[PS3] Is The Playstation 3 Dead In The Water?

[.:|Physalis|:.]

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Introduction


For a while, it looked like Sony had an unbeatable console in the Playstation 3. At their E3 2005 press conference last year, they first showed off the console along with a few tech demos, a playable early version of Unreal Tournament 2007, and a number of game concept videos. Everyone who attended that conference thought that the PS3 would easily be the champion of the next-gen console wars, despite the year head start of Microsoft's Xbox 360 and the low price and low development costs of Nintendo's Revolution.

How times have changed.

On Monday night, Sony once again held a massive pre-E3 press conference at one of the huge sound stages at the Sony Pictures studio in Culver City, CA. Sony execs came on stage to tout once again how the PS3 would not just be a video game console but a full-fleged entertainment device.

And then they started showing off the first launch title PS3 games, some of which were playable to press conference attendees at the end of the pre-E3 press conference. Graphically, the games looked a lot better than games on Sony's previous PS2 machine, but they certainly didn't look like a lot of the movies that Sony showed off at last year's press conference. Moreover, games like Warhawk, Resistance, and Gran Turismo HD didn't look all that much better, if at all better, than current games on Microsoft's Xbox 360.

Then came the more surprising and at the same time most disappointing news of all: pricing. Normally price points and exact release dates for new consoles don't come during E3, but later in the year and closer to the actual launch date. Not this time for the PS3 as Sony announced two separate versions, one with a 20 GB hard drive and the other with a 60 GB hard drive, which will retail for $499.99 and $599.99, respectively. A US launch date of Nov 17 was also announced.

The crowd at the conference didn't really know what to make of it. Most people had assumed that the PS3 would be expensive, and certainly more expensive than the PS2 which launched for $300 back in 2000 in the US. But no one expected that the high-end PS3 version (which besides having a bigger hard drive will have several other features that the 20 GB version won't have) would retail for twice as much as the PS2 launch price.

I spoke with several people who attended the press conference right after it concluded. Their opinion was one of shock and dismay that Sony would ask such a high price for a product that, at first glance, didn't seem to be a huge quantum leap over the Xbox 360 in terms of hardware features. One very well known game developer told me that it was a surprise that Sony would reveal the pricing for the PS3 at E3. "That was a big mistake," was the game developer's response. A well know game journalist also told me that the PS3 press conference showed that the console was dead in the water. "There will not be a PS4," according to this journalist.

So how did Sony, who was on top of the world at last year's E3, come crashing down so hard this year? There are several factors, in our opinion...


The timing of the price announcement: There is still confusion as to why Sony would offer up a price point for the console over six months before its launch. Perhaps Sony was trying to prepare people for such a huge leap in the cost of their new machine well ahead of time. However, the fact is that tons of people would have lined up to pre-order the PS3 for months before the final price was revealed. Now that the price is out there pre-orders for the console could be affected.

The price itself: $499 and $599, no matter how you look at it, is a lot of money. The economic picture today is a lot different than 2000 when the PS2 launched with prices for gas and other essential items was far cheaper than it is today. With such a high price tag, it could be that the retail price could end up being a psychological barrier preventing some people from purchasing the product, especially with the Xbox 360 Premium currently selling for $399 and the Nintendo Wii likely to cost even less.



The tech: Sony has banked on their Cell multiprocessor CPU and their Blu-Ray disk drive as their two big leaps in technology. However, it is clear that the launch games for the console as shown during E3 are not using Cell to its fullest extent. Current Xbox 360 games already look almost as good if not as good as the PS3 games shown at the press conference and on the show floor. As for Blu-Ray, the PS3 will launch less than five months after the first stand alone Blu-Ray disk players. That means only a few hundred Blu-Ray movies will be available to purchase compared to the thousands of DVD movies available to PS2 owners when it launched three years after the first DVD player was in stores in 1997. Also Microsoft plans to have a add-on disk player for Xbox 360 owners that will play rival HD-DVD movies. With millions of Xbox 360 owners already out there, it's likely that a number of them will pick up the HD-DVD add-on which will likely cost a lot less than picking up a PS3 (exact pricing for the HD-DVD add-on has not yet been revealed.

