Sony Battles Through Adversity

Aug 6, 2012

This week, on Episode 45 of the Geeks With Wives Podcast, we’re going to discuss Sony’s recently released quarterly figures. In the quarter ending June 30th, Sony’s PlayStation business unit had an operating loss of ¥3.5billion or $44.75 million USD. For gamers, it’s important to know where your money is going. Whether you pick a side or not, when you purchase a game or console, your dollars are being used to recover costs and develop new product. We’ll get into this more during the show (to be released on Friday) but for now, this is my admission that Sony has officially lost the battle of this console generation. But there is a bright spot: I believe they are better positioned to win the next generation.

By the numbers

The numbers don’t lie. According to VGCHartz.com, Sony has sold 65.6 million PS3s. That’s only 1.9 million behind Microsoft’s 360 which had a one-year head start and a failure rate of 54.2% (compared to PS3’s 10.6%). No doubt this is outstanding considering how dramatically far behind Sony was 3 years ago. In fact, Sony saw the smallest decline in year-over-year primary console sales. PS3 has certainly rebounded, but they are still behind overall. And let’s face it, when the PS4 comes out we will all change gears. Granted, Sony does a phenomenal job of working secondary markets to move consoles at the end of their life-cycle. But for our purposes, the PS3 is likely a memory by November of 2013. By then, the PS3 may well catch up to the 360 in terms of unit sales, but nobody will care. Instead, most consumers will be choosing between two new consoles: one with an outstanding network that has a popular “gamer” image; and another that had flops and missed opportunities despite a powerful console with very good first-party titles.

Mistakes we won’t easily forget

April 20th, 2011. The Playstation Network goes down. Not a completely unfamiliar event. That is until April 23rd when Sony reveals “an external intrusion” lead to the theft of 77 million users profile data. For 24 days, the Internet was buzzing about identify theft, credit card information theft (although not the case), and Sony’s vulnerable network. Sony rebounded with their “Welcome Back” program which included 30 days of PSN Plus membership, two free downloadable games, and a free year of identity theft protection. Network activity is strong and PSN has grown. Playstation Plus is growing as well and the return on investment for members is substantial. Sony just recently made available outstanding titles including Far Cry 2, Infamous 2, and Little Big Planet 2. Despite the growth and benefits of being a Plus member, the PS3 will still be remembered for the security breach. And again, when consumers are choosing a new console, they’ll question PSN’s integrity over XBOX Live, which has been steady and secure.

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Wiggle Waggle

If you’ve read any of my posts, you know I’m not a fan of motion games. I think the Wii Remote is a gimmick, nothing more. 80 million Wii owners won’t agree, but that’s alright with me. They’re all in kindergarten anyway. Microsoft and Sony felt the need to respond to the Wii’s unique input method and from their desperation came Microsoft’s Kinect and Sony’s PlayStation Move. While the Move is more closely related to the Wii Remote and improves upon it ten-fold, the Kinect has become a household name. I give Microsoft all the credit in the world for how they marketed the device. Sony, on the other hand, were overly technical and could not produce a killer-app close enough to Wii Sports. If Sony attempts to make Move a cornerstone of the PS4, they’re going to challenge gamers to give them money. Not a smart move for a company that needs a very strong start to win the next battle.

How to lose a bad image in 10 days

If Sony is going to win this next generation they need to do it right from the start. And the start is right now. It’s time to leak details and socially engineer consumers into creating a buzz about the PS4. We all want to forget about the mishaps from the past, and the best way to do that is create so much to talk about that people can’t find the thoughts or the time to bring up the mistakes Sony made:

  • They need a good-looking console that has a revamped software interface.
  • Backwards compatibility is essential. It doesn’t matter how they implement it. Personally I’d like to see them leverage Gaikai to allow all PlayStation Plus members to stream all games they own and register. If the PS5 is going to be disc free, then I need to get sucked into Sony’s ecosystem now so that it’s a no-brainer for me to buy the PS5, 6, 7 and so on.
  • The price must exciting. The old model of relying on revenue from systems sales is, well, the old model. I would price the system at $300. No more. Give folks incentive to buy the system and with Sony’s massive back-catalog of games and movies, consumers will find plenty of goods to sink their teeth into.
  • Finally, I would market the hell out of the system and focus on the roots of what makes the PlayStation brand defining: first party titles, cutting-edge technology, and the place where you’ll find the best future titles.
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I am the owner of a PS3 with a broken BluRay drive motor. I wasn’t able to access PSN for 24 days last year. I tried playing Bayonneta and almost through my controller out the window. And, like Sony, I kept on through the challenges. The pluses out way the minuses and I still contest Sony’s first party titles make the system a must-own for any serious gamer. While I associate with winners, I can cheer for an underdog, which Sony will be when the next generation arrives. But if they slip up and can’t produce a winning product, I won’t be the first to walk away, and that’s the scary part. In the end, I want great games on great systems. That’s not asking for much because the requirements aren’t impossible to achieve.

As always, you can reach out to me with any comments: [email protected]

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2 Comments

  1. When has Sony ever made money off system sales?  The only company to do that ever pretty much has been Nintendo.

    • I should have been clearer, Cam. I’m a firm believer in the AOL model – make the test drive super easy and cheap (free if possible) and allow your product to sell itself. So instead of pricing the next console high, Sony should consider taking a loss on the system. Even if that loss is as high as 30%. If they can’t get gamers tied into their ecosystem early in this next generation, there is a good chance we may never see another PlayStation.

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