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Sony, Analysts React To PS3 Launch
Posted by
Zonk
on Thu Nov 30, 2006 03:36 PM
from the settling-down dept.
from the settling-down dept.
cdneng2 writes "Sony may be aware that something is just not right. There's a reshuffling of management occurring within Sony. Kazuo Hirai is set to head their videogame unit, as Ken Kutaragi has been bumped to the Sony board. Jack Tretton, former COO for SCEA, is now the president and CEO of that arm of the company. There's no word on the reasoning behind these position shifts. On the same day, Namco announced that they must sell 500,000 games to begin making profit on PS3 games. A Financial Times article confirms speculation on how hard it will be for Sony to make money, as analysts with UBS predict that 30 games must be sold per PS3 for them to break even." To add insult to injury, EA CEO Larry Probst has said PS3 numbers were lower than expected. Current thinking is that Sony managed to ship roughly half of the 400,000 units they were promising.
Related Stories
[+]
Sony Probably Going To Do PlayStation 4 149 comments
Nomura Securities' Yuta Sakurai has been quoted as saying that 'he cannot imagine a PlayStation 4' because of Kaz Hirai's promotion. He sees it as a move (eventually) towards Sega-like software focus. Sony has, of course, immediately denied this because ... they (understandably) like money. From the article: "Following the launch of the PlayStation 3 just a few weeks ago, and witnessing the huge consumer demand for the product, I think it would be rather short-sighted for anyone to predict there might not be a next generation of PlayStation product."
[+]
What the Sony Reshuffling Actually Means 30 comments
Newsweek's N'Gai Croal steps up this morning with some interesting analysis of the Sony re-organization that occurred late last month. Mr. Croal points out the difficulty of understanding the machinations of a notoriously tight-lipped foreign company, and attempts to look at the executive movements from the games business view. From the article: "Here's what's on SCE's plate at this very moment: three product lines that must be managed over the next five to six years (PS2, PSP and PS3); two more product lines that are almost certainly already in the planning stages (PS4 and PSP2); an online service, an online store, operating systems and system updates for each of the post-PS2 machines; and one of the world's largest game studio operations. Given that workload, Sony desperately needed to free Ken up to do the vision thing, and groom the next generation to run SCE on a day-to-day basis, much like Microsoft did when Bill Gates ceded operational control of Microsoft to Steve Ballmer. So while we have absolutely no visibility into whether this evolution was initiated by Kutaragi or by Stringer, it strikes us as precisely the right move to help ensure the future health of the PlayStation business."
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Alas... (Score:4, Funny)
Re: (Score:2)
Boston area is super dry. Then again, it's a youthful town.
What is going on here? (Score:5, Insightful)
People are too eager to decide. (Score:5, Insightful)
Because this generation requires such a huge investment, people want a decision to be made in the console war quickly enough that they can avoid buying a 'losing' console and wasting their money.
If you can find a way to solve this, let us know.
Parent
Re:What is going on here? (Score:5, Insightful)
Parent
Re:What is going on here? (Score:5, Informative)
Nintendo sold 600,000 Wii's in North America in the first eight days of it's launch, and they're aiming for 4 million worldwide by the end of '06. Obviously, it's been a success for Nintendo. Since they've been on the market for the same amount of time, can we not claim the PS3 launch hasn't been that great, and that Sony is hurting?
Parent
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30 Games (Score:4, Interesting)
Re:30 Games (Score:4, Insightful)
Here is a link to a cost analysis of the PS3 ( http://www.isuppli.com/news/default.asp?id=6919 [isuppli.com] )
The question I would have is whether Sony can bring the cost of manufacturing down at a rate greater than the rate they're going to be forced to reduce the price of the system?
Sometime in 2007 Microsoft will reduce the price of the XBox 360 so that the XBox 360 Bundle is $299 (as a guess), at this point in time Sony will be left with the decision to reduce the price of the PS3 or to reduce their loss on the PS3. If Sony allows Microsoft to Bully them into reducing the price of the PS3 it is likely that Sony will not start turning a profit on hardware throughout the entire generation (similar to what happened with the XBox), on the other hand if Sony doesn't reduce the price of the system they will likely bleed marketshare to Microsoft.
Honestly I hate Microsoft but the more I think about it the more I believe that Sony has lobbed the ball right into Microsofts court and ran off to get a drink while the ball is still in play; if Microsoft converts on this it will be really ugly for Sony.
Parent
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It wouldn't be the first time MS used this tactic to knock a competitor out...
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Re:30 Games (Score:5, Interesting)
"While many fret over the high cost and price of the PlayStation 3 compared to the competition, iSuppli believes the console provides more processing power and capability than any consumer electronics device in history. Because of this, the PlayStation 3 is a great bargain, well worth its $599 price and $840.35 cost, iSuppli believes."