The games: Much like the PS2 launch, the PS3 doesn't look like it will have a lot of "Wow, I must have that!" game titles when it launches in November. Games like Resistance, Heavenly Sword, Warhawk and more are currently looking pretty standard fare. This would be fine for Sony if this was the same situation as the PS2 launch when there was no real competition. Not so this time. Xbox 360 will have its second-gen titles ready to go by the time of the PS3 launch and those games, particularly Gears of War from developer Epic Games, look amazing months before launch. The Nintendo Wii, while not a graphical powerhouse like the PS3 or Xbox 360, also has some promising launch titles, particularly Legend of Zelda: Twilight Princess and Metroid Prime 3.

Conclusion

So what can Sony do about this? At this stage there is little that the company can do. The only short term solution is to announce an even lower price for the PS3 but that seems unlikely and it won't affect the fact that their launch title line-up is not looking up to speed. The only thing that might save the PS3 at this point is yet another multi-million selling exclusive game franchise that comes out of nowhere like Grand Theft Auto III did for the PS2 in 2001, one year after the launch of the console. Again the competition for such a game is much bigger (the next GTA game will launch for the PS3 and Xbox 360 at the same time next year for example) but if Sony can find that game it might be able to pull it off. At the moment, however, things look bleak and in our opinion we would rather spend our money this fall on upcoming Xbox 360 games and/or a Nintendo Wii and its titles than spend a whopping $600 on just hardware.

At this point, the biggest selling point of Sony's PS3 console appears to be its Blu-Ray disc drive. That may not be enough for many gamers to plunk down $500 or $600 once the euphoria at launch dies down.

[Reiz]

riassunto ? 

[.:|Physalis|:.]

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Introduction

During E3 this past May, FiringSquad posted an editorial on Sony's next-gen console called "Is the Playstation 3 Dead In The Water?" The editorial was written in response to Sony's decision to release their next-gen console at the steep price points of $499 and $599 along with the not-so-impressive game launch line-up. At the time we chatted with our industry sources who said that Sony had basically shot itself in the foot with its PS3 launch plans with one anonymously telling us that in their opinion, "there will not be a PS4."

Since the E3 announcements on the launch price and the launch date of the PS3 for Nov. 17 in the US and Europe and Nov. 11 in Japan Sony reps have made some ... interesting claims about the PS3. Sony Computer Entertainment head Ken Kutaragi made the claim during E3 that the $599 price tag was "probably too cheap ". Later, Sony Playstation studio head Phil Harrison said in an interview that the PS3 was "clearly a computer", rather than just being a video game console. This past summer, Sony Computer Entertainment Europe CEO David Reeves was quoted as saying that the PS3 would be successful "...even if it didn't have games." Meanwhile rumors were rampant that the PS3 was suffering from production problems in its hardware, notably because of its Blu-Ray disk drive. which only started launching its stand alone disk players this summer only a few months before the PS3's launch. As of this writing, Sony hasn't even admitted that the PS3 has started manufacturing yet.


All the quotes and all the rumors finally came to a head Wednesday morning as Sony's European division finally admitted that the simultaneous global launch for the PS3 wasn't going to happen after all. Thanks to a shortage of the laser needed for the Blu-Ray disk drive, the console is now being delayed until March of 2007 in that part of the world. Furthermore, Kutaragi also admitted Wednesday that unit amounts for the US and Japanese launches would be very small; just 400,000 units will be available for sale on launch day in the US and a tiny 100,000 units will show up in Japan. Sony is still claiming that it will ship a total of six million PS3 units by the end of its fiscal 2007 year (which ends on March 31, 2007), but you have to take those numbers with a huge grain of salt at this point. So far Sony hasn't made good on any of its previous numbers yet - remember when the PS3 was supposed to launch in spring 2006?

