While gamers and retail chains have been mostly praising Sony's new cheaper PS3 (aside from the backward-compatibility issue), the European HD DVD Promotional Group has said the 40GB system won't have much impact on Blu-ray sales in the region.
"The European PS3 price cut will have a minimal impact on the adoption of next generation HD formats. The real battleground is in sales of standalone players and HD DVD is out in front by a massive margin," Co-Chairman of the European HD DVD Promotional Group Ken Graffeo said. According to the group, HD DVD accounts for about 70 percent of the European market, and it expects that number to continue to grow.
However, many believe this year's holiday period will go a long way in deciding which format will reign as king, and we think the HD DVD group may be underestimating the impact of the 40GB PS3.
So, the 40GB PS3 is losing backwards compatibility with PS2 games. Is that a big deal? You voted, but let's hear what the analysts have to say. From a business perspective, it makes sense for Sony to remove the feature. "Cost is hard to gauge, probably $30 - $50 per unit," Wedbush Morgan Securities' Michael Pachter told GameDaily. A significant savings, when one considers the thousands of systems Sony must sell. Will the lack of PS2 support affect PS3 sales? "I thought lack of backward compatibility would hurt the Xbox , but it really didn't," Pachter noted.
However, NPD analyst Anita Frazier has some data that might concern Sony. "Nearly 70 percent said that [backwards compatibility] was an important feature to them."
Regardless, when it comes down to the choice between backwards compatibility and saving $100, the choice will be clear for most consumers. Colin Sebastian, an analyst at Lazard Capital Markets noted: "It appears that pricing is becoming more of a priority, which makes sense given where the PS3 is selling in terms of market share. I don't believe removing backwards compatibility is a huge deal, considering that most people who want to play PS2 games will continue to do so on their PS2s."
After announcing that the 40GB PlayStation 3 is headed to Australia, Sony has set some lofty expectations for the new console in the region, Michael Ephraim told Gamespot. The Sony Computer Entertainment of Australia managing editor claimed that while Sony has sold 83,000 units since its launch in March, it expects to meet or exceed that number by the end of the year.
Ephraim also continued Sony's recent tactic of downplaying the significance of the lack of backward compatibility, he also said that at this point, the PS3 and the Wii should no longer be compared to each other. "Nintendo Wii should be compared with PlayStation 2 for the functionality, the experience, and the demographic it appeals to. Consumers in that space will compare between a PS2 and a Wii, not a Wii and a PS3 – they're just completely different animals," he said.
This isn't the first time Sony's said one of its products isn't in direct competition with Nintendo's, but it'd be interesting to see if it'd be singing the same tune if the sales numbers were reversed.
How does Sony manage to keep stuff like Home free? Seems they decided to create a new in-game advertising business unit to assist in the cost and upkeep of the new "virtual space". Darlene Kindler was appointed to be in charge of the in-game advertising strategies, along with the partnership with Nielsen Media Research from July. As revealed in a recent job posting, in-game advertising is something Sony's serious about. The two companies will share network data from our PS3's and the PSN and work advertising into our virtual lives.
What can we expect? Just about any sort of "dynamic, relevant advertisements" you can think of. SCEA will make sure they're just like ads in real life -- billboards, posters, images on shopping bags or soda cans, things on your TV, and more. While this is a neat concept, we don't know how well it'll actually work. Sure, we could customize our avatar to drink Coca-Cola, but will that really make us want to go buy some? Who knows. Still, promotions like those will undoubtedly let free PSN services thrive.
Now that Sony has finally come clean and announced its new 40GB PlayStation 3, it's got some "splaining to do." The biggest issue on most gamer's minds is why Sony decided to cut the backwards compatibility feature that linked the PS3 with the PlayStation consoles that came before it.
SCEE managing director Ray Maguire said Sony will use the money it dedicated towards backwards compatibility to invest in new games or to perhaps lower prices so more gamers can afford to buy a PS3. "It was a big decision, and we know it is a very emotive subject as lots of people think that backwards compatibility is high on the agenda and yet few really use it," he said.
We're not sure how Maguire came to this conclusion, but the PS3's backwards compatibility feature is always one that we've appreciated for a long time. With Sony's commitment to a 10-year life span of its hardware and games still being published for last generation's console, it seems like an odd choice to "cut the cord" at this point.
"We should probably advertise this thing," someone said at a meeting of Sony executives.
And then it happened! A new "brand campaign" begins this week for the PS3, one that we hope is absent of creepy crying babies. According to a recent PlayStation.blog update, "the theme of this year's campaign uses computer animation to model key PS3 iconography in a black onyx world." One reader theorized that this mysterious logo may play a role in the upcoming advertising. We doubt it -- but it certainly sounds plausible.
