PS3 discussion update

[Izuno]

So now there is new press about PS3:

http://biz.gamedaily.com/industry/feature/?id=12701

ABI: Sony Pricing Strategy "Fraught with Risk"

There's already been a good deal of backlash towards Sony's expensive dual-pricing strategy for the PS3, and now some analysts are saying that the high price could put their market dominance at risk. ABI Research says Sony has "hamstrung itself."

In a recent GameDaily BIZ poll only 4 percent of our readers said they would buy the $500 PS3 this fall while 24 percent said they'd pony up the $600 for the premium version. The remaining 72 percent said they'd either forgo a PS3 purchase entirely or wait until there's a price drop. For a company that's become synonymous with gaming ever since the original PlayStation, that's a little alarming.

Is Sony's pricing strategy going to hurt their market leadership position? According to research firm ABI Research, there's a good chance that it will. "Sony is placing a serious bet that its inclusion of a Blu-ray drive in the PlayStation 3 will entice consumers to pay a premium price for the new console, despite lower cost alternatives from both Nintendo and Microsoft... Sony's console pricing strategy is fraught with risk, and may ultimately jeopardize its market leadership position," the firm explained.

"Asking consumers to pay $500 to $600 for a game console, when most have yet to purchase an HDTV, will give many current PlayStation 2 owners reason to consider the competition," said Michael Wolf, principal analyst with ABI Research's broadband and multimedia research practice. "Sony has clearly hamstrung itself with a box that is expensive to manufacture, and these costs are driving a retail pricing strategy that places a high financial burden on the consumer."

Of course, Sony doesn't feel this way at all. Recently SCE head Ken Kutaragi said that if anything the console is "too cheap" and that the price is easily justified because the PS3 offers an "amazing experience."

While ABI was concerned about PS3's prospects, the firm was quite high on Nintendo and Microsoft. "... Nintendo is the best positioned of the three to expand into the casual gamer and new gamer audiences with creative titles such as Wii Sports and WarioWare: Smooth Moves," said ABI.

As for MS, ABI believes that its new "Live Anywhere" service will have a big impact over the long run "...the ability for PC and mobile phone users to access the same online gaming community is a huge strategic maneuver with important long term implications," the firm continued.

"The ability for gamers to be continuously connected across three screens is incredibly important," added Wolf. "While we believe buy-once-play-anywhere will be hard to implement due to intellectual property and technology restrictions, the initial benefits of Live Anywhere--such as mobile scheduling and game asset purchases--will give Microsoft something that the other two competitors will be hard-pressed to counter."

And...

http://biz.gamedaily.com/industry/feature/?id=12699

Bloomberg: PS3 Launch Hampered by Lack of Dev Kits

With another 6 months to go before Sony launches its PlayStation 3, reports have surfaced that publishers have not gained access to final hardware, making it difficult to create games that utilize the console's power or to support the system at all this holiday.

Financial news publication Bloomberg.com is reporting that when the PlayStation 3 launches this November there will be "fewer and less-powerful games because the company hasn't given final technical details of the new console."

"A lot of developers have not gotten the kits,'' said Sega of America president Simon Jeffrey while attending E3 last week. "There certainly will not be a lot of titles available."

The result is that publishers that do want to take part in the PS3 launch will have to release games that don't fully take advantage of the power of the Cell processor, added Jeffrey. A number of other publishers, however, will likely decide to delay the release of their titles so that they have more time to perfect them. In fact, THQ chief executive Brian Farrell said that THQ opted not to release a version of The Sopranos for PS3 simply because the publisher didn't have enough information about Sony's next-gen console. "It was too risky to do it,'' said Farrell. "It made no sense.''

While THQ is waiting, other publishers don't seem too concerned. Both Activision and Electronic Arts have been working with the development kits as is. "While we may not have the final, final hardware, we know what the processor's capacity is,'' explained Activision CEO Robert Kotick. "We have active development under way.'' Added EA president Paul Lee: "We're happy with the development kits."

