Give Sony (SNE) credit for self-confidence: Not only is the company denying price cuts for the PS3 are in the works, but Sony execs are hitting the media circuit to insist having the most expensive gaming console on the market amidst a recession is a good idea.
The latest from Sony Europe President David Reeves, who told this whopper to the Guardian (UK):
“We simply have to suffer a little,” he explained, “go down in market share and mind-share. It’s like Ali v Foreman – go eight or nine rounds and let him punch himself out. We’re still standing, we’re still profitable and there’s a lot of fight in us. I don’t say we will land a knockout blow, but we’re there and we’re fighting.”
David also repeats what increasingly looks like Sony’s immutable position: The goal is short-term profitability over all else so price cuts are unthinkable unless PS3 manufacturing costs drop even more.
We also hear the same tired reasoning for why Sony thinks people should gladly pay more for a PS3:
Look at the capability of the machines. With PS3, you can go online for free, it’s got all the games you want, it’s got a Blu-ray drive so you don’t need a new player, you can store photos on it, and you’ve got Home [Sony’s recently launched online lobby-service].
Except that no one cares about Blu-ray (at least they don’t care to the tune of $400), Home isn’t something to brag about, and who buys a game console to store photos? And the PS3 does not have “all the games you want”: It doesn’t have Halo, it doesn’t have Fable 2, it doesn’t have Wii Fit, and that’s just three off the top of our head.
Things are only going to get worse for the PS3. With declining sales, game publishers are already shifting scarce resources away from the console: Bethesda’s award-sweeping “Fallout 3” has lots of content on the X360 it doesn’t on the PS3, publishers like EA (ERTS) are focusing on the Wii and lumping the PS3 and X360 together as a single “bucket”, and the only two upcoming PS3-exclusive titles worth mentioning, Killzone 2 and God of War 3, are both published by Sony itself.
(And neither K2 nor GoW3 are console-sellers, not like Halo is for the Xbox or the way Wii Fit sells Nintendo (NTDOY) consoles.)
We wish Sony would reconsider. The PS3 really is a beautifully engineered device, especially compared to Microsoft’s (MSFT) Xbox, which as been plagued by hardware problems like HDMI sound issues, disc scratches, and the dreaded “red ring of death.”
But with the PS3 stuck in third place, no one will make games for it other than Sony itself. (At least not exclusively, meaning the PS3’s superior power will go unutilized.) For all its bells and whistles, the PS3 is a gaming console, and Sony still hasn’t figured out that’s where the fight is.
The only way we can imagine Sony can get back in the game is price cuts, taking the short-term hit on the chin in terms of decreased revenue for the long-term boost of getting the console in people’s homes. Without a real plan to pull out of third place by the end of 2009, we don’t think Sony’s PS3 will “suffer” — we think it will fade into irrelevancy.
Sony Exec: No PS3 Price Cuts Until Manufacturing Costs Come Down
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