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PlayStation (Games) Businesses

Where the PS3 Stands Now 293

Posted by Zonk from the gaining-ground dept.
Phil Harrison and 1up's Luke Smith had a chat about the current positioning of the PlayStation 3, and it makes for some interesting reading. A quietly confident Harrison discusses the future of game distribution online, their attitude towards competition in the console market, and clarifies a few things about the potential for PS3 price cuts. The previous discussion about price cuts was apparently a big misunderstanding. "PH: Well, do you know what [Takao Yuhara] said was, cost reduction, not price drop, and there's a big difference between cost reduction and price drop. So, that I believe is where the confusion came from. Obviously, we are investing our money in making PlayStation 3s cheaper to manufacture -- that's part of our business plan. 1UP: You're not going to pass the savings along? PH: When we can, when there are savings to pass along to the consumer, we would obviously choose to do that. That's the business model. 1UP: Wait? You guys are doing this to make money? Really? PH: That's videogame hardware 101."
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Where the PS3 Stands Now More

Where the PS3 Stands Now

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  • The PS3 stands proudly (Score:4, Funny)

    by jdc180 ( 125863 ) on Thursday February 15, 2007 @02:32PM (#18027978)
    In the display cases of your local department stores.

    • Re: (Score:3, Interesting)

      by KingSkippus ( 799657 ) *

      It's modded Funny? How about Depressingly True?

      I've been in a couple of retail stores north of Atlanta recently, and they had pallets of PS3's. I still haven't gotten a Wii yet, though, because no one seems to be able to keep them in stock, even though it's two months after they came out and they've produced like ten times as many. :-(

      It's pretty obvious to me which company has a right to be proud and which one should be doing some serous soul-searching.

  • make money? (Score:5, Funny)

    by brotherscrim ( 617899 ) * on Thursday February 15, 2007 @02:36PM (#18028068) Journal
    PH: That's videogame hardware 101."
    I guess Nintendo was the only one to actually pass that class.

    • Re:make money? (Score:5, Insightful)

      by brotherscrim ( 617899 ) * on Thursday February 15, 2007 @02:50PM (#18028360) Journal
      You know, the Ps2, Xbox, Xbox 360, and (especially) the PS3 were/are being sold at a loss, for at least the first year or two the system was/is out. Only Nintendo refrains from such behavior, selling all of their hardware at a profit.

      So when Phil Harrison says that making money off of the sale of a console is "videogame hardware 101," It's obvious that there's only one game company with a passing grade in that class. But I guess saying so is "flamebait."

      • Just because they loose money at one point doesn't mean they wont make money in the long run. If they priced the PS3 at a point where they'd make a profit they'd be selling even fewer of them. Judging by the PS2's sales numbers (which IIRC they make about $40-$50 per unit these days). You're right that Nintendo passed the class but I'd say Sony passed that class as well.

        Microsoft on the other hand... AFAIK the 360 is currently selling at a small profit but the Xbox 1 never reached that point, which is w

        • Re: (Score:2)

          by apoc06 ( 853263 )
          the xbox360 is still not selling at a profit yet. they hope to bring the console into the black within the year though.
          • You're correct that they Xbox division hopes to be turning a profit by next year, but that doesn't mean they're still loosing money on each console sold. From what I've heard they're currently netting about $75 per premium unit sold [techspot.com]. When the console launched they were estimated to have been loosing about $125 per unit, but have since been able to cut many of their manufacturing costs. I suspect that moving their chips to the 65nm process will further reduce costs.

            Basically the only reason they haven't d
        • Origionally Posted By twistedsymphony: Microsoft on the other hand... AFAIK the 360 is currently selling at a small profit but the Xbox 1 never reached that point, which is why it was dropped so quickly; the games division on a whole has been deep in the red since it's inception. Even still, I suspect they'll come out on top eventually just on a much longer time scale.

          But you need to remember MS's business model:
          1) Spend outrageous, insane amount of money to undercut all competition
          2) Become monopoly
          3)

        • Re: (Score:3, Insightful)

          by poot_rootbeer ( 188613 )
          If they priced the PS3 at a point where they'd make a profit they'd be selling even fewer of them.

          To paraphrase another great strategist, "You don't enter a console war with the hardware you want. You enter a console war with the hardware you have."