Of course the PS3 is a bargain, as they are selling it for less than it costs to produce. Hard to call that a bad deal.
Unless you don't have $600. Or the $800-$1000 needed to get one on Ebay if you want a non-hypothetical PS3. "Great deal for what you get" and "way too fucking expensive" are not mutually exclusive!
Nobody buys a console because its internals are architecturally pleasing (don't get me wrong, the Cell is a sweet chip, but that neither makes a PS3 cheaper nor does it make one appear on the store shelves so I can buy it). They buy it because of the games. And right now PS3 is in the same place Xbox was in. What great games did it have? Halo and... um... Halo.
So the reason so few quote the praise for the PS3 is because it's pretty much irrelevent. We're talking about a console launch. Few doubt that the PS3 is, hardware-wise, a very nice piece of machinery. I certainly don't doubt it. That doesn't make me want one, that doesn't mean I can afford one if I did want one, that doesn't mean I could find one to buy if I could afford one, and that doesn't make Sony lose any less money on the purchase if I am finally able to complete it.
It's simple: A console that is very expensive (limiting demand) and is difficult to produce (limiting supply) is headed towards a smaller marketshare, possibly meaning that fewer games are produced for it. As Sony loses a lot of money on each sale and has to sell many games to turn a profit, this means that if it plays out that way not only will PS3 be a failure in the marketshare sense but also in a financial sense. They need to increase the supply and reduce the price before they can attain a marketshare that will keep developers devoted to them, and thus keep consumers devoted.
Notice how whether or not the PS3 is an engineering masterpiece doesn't enter into it? As an engineer I would really like to live in the universe where whoever has the coolest microarchitectures wins, but sadly it doesn't work that way. A lot of times the coolest microarchitecture is the one that fails the hardest because it is difficult to manufacture and thus too expensive and too hard to supply in volume.
Now if the PS3 was a crappy piece of hardware, and still cost $600 with short supplies, then PS3 failure would be a forgone conclusion. However I don't think anyone worth mentioning is saying it's crappy hardware, so I'm not sure what "thesis" you think that part of the isuppli article is contradicting.
Parent
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Nobody knows how many units Sony will make before they kill off the PS3, nobody knows the component price cuts that will happen before then, nobody knows the unit price drops they will make, and only Sony know the margins, the R&D cost and the deals they have with all games manufacturers. Factor in cross-subsidising of the profit or loss on sales
Re:30 Games (Score:5, Funny)
Master,
Your Flying Wheel Of Reasonable Discourse Technique... is Astonishing.
Hai!
Parent
Re:30 Games (Score:4, Interesting)
How can this be modded to +5 when the exact methodology used is described in the article?
You may not agree with their assumptions, but it is certainly not "random".
Parent
Sony Can Sell Blu-Ray Movies Not Just Games (Score:4, Insightful)
As much as I would like to poke fun at Sony for this seemingly high mark, they can also make a profit by selling a combination of PS3 games and Blu-Ray movies. It is much more reasonable for someone to have lots of movies than lots of games. Assuming of course the purchase is made at a retail store so Sony gets the profit, rather than a used dealer.
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Re:Sony Can Sell Blu-Ray Movies Not Just Games (Score:4, Insightful)
They said the same thing about the PSP and UMD. Lets hope for Sony's sake it works out better this time!
Parent
PROMOTED??? (Score:5, Insightful)
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Japanese executives are rarely fired for their mistakes as (I am told) the shame of it has led to hari-kari. (I am sure someone with more knowledge of Japanese corporate culture than I could affirm or deny that). So the result is a promotion to a position where you can't do any more damage.
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Japanese executives with high visibility are generally not fired, but rather are basically forced into a psuedo-retirement where they sit on an ineffectual board or something similar. From the outside it may look like a promotion, but (as you said) in reality he's been moved to a spot where he won't be doing very much as far as actual job duties.
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"Here's your corner office, secretary, and 6 figure salary. Just try not to break anything."
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But I don't think that's the case here, not that I'm a big Sony fan but the guy did start the whole playstation project which undeniably took the video game industry to a new level (which has it's good and bad sides offcourse), so he's not a complete idiot. In the end he did make Sony ALOT of money and at the beginning of Sony's gaming division there wer
30 games per console? (Score:4, Interesting)
I am so happy I own no Sony stock, and even more optimistic about having bought Nintendo stock.
I hope they crash and burn (Score:4, Insightful)
Sadly, way too many people have short memories and don't care that computers were scrambled by willfully malicious sony music CDs.