Yves Guillemot, Ubisoft's chief executive, noted that not having final hardware is a new trend that developers and publishers will simply have to adapt to. Microsoft didn't get its Xbox 360 dev kits out on time either. "We won't be able to take advantage of all the components of the machine, but it was the same last year,'' Guillemot said. "It's a challenge for the publishers."

Still, larger publishers may have the resources to be able to deal with this problem but others may not, especially when development for the other platforms is noticeably more affordable. "Developing for Sony's platform is incrementally more complex than what you're looking at for Microsoft or Nintendo,'' said Mike Hickey, an analyst for Janco Partners. "With costs that could go over $25 million a game, you're not seeing third-party content where it needs to be at this stage to have a successful launch."

So how many titles should consumers expect this holiday when shopping for the PS3? Kaz Hirai, Sony Computer Entertainment CEO, claims that there will be upwards of 15 titles available and that Sony is now giving game makers the final prototypes and software, "allowing for plenty of time to prepare games for PS3's debut." For the sake of comparison, Xbox 360 had 18 titles available at its launch last year.

"I don't think there will be too much of an issue," said Hirai.

So I don't really expect Sony to drop the ball with developers. I think the launch lineup won't be as amazing as some people at Sony are declaring, but eventually the platform should get "good" games, assuming you love MGS4, GT:HD...um... I don't expect Sony to blow it with the developers on the dev kits in the long run. Last summer the 360 beta kits kept crashing and final ones didn't show up until end of July / early August, and that was if you were working on a launch title. Sure, the 360 launch lineup wasn't that strong but in 2006 the 360 games are getting much better. I expect a similar thing for the PS3 games.

But on the pricing side, it's going to be hard for a lot of people to pass up a Wii with fun content for a PS3 with some content as discussed above. We've been through this debate some, but it does seem like the banking and research analysts are joining the WTFSONY bandwagon.

[Furyo]

I'm sharing this at work tomorrow, and I'll be damned if we don't all agree

[mabufo]

Amazing experience my foot, I don't have an HDTV.

[Izuno]

another interesting development:

http://www.next-gen.biz/index.php?optio ... 6&Itemid=2

A story claiming that Sony is preparing to stop the potential sale of pre-owned PlayStation 3 games is being met with some skepticism by industry insiders.

According to a UK news source, citing retail contacts, Sony is preparing to make it illegal for consumers to sell used PS3 games. The plan would involve Sony adopting a licensing system whereby gamers would agree that they are purchasing a license to play a game, rather than the game itself.

If true, such a move would be a massive boost for publishers and developers which do not profit from the lucrative and damaging retail trade in used games. In fact, many publishers are furious that they have to spend support money on consumers who have not actually contributed a dime to the company's coffers.

In turn, it would be a catastrophe for retailers, which make a significant proportion of margin from used games. Consumers would likely be less than overjoyed.

Sony, which is refusing to comment on the story, does have a patent on technology which would tie a piece of software to an individual piece of hardware. But technology and desire are not the only parts of the puzzle. Whether the company would be prepared to take on retail, consumer goodwill and, most likely, the U.S courts, is another matter.

One expert in retail law told Next-Gen.Biz, "Sony can theoretically sell a license to play the game, but the user would have to acknowledge acceptance of the license. You've seen this when you install software on a PC. I'm not sure that the license agreement is enforceable if the licensee doesn't agree to it.

"Also, even if the agreement is enforceable, it's hard to preclude subsequent sale of the disc. The consumer could theoretically agree that he doesn't own the right to transfer his license, but why couldn't he sell the medium that held the license (the disc)? Sony can't enforce the agreement against a third party, as it lacks privity with the third party.

"Stated differently, I don't believe Sony can keep someone from selling a disc, even if they create a license agreement. The only way that this can truly be effected is to require registration of the disc with a specific PS3 console. Sony has a patent on such a technology, and could render a disc unplayable once registered. That would accomplish their goal (if they really have such a goal). In summary, I don't believe this is real."

A senior games publishing source told us, "Sony and the rest of us would love to put an end to this damaging trade, but actually making it happen looks like a fight that's beyond even Sony. I can't see it happening, but i hope I'm wrong."

