The electronics giant is locked in a battle with Nintendo Co.’s Wii and Microsoft Corp.’s Xbox 360 for control of the videogame-console market. The cost cuts could help stanch the hardware red ink at Sony, which sold the previous-generation PS3 at a significant loss, making up for it with game-title sales and royalties.

Integration and key changes in components has brought the latest PS3’s cost down to $448.73 from $690.23 for the first-generation model, said iSuppli.

The PS3 sells for about $399 in the U.S., at least $150 more than Wii and Xbox 360. However, the PS3 accounted for 16% of global videogame-unit shipments in the second quarter of 2008, second only to Nintendo’s Wii, which accounted for 54% of the market.

Andrew Rassweiler of iSuppli predicted the PS3 may be able to break even in 2009 with further hardware revisions.

Part of the decline in cost is the result of “the normal learning curve and supply/demand factors that bring component prices down over time,” iSuppli said.

Also, integration of components into the core silicon of the PS3 cut the number of individual parts to an estimated 2,820 from 4,048 in the previous-generation model with a 60-gigabyte hard drive.

The cost estimate of $448.73 doesn’t include software, box contents and royalty expenses.

WSJ.com

The software, called AdSense for Games, is in beta testing and allows video, image or text advertisements to placed at the start, end or change of level in an online game.

The advertisers are charged on a cost-per-impression or cost-per-click basis with revenue being split between Google and game developers or publishers, it said in a statement.

Google is working with game makers including Konami Corp and Demand Media, run by former MySpace Chairman Richard Rosenblatt, as well as advertisers like Sprint Nextel Corp and Sony Corp’s Sony Pictures.

Data by comScore indicates that over a quarter of Internet users, or about 200 million people, play games online with their ranks growing by 17 percent annually.

Google extends AdSense to online games (Reuters) by Reuters: Yahoo! Tech

Google calls it instant gratification. Click-to-buy links, the company said, are non-obtrusive retail links positioned on the watch page beneath the video with other community features. That means users can buy products the same way they share, comment on, and respond to videos.

Google’s first step is to embed iTunes and Amazon links in videos from companies like EMI Music, and provide Amazon product links to the newly released video game Spore on videos from Electronic Arts.

Just the Beginning

According to Glenn Brown, YouTube’s strategic partner development manager, and Thai Tran, YouTube product manager, this is just the beginning of building a broad e-commerce platform for users and partners on YouTube.

“Our vision is to help partners across all industries — from music, to film, to print, to TV — offer useful and relevant products to a large yet targeted audience, and generate additional revenue from their content on YouTube beyond the advertising we serve against their videos,” they wrote in the company blog. “And those partners who use our content identification and management system can also enable these links on user-generated content by using Content ID to claim videos and choose to leave them up on the site.”

The retail links are being gradually added to YouTube’s library of music videos — and only in the United States. But YouTube is looking to expand the program to additional content and product partners, and to international users. YouTube also said it will be experimenting with the user interface over time to make sure this works for the community and will innovate based on feedback.

Ads as Content

Greg Sterling, principal analyst at Sterling Market Intelligence, said the YouTube concept is novel, but not new. There has long been talk about a hypothetical merger of television and the Internet that would allow viewers to stop the programming to purchase a product featured in the broadcast. But little progress has been made.

“There’s pressure on Google from various sources to squeeze more revenue out of YouTube and do it in a way that aligns with the content,” Sterling said. “Google’s search empire is built on the premise that ads are content when a consumer is interested in a particular topic. This is broadly consistent with that philosophy. Google is trying to generate more content without infringing on the user experience too much.”

Sterling isn’t willing to predict how much revenue YouTube could generate through the click-to-buy strategy. However, he does predict there will be more experimentation with tactics for getting more dollars from online videos.

“Google is making a worthy effort to do drive revenue without crowding the user experience with more ad units,” Sterling said. “It’s not exactly like search because people aren’t necessarily in buying mode when they are watching these videos. However, over time, if people become aware of these capabilities, then they may be prepared to buy.”

Google Launches Click-To-Buy Links on YouTube (NewsFactor) by NewsFactor: Yahoo! Tech

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