Or the fact that they love to sue music cust^H^H^H^Hpirates into submission. "Don't even have a computer? Give us money anyway cause we KNOW you've been pirating!"
Hell, the last sony laptop I got my hands on, had so much advertising crap on it that it actually *slowed down* the machine significantly, until I uninstalled all of it.
I'm sure I'm forgetting plenty of examples of Sony's heinous, arrogant behaviour.
Why do these pixels cost more (Score:3, Insightful)
What does this even mean? We have a blu-ray disc that holds lots of data, sure, and accordingly scaled up textures; but in any sort of process like this you are continually downscaling from practically any 'artistic' original source to begin with. Why does this cost more to downscale less than you were originally? Is it just harddrive space? That seems historically low.
And this doesn't even seem to take into account the idea that some games have different budgets? Why can he not make a game for both the Wii and PS3 that uses basic motion sensing? I think its a good idea if multiplatform games look as uniform as possible, and after all, "its not about the graphics anymore", right? Seriously, I'm asking, if any one can credibly enlighten me as to why Namco would say this? (I am a graphic designer by trade but I do not work in the game sector.)
Re:Why do these pixels cost more (Score:4, Informative)
Can you make low-budget games? Sure can. But expect to get ripped on sucky graphics, just like the Wii Sports series did.
Parent
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No you can't.
Character animation -- the illusion of life -- personality --- distinctive movement --- is what separates the men from the boys.
Low resolution makes the problem all the more difficult.
30 games to break even on the PS3? (Score:3, Informative)
Just how do you win something like this? (Score:5, Insightful)
Microsoft have had a full year selling the Xbox 360, which overall has undeniably been very succesful. It's online service is highly regarded, and we're now starting to get games which are pushing the console. In all those respects, it's a winner. However, they're still losing money on each unit sold, and they're backing one of two Hi-Def standards, and it may be the loser, but at least they've made it optional, so if it fails it's not going to taint the machine as a games console. If I was a serious gamer, I'd already have an Xbox 360. People know exactly what it can do, and whether they want one or not. Very few people will buy an Xbox 360 and be disappointed, it's already relatively mature and lack of novel user interfaces aside, the others are going to be playing catch-up for the next two years.
No matter what anyone says, Sony have made a phenominal number of mistakes with the PS3. However, many simply boil down to marketing goofs, and a "they'll want what we tell them" attitude which has certainly made them no friends. They're using the console to push other technologies of their own, and that is by far their biggest risk, and also the thing that's likely to keep the component price of the console high for longer. All that said, once the less than stellar launch is forgotten (that'll be around January), there's stock on the shelves, and we start seeing well written games which make use of the phenominally powerful hardware (probably in around a years time), and after whichever price drop brings the high-end console down to around half of its launch price, I'll probably get one. However, I suspect there'll be many people who are disappointed with what the machine achieves within its first 12 months of public life. It's the sort of console that if you owned one you'd want to show it off and shout about. It's a nice looking piece of consumer electronics and there are going to be some impressive looking games, but it's very much like the flash cars you see at shows (you know? The ones that cost more than your house) that you want to just stare at. You'd try and encourage a friend to buy one, so you could go for a spin in it every now and again, but you'd never consider buying it yourself, even if you could afford it.
I'll openly admit however, that my personal enthusiasm is for Nintendo's Wii. But then I'm not a hardcore gamer, and what excites me may well not excite the next man in line. I think the technology is easily good enough to give me games which are visually stunning, that sound good, are innovative (which is something I've come to appreciate more as I get older) and are fun to play. When I get around to buying a Wii in the New Year, I think it's also very likely I'll start getting Virtual Console games on a regular basis, as I'm of an age that I remember them the first time around, and there are a good handful of full games which I'll be looking to pick up when they launch. Nintendo have a good business plan, which all but ignores the other two players. It's practical, manageable, and it also means that they make money every step of the way, instead of losing a lot now, and trying to claw it back over time. The Wii does not set itself against the competition, simply alongside. It doesn't promise the earth, and then struggle to deliver, because all along Nintendo have played down what the machine is capable of and re-itterated that it's all about the games. Until the DS showed how effective that strategy can be, I doubt anyone believed them.
What it should really boil down to is which consoles are of interest to us personally, and that will ultimately depend on which game genres and series appeal to us, and how strongly they are represented on each platform. Let's not forget that the PC is now a very strong gaming platform, much more so than when the last generation of consoles launched, and that will divert some
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I mean, they'd lose more money than M$ lost on the first XBox, and would almost certainly never turn a profit, and it might even be serious enough to damage Sony the company as a whole... but 10 years down the road, people wouldnt be looking back saying "PS3? Man. that was a mistake."