Another senior manager at a third party publisher said, "I know that Sony is very upset about the used games market. But this story seems a bit far-fetched."

My gut's telling me that Sony won't do this.

But the bigger question is around controlling the way content is purchased and used. Think of it it this way, if you make a song, you'd like to be paid everytime someone listens to it. Everywhere. That's not really possible given our infrastructure. Same witih movies or TV programs.

It's an issue of revenue capture.

For games, how can a developer/puslisher/console manufacturer capture revenues for content? Further, what is fair to all sides? As always, this relates to who gets what? Every time someone experiences a game for the first time, I'm sure Sony would like to capture revenue. Traditionally this has meant when a sole gamer buys, plays, and owns a copy of the game. Today that's getting very blurred with all the different distribution models (rental vs purchased copy vs public LAN vs playing at a friends house vs borrowing).

Consumers might cry out that this is gouging, but i think the reality is more subtle. The reality is that people put different value on playing different games. For many die hard Halo fans, getting Halo2 the moment it came out was critical, so they waited in line and paid full price. To other people, it was not as valuable so they waited a few days...etc...to the point where other people waited till Halo2 went down in price or they could borrow or rent etc. Sony seems to be saying "no, we think that if you want to play it, you gotta pay on our terms and on our timeline, not yours." This is sort of similar to the logic that "people will save up their money to buy the PS3 because it's just so damn awesome."

In the end this feels a little arrogant on Sony's part. Everything about the PS3 and Sony's strategy has this arrogant flavor about it. X360's "flavor" has been more open, while Wii's is downright inviting.

The question is, will the different parts of the gamer market buy into Sony's attitude? Only if the content is there. Hence we wait... :roll:

[Taylor]

I can see this being a build up for a catastrophe on Sony’s part. Has the nonsense about Sony removing the rumble packs been posted? If it hasn’t that’s something else to baffle over.

[ReNo]

I was chatting to casual gamer mate of mine yesterday, and he was saying he was gonna get a 360 but has since decided to wait for a PS3. I then told him it was due to be £425, that GTA4 would be out on the 360 at the same time, and showed him PGR3, and now he isn't quite so sure

[Section_Ei8ht]

I want to know how these licenses work in terms of the console if they go through with this. If my ps3 breaks and the licenses are locked on that console, would I have to buy all the games again for my new console?

[Lurker]

Even taking your games over to a friend's house wouldn't work... either way, I won't be getting a PS3, but it seems like Sony is constantly making bad decisions.

[Fletch]

wow, that would be the stupidest move Sony could possibly make right now. Registering a game to a specific hardware unit would just be destructive. This would prevent you from bringing your game over to a friend's house, renting a game from Blockbuster/Gamefly, or trading games with friends. So I agree with Izuno, I don't see them doing this. Somewhere, somebody within Sony has to be smart enough to bring those points up.

Retailers that sell used games would be in a pretty strong position to just say "fuck you" and not stock Sony products, period. No PS3 sales, and possibly no PS2 sales either. Also, some of these companies are also general electronic sellers and could start to push against the Bluray format in favor of HD-DVD, which would really hurt Sony.

There is just too much to lose for Sony to be dumb enough to push through with that. Even the retailers that did still stock PS3 stuff would probably be hamstrung to keep market prices where Sony dictated them, which would probably lead to the PS3 getting the worst floor position with no endcaps (you know, where the Gamecube section is now). Publishers can complain all they want, but you need somebody in the store to promote and sell you product at the end of the day. If every Gamestop of Best Buy employee is out there saying "PS3 sucks, you spend 60 bucks on a game and you can't play it at a friend's house. You should buy an Xbox or Wii instead." it would be a toxic marketplace.

But you never know. It's Sony, and so far their PS3 team has seemingly screwed up every single decision so far.

[Lurker]

If every Gamestop of Best Buy employee is out there saying "PS3 sucks, you spend 60 bucks on a game and you can't play it at a friend's house. You should buy an Xbox or Wii instead." it would be a toxic marketplace.