FiringSquad contacted Sony for more info about their announcements and their brand new PR head David Karraker sent over a brief response to our inquires. Karraker repeated that Sony would only have 400,000 units of the PS3 available for launch day in the US but added, "....what consumers should focus on in my opinion is the fact that we will have 1 to 1.2 million units available by the end of the year, which is a significant amount that will ensure we don't see any dip in supply levels through the holidays." Further questions sent to Karraker by FiringSquad were not answered by the time this feature was posted. Only the next few months will determine if his claims pan out.


Consequences, Sonyquences

So what does this mean for the PS3 and the video game industry in general? First, we have no doubt that the console will sell out when launch day hits on Nov. 17 in the US, but that will only be because there will be a small amount of units to go around (and you can also bet that eBay will be filled with PS3 units that will go for well over the $599 retail price tag). The first party launch titles for the console don't look that promising either, with only Resistance: Fall of Man looking like it will stand out from the crowd.

The PS3 delay in Europe and the shortage in the US also means that sales of PS3 games for 2006 will likely be on the lower end of expectations. Electronic Arts, Activision, Sega and UbiSoft all had PS3 launch games in the pipeline, but with only one or two exceptions all of their PS3 launch titles will also appear on the Xbox 360, the Wii, or both. With the unit availability of Microsoft's and Nintendo's console certain to be more than the PS3, the Xbox 360 and the Wii will certainly benefit from higher sales of those ports. In addition, both the Xbox 360 and the Wii are looking like they will have solid first party exclusive games. At the same time appears as though retailers who were looking for a major jump in their sales may have to have their expectations adjusted thanks to the lack of PS3 consoles on store shelves.


Some of our speculations were confirmed Wednesday in a research note written by Michael Pachter, the well known financial analyst for Wedbush Morgan Securities. In the humorously titled paper "Flirting with Disaster: The Trilogy", Patchter wrote that total US and European video game sales for 2006 would grow by 2 percent versus their previous prediction (made just the previous Tuesday) that sales would grow by 3 percent this year. In a phone conversation with FiringSquad following the release of his report, Pachter told us that he believes that the PS3 shortfall will help Microsoft's Xbox 360 sales somewhat but really help Nintendo's Wii the most thanks to its lower price. So will people who wanted a PS3 this year go and get an Xbox 360 instead? Pachter told us that he expects only 200,000 Xbox 360 consoles sold this year will be "substitutes" for people waiting for a PS3. Ultimately, Pachter feels that while the shortfall will affect Sony in the short term they should turn out OK in the long term. Indeed his 2007 sales predictions for video game sales as a whole remain unchanged and retailers will be mostly unaffected in his opinion.

A few weeks ago, Michael Goodman, an analyst for financial firm the Yankee Group, predicted that the PS3 would be the overall winner in the next-gen console wars, edging out the Xbox 360 and blowing away the Wii in terms of total console units sold in five years. With the announcements of the European delay and the shortfall of PS3s in the US and Japan for the launch, we contacted Goodman again to find out if he plans to change his predictions. Goodman told us over the phone Wednesday that he had just heard about the changes on Sony's part and as a result was not able to say whether his earlier predictions would stick, but did say he will be making some kind of changes in his report in the next couple of weeks.


Microsoft, Nintendo, EA

So how do Microsoft and Nintendo feel about these new developments? Nintendo's official response to our inquries was brief: "Wii is on track to ship in Q4, Nintendo plans to ship 6 million systems to retailers around the world between its launch in the fourth quarter of 2006 and the end of its fiscal year on March 31, 2007." Microsoft's official response more directly took a stab at Sony's predicament: "We know how challenging it is to pull off a global launch, particularly with unproven technology, so it's not surprising that Sony has backed away from their previously announced launch plans. Europe remains a priority for us and that is why gamers have been able to experience Xbox 360 from day 1 and why we're confident we're going to have a great holiday, regardless of what competitors are or are not in the market. Xbox 360 will have over 160 high-definition games including Viva Piñata from Rare, Gears of War from Epic, Pro Evolution Soccer 6 from Konami and FIFA 2007 from EA, a robust and continuously growing online gaming community in Xbox Live, fantastic entertainment capabilities, optional HD-DVD movie playback capability and a great-value price."

