Feeling Blue: Is Blu-ray Killing the PS3?

[Damion Chaplin]

<div class='os_post_top_link'><a href='http://gamesindustry.biz/content_page.php?aid=19514' target='_blank'>http://gamesindustry.biz/content_page.php?aid=19514</a><br /><br /></div><i>"The more you look at the involvement of Blu-Ray with PS3, the more it appears to be a millstone weighing heavily around Sony's neck. While acknowledging that the technology is excellent and that its potential to make the PS3 into a system with capabilities far exceeding its competitors is certainly important, serious question marks must remain over the firm's slavish devotion to launching a new physical media format into a hugely contested space at a time when some industry players - including Microsoft and Apple - are already questioning the future of physical media as a whole. This week, the extent of that devotion was revealed even further; Sony has allowed Blu-Ray to dictate the timeline of the PS3 once again, leaving European retail up in arms, European consumers feeling like they're being treated as third-class citizens, and Microsoft laughing all the way to the high street for a second unopposed Christmas in the high-end console space. Optimistically, you might call this admirable devotion to achieving a vision, and claim that it will pay off in a few years' time when the DVD drive in Xbox 360 starts to look distinctly underpowered. Back in the real world, it looks more and more like stubbornness and folly."</i><br /><br />This is a fantastic article that sums up just about everything I feel about Sony's fanatical commitment to Blu-ray. There's not a single point that Rob Fahey brings up that I don't agree with. Sony's stubborness at sticking with Blu-ray for the PS3 may, in the long run, turn it into a superior gaming console, but in the short run it may spell doom for the PS3. If the PS3 is delayed too long (due to Sony's insistence on Blu-ray), the 360 will gain a clear edge in amount of installed user-bases and game programmers. If they take too long, they may find that there's just no one left to care. :?

[Felix Torres]

If they take too long, they may find that there's just no one left to care. :?

It may *already* be too late; the very announcement of the delay and limited production may trigger an early move to 360 for those folks waiting for a PS3 or 360 price cuts, neither of which is going to happen. The only reason for a person on the fence not to buy a 360 now is the expectation of special xmas bundles. And those should hit stores by mid october...

1- Instead of PS3 lifting BluRay, Sony has painted themselves into a corner where Blu-Ray has to carry the PS3 as well as beat HD-dVD. Which means Sony has to manage their Blue laser components with exquisite care: divert too many drives to the PS3 market and they might lose the early adopter movie market; divert too few, and they might lose the video gamers. They're fighting two wars that depend on network effects in two markets with minimal overlap.

2- In surrendering the 06 xmas season to MS they have guaranteed MS will have the upper hand into spring 08 at the least. Worse, MS is likely going to get the 360 into the black this XMAS. This is waaayyyy dangerous because MS is *not* looking at the 360 as a 10-year product like Sony does with the PS3. Since MS owns the IP of the 360, they have a range of competitive options that could be devastating to the PS3 as a *platform*. They will definitely be the first to 20 million and if they choose to cut prices repeatedly in 07, they can be the first to 30 million. Worse, they can come up with a 360 version 1.5 for xmas 07 (built-in HD-DVD and HDMI, bigger HD, etc) or a version 2.0 as early as 09. Which means they can effectively force Sony to "buy" their marketshare with red ink (as MS did with the original xbox--which they, unlike Sony, can afford) or to buy profit margins with market share. Either way, Sony loses control of the market. And if MS goes for the jugular, they can (theoretically) beat the PS4 to market by 3 years and force Sony to do a Nintendo and make the PS4 an incremental improvement instead of a full step forward.

3- So far, Sony has effectively been Murpy-ed on the PS3; *everything* that could go wrong has gone wrong. And they haven't even starting assembling the boxes! (In other words; still more problems lie ahead--maybe small, maybe big...) But the funny thing is, the biggest impact isn't to Sony itself; it is to their software development partners, who are going to have to derive full profit for their PS3 games off half the originally-planned installed base. At a minimum, it means the worse hit are the most loyal to Sony; those that bet the most on the PS3 lose the most. Anybody that hedged their bets by doing cross-platform games should be able to balance reduced PS3 sales with increased 360 sales but those that didn't are likely to face cash-flow issues... This should lead to less exclusive games for PS3 and more for 360.

4- Lost in the hub-bub over europe is the way Sony is short-changing Japan at launch with a mere 100,000 units. Presumably, they intend to stock the japanese market with consoles built in dec (too late to get to the US before xmas) counting on late december sales and the well-known japanese aversion to foreign products to protect their market, but if Nintendo floods Japan early, they could lose control of all three markets; NorthAm and Europe to MS and Japan to the Wii.

Sony now has many ways to lose but only one way to win: Blu-ray has to *drive* PS3 sales instead of getting a free ride. I'm thinking this is going to be studied in business schools the world over for the next decade.

[Jason Eaton]

I admit, I am a what if guy. Always trying to see the other side of the coin.

Now... what if this issue is a perceptional problem because of where they are located and where we are? This might be a little round about but here goes.

Sony is based in Japan, most of you probably knew that one. But did you know that in Japan the Game Cube from Nintendo (a five year old previous generation system) out sold the number of Xbox 360s last month?

Think about that for a moment.

While I am not saying the big wigs of Sony actually shop in Akihabara themselves, their view of the MS threat may be biased because of the overwhelming lack of adoption for the Xbox 360 in their home turf.

They may perceive that everyone is waiting for them. They may actually think their suggested price is spot on. People telling them of the success the Xbox 360 has in other regions might as well be trying to tell people in the conference rooms of Sony that the sky is polka dotted.

Corporations that big take a long term to change course or tactics. Any delay in thinking becomes magnified ten fold. I don't think Sony *can* react any faster.