          If Sony had lowered their sights a little when designing the PS3, there's no reason why they shouldn't have been able to create a profitable console that could sell for $400 or less. But no, they decided they NEEDED a Cell processor, and they NEEDED a Blu-Ray d

          • Re: (Score:3, Insightful)

            by 7Prime ( 871679 )
            It's all about BluRay. They would never sell it without BluRay because their media division forced them to do so. Now, the Cell processor, on the other hand, was their own fault. Unneccessary, and from what I've heard, detrimental to getting developers onboard and getting content out the door quickly.

            But, unfortunately, Sony would never even begin to consider the possibility of creating a PS3 without BluRay. Honestly, in the minds of the big wigs, their game division could completely collapse, but it would

          • Re: (Score:2, Troll)

            by drinkypoo ( 153816 )

            Yes, both Blu-Ray and Cell were horrible mistakes. But then, what do you expect? The PS2 succeeded because the marketing killed the Dreamcast dead before the PS2 even came out, not because it was actually a superior platform (although it definitely has more raw power available, actually utilizing it all is a damned big task.)

            Blu-Ray was of course added because the parent company said THOU SHALT PLAY BLU-RAY. It was obviously not because HD-DVD didn't hold enough content for games. The only reason any de

          • "You don't enter a console war with the hardware you want. You enter a console war with the hardware you have."

            Exactly. Lowered expectations [youtube.com] worked for me.

      • Re: (Score:2, Insightful)

        by nomadic ( 141991 )
        So when Phil Harrison says that making money off of the sale of a console is "videogame hardware 101," It's obvious that there's only one game company with a passing grade in that class. But I guess saying so is "flamebait."

        How is it flamebait? Bashing Sony's PS3 decisions gets you easy +moderation.

      • Re: (Score:2)

        by VJ42 ( 860241 )

        You know, the Ps2, Xbox, Xbox 360, and (especially) the PS3 were/are being sold at a loss, for at least the first year or two the system was/is out. Only Nintendo refrains from such behavior, selling all of their hardware at a profit.

        So when Phil Harrison says that making money off of the sale of a console is "videogame hardware 101," It's obvious that there's only one game company with a passing grade in that class. But I guess saying so is "flamebait."

        I wouldn't worry, you're back up as "funny" now (though that won't help your karma); I think this thread has had a Sony Fanboi moderator go through it, AnonymousSonyFanboiTroll got an "interesting" upmod.

        To address your point, you're spot on, but to sell at a profit, Sony would have to sell the PS3 at around $1000, here in the UK they will be selling at around £425 (~$800) and that's still a loss as I understand it. The system is selling badly as it is, how much worse do you think it'd be seling at

      • Re: (Score:2)

        by Knuckles ( 8964 )
        selling all of their hardware at a profit

        Not true. There are numerous interviews with Miyamoto out there where he says that they of course do not make a profit on every console sold at every point of the whole life cycle, but that overall they do.

      • Re: (Score:3, Interesting)

        by king-manic ( 409855 )
        The Ps2 was only sold at a loss for the first run. According to all available info. The Xbox and 360 were sold at a loss up till even today. The Xbox has too many outsourced components. The part costs have not fallen for MS significantly while the selling price has. They have admitted it still sellls at a loss. Ditto with the 360. Sony has said the Ps2 has not sold at a loss for a long time.

        The Ps3 may be the same as the Ps2. Since the majority fo the initial costs is R&D and fab facilities. Their cost

  • zzz...Is it under $100 yet?...zzz (Score:3, Funny)

    by xxxJonBoyxxx ( 565205 ) on Thursday February 15, 2007 @02:36PM (#18028086)
    zzz...Is it under $100 yet? No? Wake me up in a couple years, then...zzz

  • wow (Score:3, Funny)

    by flyingsquid ( 813711 ) on Thursday February 15, 2007 @02:37PM (#18028090)
    They're in this to make money?


    Damn, Sony sure had me fooled...

    • Re: (Score:2)

      by fotbr ( 855184 )
      Well, they need some way to keep their movie division afloat, since piracy is so bad that hollywood can't make any money on their own.

  • Problem with PS3 release was... (Score:5, Interesting)

    by blahplusplus ( 757119 ) on Thursday February 15, 2007 @02:37PM (#18028096)
    ... lack of killer system selling game or games. It has to be said if the games were there even the high price would not be such a barrier of there really was a killer app that made people throw their financial reason to the wind.

