds me of launch of ps1-ps2 when Sony was on fire

alb18991090d ago (Edited 1090d ago )

What is The point on this.......isn't Microsoft a more prosper and richer company?
Isn't Bill Gates the richest person on earth?
Isn't Apple making some parts of the iPhone with Samsung......so what?
Does that make apple less better than Samsung or something?
Does it make SONY BETTER THAN MICROSOFT?
How much pay SONY to Microsoft in the computer business?
Who needs who?

Funantic11090d ago

These companies have always paid licensing fees to each other. The Microsoft Office and Windows fees are far more expensive depending on which edition the Sony Vaio computers use. The fees were once $120 once but Microsoft supposedly slashed the prices a whole lot this year. And the fees for the blu ray disc are like 12 cents. Plus the fees paid for the blu ray usage is $9.50 but divided between 9 companies of the BDA. And fees eventually go down. Microsoft can easily pay this without hurting.

+ Show (7) more repliesLast reply 1090d ago
KillrateOmega1091d ago

Eh, not that much (from the perspective of corporations of that size), but it's still something.

Better than nothing, right?

RIP_Cell1091d ago

Sony is just one of the members of the BluRay Association

Gimmemorebubblez1091d ago (Edited 1091d ago )

Yup, they are one of the many members but they are one of the 4 propriety owners of Blu-Ray technology and they control the rights to the use of Blu-ray in consoles. MS will pay them a minimal amount, its something but nothing to brag about. MS will pay maybe $4 in royalties and Sony might receive $1 for every Xbone.

Belking1091d ago

but they are one of the 4 propriety owners of Blu-Ray technology and they control the rights to the use of Blu-ray in consoles.

That's not true. They don't control the rights to bluray used in a console. It doesn't work that way.

Th4Freak1091d ago

@Belking Company, Shareholder, Patent, License. Take a look at these concepts and you will understand how it works.

popup1091d ago (Edited 1091d ago )

..and don't forget, with the power of the cloud, $1 is actually worth 10

kneon1091d ago

These sorts of industry organizations normally license their technology on a fair and non-discriminatory basis, so Sony can't block a company from licensing bluray, provided they meet all the normal criteria and agree to the standard license.

+ Show (1) more replyLast reply 1091d ago
CertifiedGamer1090d ago

I said it since Microsoft was pushing for DRM that Microsoft wants to sway customers to buy Digital so they could try and avoid paying Sony and save big on just digital distribution but everyone knows how that idea turned out.

hakeem09961090d ago

MS DRM implementation was because the publishers ask for it and also because they want to destroy GAMESTOP. As for their pursuit of digital it because digital is the future.None of these measures has anything to do with SONY . MS and SONY have been paying each other for stuff since for ever . Yes MS will pay a few cents per disc to SONY but SONY still pays them for the codec they use . MS pays them for the CD,DVD,Bluray rights and Sony pays MS for codec ,use of windows in their computers and tons of other MS software . it's a give and take relationship

kupomogli1090d ago

@hakeem0996

Both Sony and Microsoft stated that publishers didn't pressure them into adding DRM for their consoles. It's something Microsoft did on their own.

Gamingcapacity1090d ago

Digital is the future we can agree on that. But what is wrong of offering consumers both?

We are at the stage that there is a higher demand for physical media for games than digital (on consoles). Sony and MS both offer digital versions of games so to try and kill physical media is a bit to soon. Let it die out naturally and let consumers convert to digital with a smoother transition.

Sitdown1090d ago

That would make sense, except for the fact that not only were they still going to use bluray...but the used game policy was going to cause more people to purchase new.... which means even more blurays being sold.

+ Show (1) more replyLast reply 1090d ago
xtremexx1091d ago

could this be a reason why the Xbox One is $100 above the PS4 apart from the kinect? cause obviously the tech in the Xbox One like processor .etc are cheaper since they are weaker than the PS4's

Foxgod1091d ago (Edited 1091d ago )

The tech doesnt differ much in power and price, it really is Kinect that raised the price.
Kinect is an expensive piece of equipment that had a lot of hours of R&D into it.

Foxgod1091d ago

Well, they are hoping to set their console apart from the rest.

raiden-491090d ago (Edited 1090d ago )

I don't know why there are so many dislikes they did put the hours in to "fix" the Kinect to make gamers like it more see by the results its not working.
EDIT:Also the fix part doesn't mean I don't agree about how shitty Kinect v1 was but it was.

Kenshin_BATT0USAI1091d ago

People are assuming the Kinect is a $100 piece of hardware. I just want to point this out. As much as I don't care for it, it's pretty impressive in what it can do, and I can bet that it's over $150 alone. I wouldn't be surprised if Microsoft is selling the X1 at a loss.

