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The PS3 -- Part 1 -- What went wrong

Filed under: PS3 | Sony
Posted by Jeremy on January 10, 2007 10:58 AM
Comments (5) |

Writing up the Japan sales numbers for the PS3 got me thinking about why the PS3, and therefore, Sony, are in the position they're in. That is, disliked by the gaming press and the gaming community, stuck with poor sales numbers, and painfully aware that PS3s are sitting on store shelves.


Of course, there are the obvious reasons for its lackluster performance. These include price, a lack of good games, and supply problems. That's all well and good, but the PS3 was supposed to be huge, it was supposed to be the future of gaming, the machine that nobody could live without. What went wrong?

Continue Article ↓




Price

Leading up to the launch, many in the industry, us included, were not very enthused about the PS3, mainly because of the price. Influential gaming sites, like Penny Arcade, at their Penny Arcade expo back in August, publicly stated that they wouldn't be buying a PS3 because of price. The gaming press and the gaming community felt that Sony was trying to rip them off.

The argument on the other side, and this came mostly from videophiles, was that you simply couldn't get a Blu-Ray player for under $1,000, therefore, the $600 PS3 was a bargain. Although gamers and videophiles do overlap in some circumstances, many of us who play a ton of games could care less about watching movies on a Blu-Ray drive and many who care about the Blu-Ray drive don't really care about games.

Then came the speculators. Those people who knew they could buy a PS3 at launch, pop it up on eBay and make a steep profit. And they did. In the first 24 hours after launch the average price for the $600 retail PS3 was over $2,000. It went down over the next few weeks, but speculators were still easily making $400 - $500.

Proof that there were a good number of speculators buying the PS3 was the attach rate of games, that is, how many games were sold with each console. GameStop reported that the PS3 had an attach rate of 1.5 while the Wii enjoyed a 3.0. These numbers are a lot higher than the initial launch estimates that I read which said that the PS3 had an attach rate lower than 1.0. Obviously, speculators who didn't plan on actually playing the PS3 didn't buy a game with it.

Therefore, the launch audience for the PS3 were videophiles and speculators. Gamers, being the intelligent folk that they are, knew not to get involved in this free-for-all. They knew that historically, Sony launch hardware has kinks (the PS3 was no exception), that there were few good games at launch, and that the price would inevitably have to come down in the next year or so. Waiting that extra year for the machine, therefore meant that the kinks would be worked out, that more games would be available, and that the price may be lower.

Lack of Games

Quiz time! Name three PS3 games! What's that, "Resistance: Fall of Man". Uh huh. That's one. Can you come up with another two? Riiiight. Most non-gamers would not have even come up with one. Now, how about I ask you to name three Wii games. You'd probably name 'Zelda' and 'that one that comes with the console', aka, 'Wii Sports'. If you were really good you might also name 'Red Steel' or 'Rayman' or 'Super Monkey Ball'.

What's the difference here? A killer launch title. This intertwines with price when many gamers said to themselves: "If I'm going to spend $600 there better darn well be a great game to show off my hardware!"

On that front, Sony failed, however, this isn't a mortal wound, more like a deep laceration. It usually takes a good year or so for a new console to have a killer title. The 360 just got 'Gears of War', and the PS2 wasn't all that until it wrapped up 'GTA3' as an exclusive.

That leads me to mention that the Wii launch, with two smash hits, 'Zelda' and 'Wii Sports,' is an anomaly, and, what ultimately has led to the current state of the PS3. But first, a quick note on supply.

Supply

My dad called on the day of the PS3 launch to ask if we had gotten one. We did indeed get one, being in the business and all, we figured it be good to have one (which we ended up selling on eBay...don't hate us). Anyway, my dad said something that many were thinking, a conspiratorial line of thought, that Sony purposely tightened supply in order to create huge demand for the PS3.