So is the Blu-Ray killing the PS3, probably not in their minds. They are still seeing the forest and not the army of invaders sitting inside the forest just outside the gates.

[Felix Torres]

While I am not saying the big wigs of Sony actually shop in Akihabara themselves, their view of the MS threat may be biased because of the overwhelming lack of adoption for the Xbox 360 in their home turf.


Could be.
Corporations tend to look down their nose at competitors' products all the time and even when they don't, it is standard practice for "market leaders" to pooh-pooh their competitors.

Sony has clearly been operating out of this particular PR playbook:
E3 - "The next generation begins when we say so..."
http://news.bbc.co.uk/1/hi/technology/4767807.stm

Playstation mag - "Every time we go down a path, we look behind and they're right there - we just can't shake these guys. I wish that they would come up with some strategies of their own..."
http://ps3.qj.net/Kaz-Hirai-Takes-A-Swing-At-Microsoft-/pg/49/aid/57196

But that is talk. Their actions don't quite jibe with that. A closer look at what they actually *do* suggests Sony is running scared. If anything, they are paying *too much* attention to what MS does and setting themselves up to fail by trying to copy and better everything MS does, regardless of the consequences.

After all, given the problems MS had getting the 360 out the door "worldwide" (more accurately, it was a triple launch: US, Japan, western Europe...) Sony could have simply shrugged and gone with their traditional launch pattern. Instead, they felt they *had* to show they could do better than MS and instead fell flat on their faces.

Generally, it is followers who measure themselves by somebody else's yardstick and, in fact, it is the very definition of second-rate. By focusing so closely at what MS does, Sony is telling the whole world that MS is in fact calling the shots. If MS zigs, Sony tries to zig; if MS zags...

Looking at their actions it is clear that MS simply defined a strategy and followed through as best they could. The 360 is simply the best box they could design and ship by fall 2005. If that meant going with a DVD drive and no HDMI, then so be it. The 360 will live or die based on what they were able to pack in the box and the supporting ecosystem (development tools, XBOX live, accessories, etc) and the quality of games it provides.

Sony, on the other hand, seems to be obsessing on beating MS with demos and press releases alone, judging by their public actions. (There is precedent for this, though: Sony FUD-ed Dreamcast out of the market before shipping a single PS2. They've tried to repeat the tactic with the 360 but unlike Sega, MS was prepared for it and have countered the FUD with hardware, games, and services. It also helps they have a bunch of ex-Sega guys working at MS that want a piece of Sony's hide in revenge.)

Unfortunately for Sony, the hardware they can actually build doesn't seem to be matching the expectations raised by their press releases and demos. (Slower clock-rate and less active execution units than originally promised, less ports. Higher cost. Etc, etc. Lots of broken "promises".)

Competition is a good thing (for consumers) but it *is* possible to have too much of it, especially when it gets "personal". Sony does seem to have gotten a bit carried away here:

XBOX renders games at 720p or better? Ha! PS3 will render games at 1080p! (Unless the hardware can't quite keep up or the developer chooses to allocate system power to something other than raw resolution.)

XBOX launches worldwide? Then PS3 launches worldwide! (Even if it means only a trickle of boxes show up in a given place or, worse, you raise expectations you then have to backtrack from...)

XBOX has an online service? Then PS3 has an online service. And it will be better! Free! (Unless they have to charge to maintain the servers and the VPN.)

XBOX plays DVDs and digital media? Then PS3 will play DVDS and digital media and surf the web and play BD-ROMS! (Regardless of the cost of adding the extra hardware and any component shortages that might ensue from pairing a first-batch CPU with a first-batch optical drive.)

XBOX has optional Hard Drive and wireless networking? Three USB ports? Then PS3 will have a bigger hard drive. Standard. And standard wireless! And seven USB ports! (Never mind that most games are single player locally and that a USB hub is under $10 at retail. Or that optimum networking performance really requires a wired connection. Or that if 801.11N networks ever get off the ground, the built-in wireless is going to be looking pretty darn slow by the time PS3 becomes mainstream.)

XBOX ships at two price points? Then PS3 ships at two price points! (Even if the cheaper unit can't be upgraded to match the more expensive model later.)

XBOS has been fighting to keep hobbyists from hacking the hardware to turn it into a cheap Linux computer? Sony will *help* hobbyists by giving them an official Linux to run. (Never mind that the early revenue of the PS3 is supposed to come from game sales and that PS3s running as Linux servers aren't selling games for you.)

XBOX price went up from one generation to the next? Then PS3 will raise prices even more! :lol:

Get the idea? These guys are their own worst enemy right now. They are so focused on their competitor, they've forgotten about their *customers* and generating so much bad news that even their biggest fans are forgetting that, on paper at least, the PS3 still looks like a decent enough console. It may be that, once it ships, the PS3 will continue to disappoint the faithful and fail to measure up to the competition. But it may turn out that the hardware is just fine and that the only problem lies in the panicked people running the show around it.

Somewhere along the way, Sony has forgotten that beating Microsoft or promoting BD-ROM is a secondary mission for the PS3. The primary purpose of a game console is to deliver games to customers and part them from their money. Microsoft has not forgotten this. If anything, they are constantly looking for new ways to monetize the 360 and it is this more than anything that will decide the winners and losers of the so-called console war. The Playstation name still carries a lot of weight with the faithful and unless the final hardware and games are a really dreadful package, Sony will sell tens of millions of them. They just might even sell more PS3s than MS sells 360's between now and 2010. But right now the odds are that MS will make a whole lot more money and be better positioned for the next round of the war.

As consumers, we can only hope for a tie or close match so prices drop quickly and the next generation shows up sooner rather than later. But that requires that Sony clean up their act and put up a fight instead of shooting themselves in the foot and other places.

Right now, I'm not betting on it. :roll: