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Sorting Out Sony’s Gamescom Announcements
Aug 18th, 2009 by worldblee

Kudos to Sony. It took them long enough, but they finally dropped price to $299 and came out with a smaller, more power-efficient console, the long-rumored PS3 Slim. Because Sony is focused on profitability at a time when the corporation is losing money, they first got their manufacturing costs down before making the move publishers, analysts, and customers alike were waiting for.

The $299 Sony PS3 Slim: Late to the party, but not unwelcome

The $299 Sony PS3 Slim: Late to the party, but not unwelcome

Sony made other good moves at Gamescom, coming up short on only one major item: failing to provide PS2 backward compatibility via software in its latest firmware update. The family that’s still using its PS2 doesn’t want to throw out its huge library of games, but nor do they want to have two consoles to try to plug into their TV or receiver. Sure, they could shift the PS2 to the kids’ room, but in today’s economy people want to see maximum value for their purchase. Sony can argue (and rationally so) that the Blu-ray capability of the PS3 makes the system a great value. And it’s true. But when trying to convince late adopters to pick up a PS3, letting them know they can play all their PS2 games (which every person tempted to buy a PS3 will have) on their new system is a good argument.

Back to the other Sony moves. The PSPgo app store with iPhone-like pricing and size is a good move, although a copycat one. But better copying someone else’s strategy than sticking with the UMD forever. I like it for small developers because for what should be a manageable port (fingers crossed on that one) they can expand the size of their potential market while putting their games on a device that’s actually made for gaming (with real buttons and a D-Pad). Of course, I imagine the crossover between iPhone owners and PSP owners is fairly substantial but the market will be increased nonetheless. For anyone to be able to stay in business making quality games the median price will have to rise above $2, but that’s another discussion.

With Sony’s film offerings for Europe, PSN cards that kids can buy at shops without a credit card, and a €299 (£249 in the UK) console price, Sony has put the pieces in place to strengthen their hand in Europe, where the PS2 brand is strong. I can see Sony being the #2 console in Europe this console cycle.

What I can’t see is the company overtaking the PlayStation 360 in the US. Microsoft has a big lead, their audience skews younger than Sony’s, and they have a strong games lineup and good online services for their paying customers. If MS offered everyone Gold services for free, it would be game over. They could still make money with upcharges for things like Netflix, although the revenue would be far less than they’re making from Gold. But as long as they continue to hold steady on sales I don’t see them changing…

The Battle for Number Two

Unless Nintendo stumbles horribly they’ll remain #1 worldwide. Microsoft will be a strong #2 in the US and Sony may become #2 in Europe. Sony has the PSP market to flank Microsoft with, but MS may eventually get a viable HH platform themselves. Zune HD? I don’t know; we’ll see.

Sony should see a sales lift from their price cuts but it won’t catapult them into the lead unless they have exclusive games that are so absolutely killer that anyone who loves games can’t live without them. If their video offerings become so compelling that you can service all your entertainment needs with a single device, then they could also take the lead in new consoles sold (not total consoles sold; new consoles sold from here on out).

But with the lack of purchasing power of US households it’s a hard time to be hawking $300 machines. The great recession is not going anywhere; over $13 trillion of household wealth has vanished in the US the past couple years and it’s not returning soon. The so-called ‘green shoots’ lauded in the mainstream press are a figment of Fed policy that has pumped a tremendous amount of money back into the financial sector. Having no place to go, it got pushed into stocks. But it didn’t go into consumer pockets and a consumer-driven economy needs low unemployment and higher wages to thrive. Unfortunately, neither of those will arrive in the near future.

However, for a company willing to invest, a down economy offers the opportunity to grow a brand. The New Yorker had an interesting article in April about the success Kellogg had in outspending Post to take a huge chunk of their market share during the Great Depression. When other business cut ad spending, Kellogg increased theirs and boosted profit by 30%, and they kept their increased market share after the depression was over.

Does a similar possibility await Sony or another console maker this cycle? I would argue that Nintendo has already done just that. They came out with the cheapest console, made it fun, and advertised the heck of out it. The battle from here on out is about maximizing the remaining sales in the market And for this, the $299 price helps, but it’s not yet low enough to move millions of consoles in a down economy. Not when you still have to pay $60 for a AAA game.

But a PS3 for $299 with God of War and some other extras? That would be a step in the right direction.

Post-E3: Ranking the Big 3
Jun 6th, 2009 by worldblee

E3 2009 is over and hundreds of marketing people are writing up their show summaries, each one trying to show how their product or company dominated the show (been there, done that). Certainly, Microsoft, Sony, and Nintendo expended a lot of effort and no little sum of money trying to show through press conferences, booths, interviews, videos, etc. that each of their respective consoles was the ‘bestest with the mostest’. (There were also handheld-related announcements but we’re focusing on consoles for now.)