That's a bunch of bull honkey, but not insignificant bull honkey. It doesn't matter whether or not Sony was manipulating its shipments (and personally, I don't think they were...I just don't think they could make them fast enough) but the fact that people thought that Sony was being devious futhered the notion that Sony was trying to rip them off.

Add in the news reports of shootings, beatings, and stampedes at the launch and what you have is the negative stereotype of the crazed gamer pining for their fix. The funny thing is, it wasn't crazed gamers, but crazed speculators that were causing the problems. Seriously, if each PS3 represented a profit of $1,400 for you, wouldn't you be a little more apt to trample somebody to get one?

Therefore, the tight supply resulted in the furthering of an already negative feeling that Sony was out to take advantage of the very gamer that they were counting on, and also resulted in a slew of negative press which the news outlets made to look like the LA riots.

The Wii -- The unforseen downfall of the PS3

Leading up to the launch of the PS3 many people suggested that, for the same price as one PS3, a gamer could get an Xbox 360 and a Wii. This was referred to as the NintendSoft bundle or the WiiBox (I'm sure there were other names, these are the ones I remember seeing).

This, of course, assumes that a person has $600 to spend on their gaming machine(s). It also assumes that there is a need for the cutting edge technology of either the Xbox 360 or the PS3. These assumptions were wrong.

Let's take the Wii out of the picture for a moment and create an alternate universe where the launch of the PS3 was going up against a year old Xbox 360. In Japan, where the Xbox has struggled to sell as if it were a Chevy SUV, the PS3 would have absolutely dominated. Everybody would have had to have one.

In the US, using this same alternate universe, the PS3 and Xbox 360 would essentially be in a pissing match of who has the best processor, who can render more polygons, and which high def DVD is better. It's like Pepsi and Coke doing battle...same product, slightly different taste. In this battle, the PS3 would have done well because, in all honesty, it does have slightly more horsepower and to the American consumer, that is actually very important.

Now, let's leave this dichotomous parallel universe and enter the real world. The world where the Wii launched the day after the PS3 here in the States and three weeks after the PS3 in Japan. The Wii also launched in Europe, which the PS3 will not do until March '07.

In the real world, people, some gamers, but many just regular people, were ready for a new game machine. They didn't care about graphics, polygons, or processors. They cared about having fun. They cared about not being presented with a 12 button cluster of controls. They cared about not paying $600.

And that's how the Wii killed the PS3. It was the third option. The Sprite to the Coke and Pepsi that most people were tired of. It shattered Sony's assumption that power and graphics were the way to go. It blew away Sony's focus on the Xbox 360 as its competition. The Wii was different, it was approachable, it came with a game (really five games), it had a fun controller, and, most importantly, it only cost $250.

Summary

It's been a rocky start for the PS3, but any new console has a rocky start. That's to be expected. What Sony didn't factor in was the appeal of the Wii. The Wii whose launch couldn't have gone better. The Wii which has the Nintendo name that us 30 somethings fondly remember from our childhood, not to mention the 'Zelda' bond that we all have. The Wii which only cost $250 and could be played right out of the box for hours on end.

The PS3 is not dead in the water, but it's close.

Look for Part 2 of this article tomorrow, "How Sony can save the PS3".

Oh, and to toot my own horn, take a look at the story I wrote up during E3 2006 titled, "Why the PS3 is poised to lose the Next-Gen battle". How right can a guy be?




Comments (5)



I am so sick of the corporate mouthpieces like you out there, even if you dont work for them. I own both a PS3 and a 360, and am far more angry at the Microsoft corporation and every game dealer that sold me my 360. I bought the hype about price points with my 360, and paid my 399, and then another 200 for the hd player. By the time I added all the things the ps3 came with I paid more for the 360. So before you keep harping on price points, it would bring joy for me to think others can see this as well. As for bad launch titles, I remember 360's first offerings and the ysucked just as bad. I recently had a phone conversation with the manager that sold me my 360, and he admitted that the reason they were partial to 360 was because Microsoft flew them all out to Dallas to check out their new hardware and loaded them down with freebies. Try thinking before you report. It would do us all good.




