Sunday, May 27, 2007

PS3: Why Sony Has To Do Something About The PS3

Many have harped on about the severe dearth of quality games for the PS3, while trumpeting the surge in high-quality Xbox 360 games. In which case, I won't. But with PR gaffe after gaffe, and forum hounds and market analysts alike proclaiming Sony's failure in the next-gen console war, what is Sony actually doing to convince consumers?

More after the jump.

Luckily, finding hilarious quotes from Sony management is quite an easy task;

"I am pretty sure if you asked just about any real gamer out there if they would like to have a PS3, their answer would be a resounding "Yes!"

Dave Karakker, Sony ’s Director of Corporate Communications (Gamepro Interview)

1) Operating profits were down 68% to $US597 million in 2006, from US$1.88 billion the year before.

2) 3.2 million PS3s sold against 10.9 million 360s and 7.4 million Wiis. The Wii is outselling the PS3 by over 2:1, while Sony isn't actually doing all that bad against MS

Surprising? Not when you consider some of the moves made by the geniuses over at Sony HQ:

1) Exploding notebook batteries

2) PS3 launched way before ready - that's a nice way of saying Europeans ended up paying US$600 for a "downgraded" "work of art"

3) Spyware encrypted in Sony music CDs. Not exactly the best way to endear yourself to the net-savvy gamers you want to buy your console.

And it's not just us philistine hoi polloi Sony is alienating. By pricing the hardware out of reach of most of the public, Sony has (unwittingly, one might hope) promoted a tactic that has also scared away game developers.

Games Sony Lost
So far, the PS3 has lost exclusivity to Assassin's Creed, Devil May Cry, Haze, and
Hideo Kojima's fabled Metal Gear Solid 4: Guns Of The Patriots. Rumors are circling that both Final Fantasy and Metal Gear Solid, long term Sony stalwarts, will be providing ports of their latest releases to the Xbox 360, albeit at a much later date. With all of this, there's little incentive for gamers to shell out for a PS3, when they can play the same game on the cheaper, more refined 360.

Then there are the 360-exclusive launches: Bioware's Mass Effect, Irrational's Bioshock, and of course,
September's Halo 3 - only the hugest, most marketed, most anticipated game for any console yet. Gamespot is reporting that 4 million pre-orders have already been laid down for Halo 3, with a sales forecast of US$172 million for the first quarter alone. Peter Jackson directing the movie version of Halo will no doubt spin the hype even further.

It's Not So Bad
But take heart bunglers, your potentially devastating situation is partly relieved by the drop in manufacturing costs of the Blu-ray hardware, along with a move to a 65nm manufacturing process for IBM's Cell CPU. A smaller CPU manufacturing process means more CPUs can be produced from the same silicon wafer, meaning lower costs -but not necessarily lower for the consumer. Price drops have already been announced for Blu-ray players. Most likely these will be turned into higher profit margins for Sony, or should we say, any profit margin.

No Wait, It Is That Bad
Each 60Gb PS3 costs US$840 to produce; it retails at US$599 - meaning a loss of US$241.35. Without even considering the recently recalled 20GB units, which saw Sony take a massive US$306.85 hit with every unit sold, Sony is absorbing a tremendous loss.

And consider this cheerful number they probably pulled out of thin air: Sony stated they envisage the PS3 having a ten-year shelf life. Aside from being unlikely - when was the last time you kept anything for more than ten minutes without modding it? Unless the strategy bears some crazy fruit, this could well be Sony's version of Sega's extravagant-but-financially-ruinous Dreamcast. Need I remind you it helped end Sega's run as a hardware player in the console market?

Ok But At Least There's Pie Right?
The one bright light at the end of the tunnel for Sony is that its unlikely to get any worse. Promising titles like Lair, Heavenly Sword, Uncharted: Drake's Fortune and Grand Theft Auto IV are all planned for launch before Christmas, and expected to boost sales tremendously, not to mention Final Fantasy XXIII and Metal Gear Solid 4. Quite possibly it's not the last we'll see of Sony just yet but unless they have a stable full of unbelievable games in development now, it looks as if the horse has already bolted for Sony.

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