FiringSquad also sent inquiries to publishers Electronic Arts, Activision, Sega and UbiSoft to get their official responses on Wednesday's development. All of them have PS3 launch titles scheduled for this fall. Only EA responded back to us by the time this feature was posted: "While this is disappointing news for European consumers who were anticipating the arrival of the PS3 this year, Sony should still have opportunity for a strong launch next year in Europe. EA will have a great portfolio of games ready when the console arrives in Europe. We look forward to bringing our PS3 line up to gamers in the region next March." EA did not respond to a follow up asking if the small launch unit numbers in the US will affect their sales.

FiringSquad also contacted other game developers to get their feelings on the PS3 delay in Europe and the unit shortfall in the US and Japan. One well known developer, who wished to remain anonymous for our article, told us, "This isn't a surprise; anyone who is surprised by this has had their head up their ass for the last 9 months. Sony has been behind for a long time. Frankly, I wouldn't be surprised if there is another, even worse announcement made later in the year. It will hurt the games biz; sales will be down in the very crucial (fourth quarter). The 360/DS/WII markets won't make up the difference. This will affect game scheduled to ship 6,9,12, even 18 months from then, as profits from that (quarter) that would have been spent on new games won't be there. It will have cascading effects into TV sales and HDTV penetration will slow."

Alex Cruz, the president of Maxum Games, told us, "There will be one group who will be ecstatic on Nov 17th. – Ebay sellers. This low number of units will promote an exclusivity club of elite PS3 owners. The ones who can afford the $700 cost plus the $500 Ebay mark up will mostly receive these units and no one else. This might cause a sense of snobbery regarding the PS3 which will not be good. When the last three consoles came out, their price points where not as significantly different as this generation. People are going to feel an even stronger loyalty to the system and games they can afford. However ugly, the owners of low cost systems will be teased by the owners with the highest price system. This may cause resentment and distaste for the PS3 they cannot afford nor obtain. Sony may not recover and will probably lose the number one console spot not because of limited supply but because of alienation. 'Hey, there goes that bastard driving away in his new PS3.'"

Cruz added, "On the developer side, less PS3 units means a smaller install base. A smaller install base means less profit for an exclusive title. This announcement will only hurt Sony's relations with publishers and developers. They are all now reconsidering how much resources shall they devote to the estranged PS3. The industry may recover in the next couple of years when console prices level out and innovative solutions are presented to aid in the complexities of next-gen development."


Randy Pitchford

Randy Pitchford, the president of Gearbox Software, told us "The PS2 launched with 250k units in the US - so it's all relative. I think that Sony will do the best it can to meet demand. It will be interesting to see how 400k units compares to demand during the US launch window. In any case, the PS3 is appearing after the 360 and after the Wii in Europe. This will make it a 'catch up' race for Sony if comparisons are relevant. I think as long as Sony's business is solid for itself, it will be comfortable with the results. It's never been a case where "winner" takes all. In the last round, for example, Nintendo has fewer installed units than both Microsoft and Sony worldwide, but they had a great business when examined independently."

Pitchford added, "We need hardware to play software. We need software to care about hardware. The whole chicken and egg problem is slowed for the millions of loyal Sony game players and game makers who are anxiously awaiting the launch of the new system. Meanwhile, for 360 fans and Nintendo fans, it's probably great news. For my own part, I generally am happy about anything that allows more people, including me, to enjoy better video games, including the games we're making at Gearbox for all of the next-generation platforms."