Pick me! No, pick me!

"Pick me!" "No, pick me!"

Microsoft made the most announcements and showed they were serious about going after Nintendo. Sony has the best pure technology in their system and continued to posit they were the best company to bet on in the long term of their ‘ten year plan.’ And Nintendo has the best market share and, while not wowing anyone at the show, continued to execute on what they do best while preparing to sell into their huge existing audience with technology that requires no major change on the part of their customers and will be packaged with software that is almost guaranteed to be a major hit.

Does the last sentence of the preceding paragraph reveal too much about which company Concepticate thought ‘won’ E3 2009 no matter what industry insiders and the press said? Regardless, we’ll look at the strengths and weaknesses of each system following the show.

Microsoft

Strengths:

  • First console to announce 3D camera controller for full body motion gaming
  • #2 installed base
  • Had a great combined weight of announcements–exclusives, technology, new games–that got the most buzz during the show
  • Best combination of online features

Weaknesses:

  • Have to prove that Project Natal is a good fit with installed base
  • Selling a new gaming paradigm for console play
  • Project Natal is only a good fit with certain game genres
  • Best online features require paid Gold membership

Unknowns:

  • Price point and ship date, as well as final name and marketing strategy for Natal
  • What software will be packaged with Natal to sell it

Sony

Strengths:

  • Possible the most accurate technology
  • Even though a tech demo, running software looked tight and gaming applications very, um applicable
  • Core technology is undeniably strong and PS2 is proof they can execute a 10 year plan–don’t hear much about Xbox 1 software sales, do you?
  • Free online features

Weaknesses:

  • #3 installed base
  • Technology requires a PS Eye Toy camera and essentially seems like Wii Motion Plus controller with greater accuracy
  • Highest price of any console

Unknowns:

  • Price point and software shipped with new controller, as well as its name and positioning (they did say it would ship in Spring 2010)
  • What their killer app will be for the controller

Nintendo

Strengths:

  • #1 installed base
  • Tech is proven great fit with existing customer base
  • Killer app for tech is already proven (c.f., Wii Sports)

Weaknesses:

  • Least amount of new news gave perception they were resting on their laurels
  • Weakest tech of any of the big 3 could slow sales in coming years
  • Perception among hardcore gamers is lowest of big 3

Unknowns:

  • Can Microsoft and Sony steal customers from Wii by adding new ways to play to their technologically superior systems?

One announcement that gamers, publishers, and analysts were all hoping for was a price drop–but none of the manufacturers announced a change in their price point. Nintendo could drop their price if they felt threatened since their SKU is the most profitable per unit, but they don’t feel threatened. Sony is pushing for greater profitability so as much as analysts would love to see $100 drop (and their sales would certainly benefit!) it’s not happening in the near term. And Microsoft has already come out with the lower-priced Arcade SKU so they feel they’ve addressed price by creating a lower-featured model although we haven’t seen the Arcade flying off shelves.

Sans a price drop, Wii continues to lead in sales and we don’t see this changing anytime soon. It remains to be seen what a bundled Xbox 360 or PS3 with a motion control system will cost but unless they are sold at a loss they won’t be cheaper than a Wii, which includes a motion controller in the core SKU, and presumably by the time Natal or the Sony product ships Nintendo will be shipping Motion Plus bundled with every new Wii.

Finally, and this can’t be understated, the killer app for Motion Plus is a known quantity that is a perfect fit for the owners of the 50MM existing Wiis: Wii Sports Resort.  The Sony controller looks to work well for swordfighting, shooting, ‘mouse’ actions, and other traditional gaming gestures, and Project Natal will work great for exergames, dance games, and some sports games and casual games. But neither system has announced a killer app to beat Wii Sports Resort.

As much as core gamers continue to put down the Wii, Nintendo continues to sell millions of Wii systems week after week, month after month, expanding the demographic of console gamers with each year. Microsoft and Sony have aspirations to do the same thing, but until they show they can do it, Nintendo is still the king. Nothing that was shown at E3 did anything to change that, as exciting as it was to see the Beatles, Uncharted 2, Steven Spielberg, God of War 3, et al.

Here’s the equation:

Proven gaming quotient + largest existing audience + ‘small, quiet, and affordable’ = the champ until dethroned

Having said that, we’re looking forward to someone topping Nintendo–the more the ante is upped, the better it is for gamers everywhere.

E3 2009: Sony Press Conference
Jun 2nd, 2009 by worldblee

Is there an inverse relationship between installed base and the length of E3 press conferences? Nintendo (#1) was definitely shortest, and I think Sony (#3 if you just count ‘next-gen’ consoles) was even longer than Microsoft’s. This wasn’t because Sony had the most news to reveal; it was because Sony showed longer demos and went into more detail on each game. To see for yourself you can watch the replay here.