I work in game retail, and the same thing happens with the PSP. If a customer comes in and asks me if they should get their son or daughter a DS or PSP, I almost always tell them to go with the cheaper DS, unless they're looking for an entertainment handheld system. Same thing will likely happen with the PS3 -- games are alongside the entertainment portions of it, and unless they're looking for the complete/whole/expensive package, I'll probably have to tell them to go with the Xbox360. The real winner in this is Microsoft, seeing as how Nintendo is not in direct competetion with them like Sony has aligned themselves.

To me, the PS3 screams over-ambition and excess.

[ginsengavenger]

I'll be buying a 360 in a week and a Wii off the bat. Maybe (MAYBE) in a couple years I'll buy a PS3 if it's well enough established and supported. Right now I'm very skeptical. And right now I'm working on a PS3 game.

[JAL]

This might not be the most intelligent response to the situation, but frankly I think sony is fucked in the next.gen. console competition.

[kleinluka]

I would have to agree...

[mikezilla]

Yeah and Itunes registered mp3's to your computer and look where it is now... oh wait.

The truth of the matter is that Sony is going to do incredibly well with the next generation, their market share is simply too large and too strong. Consumers allow a certain number of failures before they actually stop using a product... the ps1 and ps2 were massive successes in their minds, so they will charge headlong into the ps3 forray (remember that the incredibly loud internet populace that chastises corporations like Sony for their decisions makes up less than 5% of the market.)

But that's the not the point. The point is that Sony wants to stop retailers from fucking the DEVELOPERS over. This has little to do with the consumer at all. This is a good thing.

Look at it this way. When a game ships the money is split all kinds of ways. Most goes to the publisher (as they spend all the cap to get it out there) and depending on your deal some of the rest goes back to you. On a $50 game the whole sale price (aka what the dev and publisher split) is about $36. So per unit, maybe anywhere from 5-15 (totally rough) gets back to the developer per unit. Most to all of this money goes straight back into paying salaries and development costs (which are rising.)

A number of things can happen from there. People can return the game which then comes out of something called a "return reserve." Essentially, 15-20% of the money the developer would get, is set aside in the event that anyone returns the game. If they do, money is subracted from this reserve. When the time is up, whatever is left is given back. We know this as something that totally sucks.

Or the consumer might choose to "trade-in" the game. This is where the system gets totally fucked over and Gamestop should go to hell. Consumer A buys a game for 50 bucks (that 36 we were talking about earlier goes back to the publisher and developer.) The he trades it in and gets 30 dollars back. Then Gamestop sells the GAME AGAIN FOR 40 DOLLARS. None of that money goes to anyone but Gamestop. The reason this is bad is because they can repeat this process ad nauseum and encourage as many consumers as possible to not put money into development. Why do you think the first thing, i mean the FIRST THING when you walk into a Gamestop isn't even hello? It's "Did you bring any trade-ins for me?" For you? No, no I did not. Their whole company revolves around this one philosophy because it's the only thing keeping them in business against giants like Best Buy. It's a clever scheme that's costing developers (say what you will about money grubbing publishers) but when developers are losing millions, you get less games and you get less quality.

I'll pre-emp whatever arguments about fairness and "what blockbuster does" with how we've dealt with this problem in the past. When blockbuster gets a movie they pay over a hundred dollars per unit because they'll make back twice that in the long run. This was put in place to protect the people making entertainment from the people selling it. Nothing of this nature has been put in place for games, Blockbuster just buys regular games and rents them out to tons and tons and tons of people.

Movie - 100

Game - 50

What?

The government is so intent on destroying the gaming industry that there isn't anyone that will fucking stand up for us. Development got expensive. It got REALLY expensive. Covering development costs is now in the range of 10-20 million on the average (and more where people don't know how to run a company.) That's pushing a lot of units to break even and make another game.

So in conclusion, fuck Gamestop, EB, Babbage's, and all those other little trade-in stores that are making a fortune off of selling the same shit to different people.

I should put up a website like those I hate WalMart websites.

[Ginger Lord]

Then make a game that nobody would ever want to get rid of or hand back in