FiringSquad also contacted Dean Takahashi, staff writer at the San Jose Mercury News and author of the books"Opening The Xbox" and "The Xbox 360 Uncloaked", for his opinion. He told us, "The problem that Sony has now created is one of credibility. Can they execute to their plans? Will they always disappoint?" When asked if this will help Microsoft and Nintendo, he told us, "It presents a great opportunity for Nintendo, for sure. Nintendo's console won't be as difficult to manufacture, and it should be able to flood the market with consoles if everything goes well. For Sony, this puts it in exactly the same bad position that Microsoft was in the last time around. It is late, it has an expensive box, and consumers may not care about the difference in quality that results from the more expensive hardware."

Dean continues, "Microsoft also stands to gain by turning the tables on Sony in a key region. It can gain a larger share of Europe, which is a critical market for anyone who wants to have a bigger share of the games business. Sony is essentially treating Europe as a second-class citizen. That won't sit well with European consumers, who also are likely to be unhappy with Sony's pricing. They may decide not to delay their purchases."

He added, "It could cause the industry to shift more development resources to both the Xbox 360 and the Wii. In that case, Sony's lost sales are shifted to other players. But the industry has to be prepared for delayed consumer spending, which will hurt everyone. That would repeat the pattern set last year when Microsoft had shortages. That delay hurt companies such as Electronic Arts, which counted on both strong Xbox 360 game sales and current generation game sales which never materialized. Already some analysts are predicting that overall unit sales of consoles will be smaller in this generation because of the higher pricing. That is an unwelcome trend for an industry still bent on world domination."


Sony's path to salvation?

So the big question is: Can Sony recover from the lowered expectations for the PS3's success? Actually we think they can IF one or more developments happen:

1. Sony actually makes good on its latest shipment numbers. Even though only 400,000 units will be available for the US launch, Sony is still insisting that it will ship six million units by March 31, 2007, the end of their current fiscal year. If they can truly solve their problems with the making of the Blu-Ray disk drive, the number of consoles available for sale will be considerable and could boost sales.

2. 2007 PS3 exclusive games will be as impressive as people want them to be. In 2007 Playstation fans are expecting Metal Gear Solid 4 and Final Fantasy XIII will be released, and even if Grand Theft Auto IV is no longer a PS3 exclusive that game will likely spur sales of the PS3 as well. Perhaps Sony will release the Killzone PS3 shooter, and make it as impressive as the E3 2005 pre-rendered movie made it look.

3. The Nintendo Wii could bomb. While Nintendo's Wii console has a lot going for it, a lot is also riding on the hope that gamers will truly take to the motion controlling features of its wireless controller. There's been some recent backlash against the controller with some parties feeling that the controller will make people tired and not willing to play games with the controller for long lengths of time. Will this prove true or will Nintendo actually offer a new and more accessible way to interact with games?

4. Microsoft could stumble with its first party launch games. While Microsoft has Epic's long awaited Gears of War set for release on Nov. 12, other first party titles will miss this fall's launch time period, including Mass Effect, Too Human and the recently revealed delay of Forza Motorsport 2. Halo 3 isn't due out until 2007 either. Microsoft needs to have a solid amount of quality exclusive games in the next 12 to 18 months to make potential PS3 owners forget about Metal Gear Solid 4 and Final Fantasy XIII.

With Nintendo set to make major announcements (final launch date and price) for the Wii next week, the Tokyo Game Show announcements set for the end of the month and Microsoft's X06 event set for October, the console war will become a bit more clear in the next several weeks. However, history may show that September 6, 2006 was the big turning point of the next-gen console conflict, one way or the other.

[Turrican3]

Troppe incognite, troppe incognite: mi piace sempre ricordare l'exploit di GTA, alzi la mano chi avrebbe pronosticato nel '99 (o anche nel 2000 eh? ) un successo di quelle proporzioni... we'll see.