Of course... that wont happen, so you're probably right. But in my dreams, I own a 200 doll
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What is particularly mind-boggling about Sony is that they continue to spend money advertising on Television to sell a console you cannot buy and a console that will require no advertising-induced desires to be able to sell any that Sony can manage to get on the shelves.
Plus, a 30 game attach rate to break even? That is mind-boggling and cannot be possible. Sony could not be that stupid.
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What? After all the good decisions they made over the past year? I think they could be that stupid, or to say it 'politically correctly' They are "over-confident".
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Maybe I have odd timing but lately when I search eBay for 'PS3' I see that most of the PS3 units with less than 10 minutes remaining on the auction have bids in the $700-$800 range for 20GB model and $800 to $900 for the 60GB model; most of the auctions that have starting bids at $1000 or higher end without a single bid on them. Now, I don't doubt that some systems have sold for
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> (Should imagine they're are quite a number of people with 30+ ps2
> games), and don't forget Sony get money on Blu-ray discs too.
I don't know... "quite a number" I will grant you. But more than half? More importantly, all things considered, does the mean work out to 30 or more? I would seriously doubt that.
You have a point on Blu-ray, but it may be a catch-22: Sony intended for the PS3 to rocket Blu-ray to the top as the new stand
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I'm also tempted to link the relevant VG Cats strip, but it's just too obvious.
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Yeah, but they'll make it up on volume!
Oh, wait...
Check that reality maybe.... (Score:2, Interesting)
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Release low enough numbers of something, and it's bound to sell out
eBay prices continue to very high for the system
Directly related to your first point - when you're 10,000 miles away from meeting demand, there's going to be a premium
gamers are raving about these epic 40 player lagfree free online Resistance matches
I'm surprised they can even find 40 plays to play with. But, let's see if there's any lag after Sony ships 10 million consoles.
going nuts ov
best Blu-Ray player in the market? What Market? (Score:3, Interesting)
If I'm not mistaken, the PS3 is only the 2nd Blu-Ray player on the market... There's the Samsung player, which has been out for a little while now, the PS3, and the Sony one won't be released until just before Christmas, I believe. Pioneer and Philips should have players... eventually... but for now they're getting screwed over by the already short supply of blue lasers going to the
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Please tell me where. Microcenter has the "best deal" and that requires $100 rebate, $100 voucher for getting opening a credit card, and a $200 voucher for getting Vonage for 2 years. That's ONE place and its Microcenter, not Microsoft, offering the deal. The best you can do is about $340 from Overstock or Dell, though I think those deals are over no
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core systems for $100 each. The demand crashed the site for about 20 minutes.
Regarding compelling games, Gears of War is the first 360 game that lived up to my expectations of the next gen. It isn't perfect, but it's pretty damn good and is probably enough to sell some more systems. When Halo 3 is released, you can guarantee a spike in 360 sales will accompany.
Re:Let's see (Score:4, Insightful)
Parent
Re: (Score:3, Interesting)
You have some valid points but Gears of War is definitely in the category of compelling games. Personally I would put Oblivion in that category as well but there are people who prefer to play it on PC because of all of the community-added content available.
I don't like Sony either, but I think their system will be moderately successful after a few years. The current shortages and reported dif
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That's not hard if you only have one to sell. [vgcats.com]
The thing that's really hurting is that, depite all the hype and the astronomical price, it's not substantially different or better than what the XBox 360 is offering. At least the Wii can claim lower price + novel controller; all Sony has is their brand, and the market is showing that there are some $600+ pills it won't swallow.
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Which is not to say that as a launch lineup the PS3 is terrible. All systems launch with a terrible lineup. The 360's best
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That's because C64 games are free these days. Just grab a floppy drive, a few dozen double-density floppies [floppydisk.com], and have at it [c64hq.com].
;)
Now if you want to talk about Atari 2600, Intellivision, and Coleco cartridges, I probably have over 300. They're a pain in the butt to store, but they're so cheap to get ahold of these days.
Re: Bricked or Semi-Bricked ? (Score:3, Insightful)
So far I haven't seen an article that anyone got a fully bricked Wii through the update. All the 'Bricked systems' reported have only affected the online function, but you can still play games until Nintendo Support sends you a new system (since the Firmware according to Nintendo, exposed a hardware problem that needs fixing.) Now I'm not saying it isn't possible, I just
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Sony gets substantially less than the retail price, too.
I have no reason to believe that Sony has ever made money selling a console; it's always been game licensing.
When people say that only the Xbox has been a loss, they mean the WHOLE BUSINESS is a loss -- Microsoft lost money even taking licensing into accou