    • Re: (Score:2)

      by eln ( 21727 )
      That was probably part of it, but the price was so much higher than any previous game system (that sold, anyway) that even a killer game might not have been enough. Most people complaining about the price were saying that it was too much money for ANY game system. Most people are still reluctant to drop that much money on a TV set, much less a game console.

      It is possible that enough games could come out to make it attractive to a large enough segment of the population even without a price drop, but I can'

  • Vaporware (Score:4, Interesting)

    by Cutriss ( 262920 ) on Thursday February 15, 2007 @02:47PM (#18028288) Homepage
    "We have a hard drive, we have a commerce engine, it doesn't take a rocket scientist to figure out we will have that on the network very shortly."

    Define "very shortly". The PSP was supposed to have this functionality for music over a *year* ago. It's been delayed so many times that I think people have largely forgotten about it. Sony was always talking about being able to use Sony Connect to purchase music and possibly videos on/for the PSP (in order to posture the PSP as a competitor to the iPod), but that clearly has not yet taken place. Why should the PS3 be any different?

  • Cost reduction (Score:5, Informative)

    by rlp ( 11898 ) on Thursday February 15, 2007 @02:49PM (#18028356)
    Sony is selling the PS/3 at a loss. I've seen estimates as high as $300 (loss) per unit. Clearly their strategy is to get the manufacturing cost down ASAP and recover some of the loss via higher game royalty payments. They MAY even be limiting production - at least till they can further lower manufacturing costs.

    A risky strategy, when you consider the deep pockets of Microsoft (also selling their console at a loss), and that Nintendo is actually making a profit on their consoles. But it's still early in the cycle for this generation of consoles. Personally, I'm cheering for Nintendo. But it's MUCH to early to count Sony out of the game.

  • The PS3 has it rough (Score:4, Interesting)

    by Hott of the World ( 537284 ) on Thursday February 15, 2007 @02:53PM (#18028420) Homepage Journal
    The problem is 50% perception, and 50% targeted market. Here's what I mean:

    "Perception": People see 600 - 800 dollars and no games. They see a huge Sony ego and laughable selling numbers. No one's buying it, no one wants one.

    Reality: It can be bought here in the US for as little as 499 if you want the 20GB model, and if you're patient by summer we'll have a healthy injection of new games on the PS3. They even have more demos and movie trailers available in the PS3 network for free. Games are coming, and patience is key. I'm not an apologist. This is just how new consoles tend to work.

    As for the ego, it's there. But it's not contempt for consumers, as most detractors would have you believe. It's confidence. They're saying, "we're number 1". Sony needs to be seen as confident in this console outing. You want them to say "Yeah it sucks, get an Xbox?"

    The price is out of necessity, not arrogance. They're definitely losing more per console than Microsoft. Blu-ray was a risk, but not a totally harmful one. Prices will come down and the complaining will slowly go away

    "Target market" is the other aspect that's hurting the PS3.

    Not only do people not want to drop 500-600-800 dollars on a game system, they certainly don't want to pay more for the same games. That's the problem most 360 owners see with the PS3. They can't envy it any. Pay tons more for some future exclusives? Laughable.

    The PS3 is for people who want blu-ray, PS3, PS2, and don't have a 360 already, and are willing to spend at least 500 bucks for it, probably more. That's not a great subset of people.

    With all of that, it's a testimony to the power of Sony and its future exclusives that so many people are buying the thing.

    • Re:The PS3 has it rough (Score:5, Funny)

      by Chris Burke ( 6130 ) on Thursday February 15, 2007 @03:11PM (#18028726) Homepage
      As for the ego, it's there. But it's not contempt for consumers, as most detractors would have you believe. It's confidence. They're saying, "we're number 1". Sony needs to be seen as confident in this console outing. You want them to say "Yeah it sucks, get an Xbox?"

      Obviously, but there's a point where confidence does become contempt. Or at least where it is seen as arrogance and presumption, and the customer is offended. As for me, that line was crossed by Sony's gaming division when they said that they thought people would get another job if they had to in order to get a PS3. It was the presumption that their shit was so hot that we would fall all over ourselves to get it, no matter what. That's not an appropriate form of confidence. It's the difference between "we will defeat our competitiors!" and Romero-esque "Ya'll are my bitches!"