So what did Sony reveal? Well, as usual, that if you look at the data the right way, Sony is number one. They’re coming out with the PSP Go (Tretton poked some fun at how that story was leaked), the PS2 is still selling, the PS3 is the most powerful game system out there, and they’ll have 35 PS-exclusive titles including Rockstar’s Agent, God of War 3, Final Fantasy XIV (which was shown for the first time), and Gran Turismo 5, and they’ll launch their own motion controller in 2010. And with 364 games projected for PlayStation platforms this year they’ll have nearly a new PS game for each day of the year.

Kratos is back for more blood

Kratos is back for more blood

Sony is expanding in Latin America, where their brand is strong. Interestingly, it seems the Sony brand is strong in Romance language countries, while Microsoft is correspondingly weaker outside Anglo countries. Anyway, maybe that will help Sony with the ten-year plan they’re always talking about for the PlayStation 3 (they took pains to point out that the PS2 outsold current-gen consoles in April despite the fact that it’s in its ninth year).

I wish the PSP Go was priced at $199 rather than $249 but with Sony dedicated to reaching profitability I can understand their reasoning. But paying the same price as a Wii for a refresh of a portable that’s been out for over four years seems steep even if it has new features. I won’t go into PSP Go details covered elsewhere other than saying the other PSP SKUs will still remain in the channel; Go is a new option but doesn’t replace the PSP 3000. There are 50MM PSPs out there and 15MM sold through last year according to Sony. Also, the PSP games shown by Sony this year looked promising, including Metal Gear Solid Peace Walker (sequel to MGS 3), Little Big Planet, and a Gran Turismo with no less than 35 tracks and 800 cars you can trade and share with your friends via ad hoc connection.

Moving to the PS3 titles shown, Assassin’s Creed II, set in the Italian Renassaince and featuring a Leonardo-like glider you can fly over the city looked like awesome fun. Drake’s Uncharted 2 also looked great; even better than the original and the battle sequence demoed was fast-paced and chaotic with great visuals. The crowd liked MAG and its 256 players but it didn’t move me, probably because I’m not in its intended audience. Gran Turismo 5 was as expected, the Final Fantasy XIII video shown got me more excited about the title than what Microsoft showed yesterday (figures that the Square Enix guys would be tighter with Sony).

Mod Motion Racers, a kart racing game with a great track editor, had me yawning at the initial announcement but when I saw the editor I perked up immediately–I’m not a huge fan of, um fan-generated content but this tech looked like the easiest way yet to create high fidelity tracks and environments. Could be an upstart to watch.

Finally, God of War 3 looked as fun as expected and the graphics looked better than the trailer a few months ago that had people underwhelmed. That game will move some PS3s. (Disclosure: I did some work for the Sony marketing team so feel free to doubt my motives even though I’m just calling it like I see it.)

Near the end of the presentation Sony finally got around to showing what I was most looking forward to: their new motion controller. Unlike the Microsoft motion camera, Sony is using a physical controller with a glowing sphere that’s tracked by the PS Eye, so you’re still holding a controller–sounds a little like the Wii, no? The sphere can change colors to reflect different states in the game, and the tracking accuracy is less than a millimeter according to the Sony engineers. Lag time was virtually nonexistant and the tracking looking one-to-one accurate in the tech demos they demonstrated.

The Sony motion controller in action

The Sony motion controller in action

Aside from the accuracy, it was interesting that Sony was using live video in conjunction with 3D objects to show the player’s movement–obviously can’t track the player’s body like a motion camera can, so this is a good idea. For instance, the demoer was shown on the screen holding the controller, which turned into a tennis racquet, a baseball bat, a sword, etc. The demoer had trouble hitting a tennis ball but it was easy to see how this could work in sports games, in magic games as a wand, or as a sword in a fighting game. It was also shown as a mouse substitute for RTS games, and as a very capable drawing and painting tool (much better than Microsoft’s painting demo; not sure why MS tried that as motion cameras are not a good interface for painting and drawing).

Next, they showed the use of two controllers to control a sword and shield, a bow and arrow (hmm, just like in the Nintendo demo), and as two tools. The sword and shield combat looked hella fun–would be interesting to try to cobble together a tech demo using a DDR floor mat and two controllers to allow the player to move through an RPG game while using both hands for fighting and spellcasting. Sony, please get on that.

We’ll post an anlysis of the motion gaming options for all three consoles in the next day or two after we have some time to think over the possibilities. But Sony showed more than expected for motion gaming, and that’s exciting for those of us interested in the motion gaming category.

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© All content (c) 2008, 2009 by David C. Lee