I'm just floored that people like you get so angry without even reading the article. You see something about price point, then, suddenly, we're corporate mouthpieces who don't think. Geesh.

Read the article. You're upset about the price point of the Xbox 360 + HD being about the same as the PS3. You're right, it is. And, as the article states, the PS3 has a great price point for videophiles who want a Bluray player under $1000. However, for people who just want a gaming machine (which most gamers do), the Xbox 360 is more affordable. There's no debate about that. You needed to have done more research if you knew you wanted that Xbox 360 + HD. You say you "bought the hype" about the PS3 being more expensive? How about actually looking at price tags while at the store?

Regarding your problem with bad launch titles, well, again, read the article. It clearly states that it takes a good year for good titles to come out. With that being said, the Xbox 360 did have "Perfect Dark Zero", "Condemned", "Kameo", "Call of Duty 2", and "Project Gotham Racing 3" at launch (plus nameless others). Not bad, really.

As for the manager of the store that sold you the Xbox 360 and his trip to Dallas, well, if that's true, then he's lame. But that has nothing to do with anything.

You tell us to try thinking before we report. How about you try reading before you attack? Seriously, what you have written is quite rude, is not a legitimate response to the article, and, if I may be frank, sounds like 100% BS. I don't know why you're so willing to defend the PS3 with such comments, but, trust me, you're not doing Sony any favors for doing so, as it just looks bad. So, please, read before you comment here again.




I was told by my son to read his great response to you article, and was as embarassed as you were probably annoyed with his diatribe. I and he apologize, him for his grammer and ignorance, I for not knowing he was posting replies at his age.

I did read your article, and I found it very good. My son didnt pay for those two systems, I did. And yes you are correct in your assumptions about the differences in the systems, but I would like to point out one or two things, if I may.

I am an old gamer, I have been playing since their advent, and I think that Sony did something that is being overlooked. You wrote how gamers and videophiles are usually exclusive, I agree. But the tack sony took was to incorporate ALL home media usages, whereas Microsoft was strictly for games. Instead of everyone trying to compare systems, saying one is better than the other for any reason, is moot in my opinion. I like MY (not his) Ps3 simply because it does try to do this, whereas if I simply wanted games, I would have the 360 on my entertainment center. Gamers seem to be overlooking what Sony is trying to do with this system, and instead of lauding it, they are unhappy with the direction sony has gone. Instead of saying one is for gamers, the others for movie nuts is to black and white. I am a hardcore gamer, even at my age, and love my movies. I am both, not soley one. Sony is getting no love for this, and it baffles me.

I am sorry if this was a bit long, and my son was sufficiently muted by your eloquent respone(thanks for that) And we apologize again for his rudeness. Ican say from my point, his angst was indeed from a long line of retailers doing everything they could to get him to hate the PS3. While I do agree with you, I can see where he and I are tired of hearing how awful a system we bought, when it is superior in our view. And the last line of your article, if I read it right, was is sony dead in the water, not yet, but close.
Well this system is very new, and I remind you of the myriad problems we all had with our first shipment of 360's. Thanks for your time and indulgence, and I imagine you get many many teens with unformed opinions making your day just a bit more frustrating.

They do grow up:)
Aaron




I like how you wrote this article, you stay neutral throughout the whole thing. I also like how you said it like it was. When you talked about the Wii like that, you left out one important part, though. While the PS3 and 360 stayed with the old style controller, Nintendo, with the Wii, simplified and made it the best.




I see where you are coming from with all this, Most people do not understand that they both have qualities. I myself am a gamer, I love this article so I just want to ask if I could share this with some other people who do not know what I am talking about? It would be great if you let me.

In Time The World Will Grow For Us As We Destroy It

Jack




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