      It's kinda like the dating scene. You need to be confident, right? Well there's a difference between going up to a beautiful woman in a way that suggests you are not intimidated by her, and walking up and saying "Hey babe, I'm the man of your dreams, you'll be sucking my dick by the end of the night, even after I do THIS!" and then slapping her.

      That might work sometimes (run screaming if it does), but it is hardly a good way to achieve broad market penetration, if you catch my drift.

    • Reality: It can be bought here in the US for as little as 499 if you want the 20GB model,

      Five hundred bucks will buy a lot of stuff. It will almost pay my rent for the month (and I share a ~2000 sq.ft. house with a 400 sq.ft. addition on 12 ac. with my SO) and it's one-third of what I paid for my car, which is fuel-injected, has only minor dings, the paint is generally in good shape, and it has AWD and ABS.) That's a LOT of money! When you consider that consoles have tended to come out at $300 for some ti

  • It's a really good time to be Nintendo, with the only "affordable" (everyone has a different definition of that word, I'm looking at it from a casual persons concept of "what I'd pay for a video game console") system out there. 360 is a little more tenable, but still sort of in the "hardcore" price range.

    With no HDTV, there's no compelling reason at this point to own either PS3 or 360. Eventually they'll have some more (and some *subjective word* good) exclusive titles, but as it is, almost everything is

    • Re: (Score:2, Informative)

      by Osty ( 16825 )

      So far I've yet to be blown away by any next-gen games, and here I sit with a Wii, and a 360, and really no games out there asking me to buy them. I have twilight princess and dead rising, respectively.

      Well, that might be your problem. Twilight Princess is very much a last-gen game in terms of everything but the Wiimote control (it spent years in development on the GC before a last-minute switch to Wii), and Dead Rising has ... problems with non-HDTVs that can severely hamper your enjoyment of the game

    • It's a really good time to be Nintendo, with the only "affordable" (everyone has a different definition of that word, I'm looking at it from a casual persons concept of "what I'd pay for a video game console") system out there.

      The Playstation 2 is still available for sale, costs about $130 brand new, and if titles like Guitar Hero II are any indication, the console is far from dead yet.

      The problem Sony faces is how to prevent PS2 sales from cannibalizing potential PS3 sales. Well, that's one of the problem
  • So, I really don't want to buy a PS3, and I'm not impressed with the system really at all. I'm really happy whenever something bad happens to Sony because, They Are Dicks. This is fact.

    But, I have no delusions that the PS3 will not be amazingly successful. Because the PS3 has two franchises that the 360, currently, does not (So, I'll put in my disclaimer that if exclusivity is broken, my post is moot): Gran Turismo and Final Fantasy. It doesn't matter if we hate Sony. It doesn't matter if its over priced. I
    • You do realize that 80% of the PS2's userbase did not buy a Final Fantasy or Grand Turismo game, right? [the top selling GT game was GT3 at 14.84 Million and the top selling FF game was Fianl Fantasy X at 7.93 Million]

      What people never seem to get is that people bought a PS2 because videogames are an inexpensive form of entertainment and the Playstation 2 was the most popular videogame system on the market; currently, you can't say that the PS3 is inexpensive, and the PS3 is not the most popular system on t
    • If being dicks is the benchmark for yoru business then no one should have it. Remember MS is a software cartel built on monopoly and aggressive marketting and Nintendo was a masssive tyrant back in the days it was #1 (NES - SNES).

      As for over priced, I don't feel that way. But it might because I have enough room in my budget to get the Ps3 and a whack of games and acccesories right now. All I am waiting for is a compelling game. My PS2 is starting to have slow load times so it's days are numbered (5 years ol

      • Re: (Score:2)

        by Rycross ( 836649 )
        Yep, there was a reason developers dropped Nintendo, and it wasn't just because of the cartridges and Square defecting. They're a lot nicer company since they've had some humble beaten into them. In some ways I'd like to see that happen with Sony, as they're getting to be the same way. MS is MS, no more needed to go into that.

        PS3 is too expensive for me (and a lot of people) simply because there's one game out that I'd like to play, and one, maybe two, thats actually been announced. Exclusives that is.