S2Killinit1090d ago (Edited 1090d ago )

in my opinion what drove the cost high is because of all the data gathering capabilities of kinect. I don't think we will see too many games that will justify all the R&D that went into Kinect reading how you feel, or whats your heart rate, or where you look and for how long, or where the blood is rushing in your body, or how many people sit in front of it and whether that person is you. the last two or the ones that scare me the most by the way because Microsoft bragged about them to a group of industry analysts saying Kinect was the future of charging people for a rental based on how many people are sitting in front of the kinect. They even made the patents for these features. Personally I don't think MS will have the guts to implement these technologies in such a way, anytime soon, but the Kincet will be the catalyst that sets the precedent of invading peoples homes in ways that were unheard of only a few months ago. Once people buy into xbox (and they will) and it becomes normal to have such a device with these types of technologies in your home and be ok with it, then the next step will be to use the said technology to make money. Its kind of like the frog that gets boiled slowly, never jumps out of the pot story. Kinect will be the trojan horse that sets the precedent for all corporations to gather information from your homes using all sorts of devices you use.

Qrphe1090d ago

"I wouldn't be surprised if Microsoft is selling the X1 at a loss. "

One is certain it will be selling at a loss Kinect or not if the PS4 also is. You're right about the Kinect's manufacturing costs, Kinect 1 retailed for $150, surely Kinect 2 is around that price specially since it's way ahead technologically.

isa_scout1090d ago

It's impressive watching it on the internet(for some people I guess), but what happens when it's in the hands of the consumers? I think it's going to end up being like the kinect 1.0 on the 360. Mine started to collect dust after a few weeks because all MS released were casual shovelware titles, and lets be honest when you get home from work the last thing you want to do is wave your tired arms around in front of your TV.Kinect is cool for what it is, a device designed for kids and grandparents.

rainslacker1090d ago

Not likely. Keep in mind that there is going to be tech in the PS4 that Sony will be licensing from MS as well. MS and Sony will be licensing tech from Motorola, Samsung, and likely many other companies as well. It's just the way computer stuff is made nowadays.

Patent licensing of this nature is usually fractions of a penny per unit, or sometimes just a base price to license the tech.

Everyone assumes that the Kinect is the main $100 price difference, which is reasonable considering all it does, but I doubt it actually costs MS $100 to manufacture each Kinect device. Foxgod is accurate though that they would want to recoup R&D costs on the device, but that's likely part of the overall R&D budget for X1.

TwistedMetal1091d ago

so either way xbox one fanboys lose. you will still be giving money to sony so you might as well go all the way and get the superior ps4 which has the better blueray player an discs.

True_Samurai1091d ago (Edited 1091d ago )

Yeeeeaaa but Blu ray has a codec that belongs to Microsoft. So they're paying Microsoft also :-p

Foxgod1091d ago

Sun and Oracle also get money, considering java is used on Bluray disc's.

rainslacker1090d ago (Edited 1090d ago )

VC-1, the codec you are referring to, is actually owned by 18 different companies. It is considered an essential patent and licensing fees are paid either to the MPEG LA licensing body, or directly to it's members. The standard itself is open to implementation by anybody, but licensing may be required.

VC-1 is already supported by PS3 and is the standard codec for the 360.

It's worth noting that Sony is one of the 18 members who holds a patent that is part of VC-1.

Overall this whole debate is stupid. These companies aren't really at each others throats. And any licensing fees paid through this stuff is paltry compared to other costs involved in manufacturing these systems or games.

I'd also like to point out, that most of these fees are paid by the actual practical application of the patent application. For instance, in Foxgod's example of Java, Sun isn't likely to get anything unless the disc actually uses something that is Java based. That fee will likely come from the development tool used to make the content in question, and isn't paid on a per unit basis.

True_Samurai1090d ago

^^^ VC-1 is no longer the codec they have upgraded

rainslacker1090d ago

Mind if I ask what codec Blu-Ray upgraded to? All I can find is that it is one of the codecs used in Blu-Ray. BTW, blu-ray actually supports several codecs. VC-1 was just the commonly accepted one used for movie playback. MPEG-4AVC is the other compatible format that's a choice to use for HD playback, but they've both been available from the start.

rainslacker1089d ago

VC-1 is the official release VC-9. VC-9 was never an official release, but a provisional standard. VC-9 is a standard that BD-ROM was going to support in 2004, in 2006 they used VC-1 instead as that was the official version of the codec released by MS.

+ Show (3) more repliesLast reply 1089d ago
CalamityCB1091d ago

Whats wrong with giving Sony royalties?
Please remove the fanboy rod outwards from the butt. You may discover a whole new world of video games.

TwistedMetal1090d ago

well Ms didn't put bluerays in there x360 and they tried to make hd dvd the winner so they feeling salty right now as well as all the xbox 360 hd dvd owners. I would like to see those fanboys comments about hddvd killing blueray lol. also like to see there comments on x360 selling more then ps3 because ps3 is winning as well. don't bet on a loosing horse. history here shows us the winner will be ps4

blackout1091d ago

What stupid A$$e$. Sony as well as every other hardware maker aint seeing nothing cause the pay MICROSOFT for there WINDOWS licence. Stop trying to use your N4G brains to much. And guess what Microsoft owns that all by themselves. Now ask how much is a windows licence. Thats the real question?????????????????????? ??????????????????????????????? ??????????????????????????????? ??????????????????????????????? ??????????????????????????????? ???????