    • Re: (Score:3, Insightful)

      by cowscows ( 103644 )
      You can really only push that so far though. You would've thought that to be the case with the N64, wouldn't you? Sure Nintendo was sticking with cartridges, sure 3rd party devs were abandoning them left and right... They still had Mario and Zelda, everyone will buy their console! They're Nintendo for pete's sake! Except that Nintendo left a huge hole for Sony to leap into, and the rest is history.

      Sure, it didn't spell death for Nintendo, and the N64 had some great games and plenty of people bought them. Bu

    • But, I have no delusions that the PS3 will not be amazingly successful. Because the PS3 has two franchises that the 360, currently, does not (So, I'll put in my disclaimer that if exclusivity is broken, my post is moot): Gran Turismo and Final Fantasy

      Gran Turismo was THE reason I bought a PS2. It's NOT enough to get me to buy a PS3. I paid $300 for the PS2 with GT3. I'm not paying $560 to play GT5. It's just not going to happen. For $500 I could buy a FWD beater, take it up in the BLM lands north of here,

    • So, I really don't want to buy a PS3, and I'm not impressed with the system really at all. I'm really happy whenever something bad happens to Sony because, They Are Dicks. This is fact.

      Yes it is. But if you know the history of consoles, who isn't? Nintendo was for a long time, despite their current good guy image. Microsoft still is; if anything, their record is worse than Sony's. Sega perhaps was not (if you give them a pass for "blast processing" and abandoning the 32X), but look what happened to them.

      • Sega of america was evil to it's early adopters. The saturn and the 32x basically killed the market for the dreamcast. Dreamcast was awesome bust since they bruned so many with the Sat and 32x they had killed themselves. And releaseing a 200$ peripheral and then dropping it after 12 games is worse then pricing yoruself $600 or being a tyrant with your third parties. So Sega was evil too. In a much mroe tangable way to the end consumer.

    • Re: (Score:2)

      by Dorceon ( 928997 )

      So will you.
      Speak for yourself.

      So will I.
      Oh, you did.

  • First game is here (Score:3, Interesting)

    by mechapanda ( 1014307 ) on Thursday February 15, 2007 @04:00PM (#18029592)
    A bit of context:
    I'm a long term Sega fan, and when I first moved to Tokyo 12 years ago spent up to 3 hours a night in my local arcade playing Virtua Fighter 2, Fighting Vipers, and Virtua On Oratorio Tangram, and played all three in competition.

    The release of the Dreamcast meant that I got to get the "arcade experience" at home, Soul Calibur with the official Sega arcade controller, and Virtua On with the Twin Stick controller was the best an arcade gamer could could buy.

    Until now:)

    ----

    Yesterday the first of the games I bought my PS3 for turned up, Virtua Fighter 5 and the Sega arcade controller.

    The controller is simply amazing, cost a fortune but an hour after unpacking it I was online ordering a second! It's currently sitting next to my Dreamcast official arcade controller which , well, looks a little tired.

    The game is purely for fight game fans, nothing here for the mass market, but for anyone who spent hours in an arcade playing the various Virtua Fighters it is an absolute must have.

    I don't want to even think about much a HDTV, PS3, and controller cost but I'm happy so it was money well spent:)

    Forget the console wars, if you are a arcade fight game fan, you need this game, the Tekken download, two Sega controllers, and a PS3. Sell blood if you have to, but get it.
  • The problem with the PS3 is that after all this time it still doesn't really seem to be quite finished. Currently, games do not automatically support both of the major HD resolutions, 1080i and 720p (never mind 1080p). Most games will output only in 720p, relying upon the 1080i/p TVs to do a decent job of scaling. Some HDTVs have poor scalers, whereas others (primarily CRT-based monitors) will only accept a 1080i signal and are incapable of displaying a 720p signal at all, in which case they are limited to
  • I paid $560 (CND) for my first run PS2 (still working) with summoner. It was a terrible game but the system paid off for me. The 60g PS3 is ~$650 CND here now so the differential is just inflation for me. For the 20 gig version it's no difference. Remember the Ps2 was expensive at first too. 2 years later it was $300 CND. 6 year slater it's $170 CND. It's not that far from the PS2 price point after inflation and the 20g model is at the exact same price point. Most of the "price" backlash is MS fanbois find

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