Sony will most likely focus on their big holiday line-up, which includes Ratchet & Clank Future and the new IP, Uncharted. In addition to the usual key selling points of the system (Blu-ray, PSN, etc.), we hope that Sony will also run advertising to promote a potentially price-reduced machine. A $399 price tag would certainly look quite attractive.
The second time in less than a month, Sony is supposedly considering selling its chip manufacturing plants to rival electronics company Toshiba. According to a report by Reuters, "Sony was in negotiations with Toshiba to sell its manufacturing facilities in Nagasaki, also in western Japan, for advanced microchips including the Cell microprocessor." The Cell processor is a vital part of the PS3 architecture and is one of the costliest and most powerful aspects of the system.
Although both companies have declined to comment, the Business Daily Nikkei has estimated the sale value of the production facilities at 100 billion yen ($856 million).
Cutting costs is important to any business. But, when you're losing millions of dollars to sell a technologically over-powered console, you need to cut costs as quickly as possible. Sony has been reducing production costs of the PS3 significantly in the past months, and a new deal with Infineon may help the company continue its efforts to reduce its losses. "This deal allows us to combine Sony's chip-designing ability with Qimonda's chip-making ability," Sony President Ryoji Chubachi told Bloomberg. "That way, we can share a roadmap to cut costs."
The DRAM that Infineon will produce will reduce costs for producing a variety of Sony devices, such as cameras, mobile phones, and more. DRAM chips are also used in the PS3.
Last November, Sony announced the discontinuation of the Official PlayStation Magazine, but it appears it's getting a new lease on life as Sony and Future US announced their agreement on a new magazine – PlayStation: The Official Magazine. The magazine, which will initially have a circulation of about 300,000 copies, will arrive in November.
"We're very excited to be working with a group that is nearly as passionate about our brand as we are ourselves and we look forward to working with Future on many innovative ideas they have to create a best in class enthusiast publication," said Peter Dille, senior vice president of marketing at SCEA.
Ziff Davis, the former publisher of OPM, continues to battle financial issues, so it's understandable Sony's preference to find a more reliable company in Future, which has continued to publish OPM in Europe. Additionally, when Sony made the announcement last year, it said focus would shift to delivering content via PlayStation.com and the PlayStation Store, so we wonder what spurred this change of heart.
Eidos Chairman Tim Ryan believes the PS3 will live up to its potential. He said so in a written statement that was presented to Eidos' parent company SCi recently, but Ryan, along with many others, thinks Sony must drop the PS3's price before it can be all it can be.
"The board continues to believe in the long-term commercial success of PlayStation 3 but believes this may take more time than originally forecast by Sony," he wrote. "The board is of the opinion that the key driver to the acceleration of the installed base of PlayStation 3 will be a further hardware price cut."
We're not sure if Ryan got the memo, but Sony has plans to release a more wallet-friendly PS3 in the coming months. But could Ryan be mudslinging to redirect some of the blame he and his company is receiving after reporting a $60 million fiscal year loss? Ouch!
Those that have been following the development of Home should not find it surprising that the ambitious online program was delayed to next year. Troubling signs from the beta suggested that the project simply wasn't moving as quickly as it should. Even more telling, a quick look through Gamasutra reveals that there's still a crucial job opening specifically for Home has still been unfilled.
The Home Content Producer will be responsible for:
Developing content strategies for Home to achieve Home business objectives.
Coordinate development efforts of Home content.
Act as a liaison between first and third party game publishers/advertisers and external developers of Home content.
It appears that this is a serious position that is crucial to the development of Home. It's interesting to note that not only is Sony concerned about getting the service out to the masses, but is focused on getting third party content (including advertising) into the platform. Qualified individuals can apply for the job here.
According to Tech Analyst Tim Bajarin (with Creative Strategies), people set a price ceiling of $399 for new electronic items and anything above that ceiling will not only get infested with rats (damned crawlspaces), but won't be able to sell in volume. They cite the iPhone as a suffrant of this concept as well as the PlayStation 3. No, suffrant isn't a word, but it should be. It's a new way of saying "one afflicted by suffering" or something. This price ceiling isn't end-all, that is, televisions and computers are exempt from the ceiling because those are "worth" the extra cash.
What we thought was interesting was the coupling of the $399 price ceiling and the rumored price drop of the PS3 to that sweet $399 mark. If that's what it takes to sell volumes, there might be more behind this analysis than meets the eye. Still, most people reading this site are exceptions to the rule -- we nabbed the PS3 before this price ceiling, but then again, we don't exactly constitute "volume" sales. Do you guys think PlayStation 3 sales will skyrocket if the price hits $399?
Sony is continuing their treatment of the PlayStation 3 as the Ferrari of consoles by teaming up with customer publishing agency Future Plus, to produce a 60 page, high-end brochure for UK consumers. The glossy PS3 novella will be distributed by Sony across the British Isles at special events and kiosks scattered throughout the area.
Over 250,000 copies of the 'lavishly produced' brochure will be handed out to consumers in the pre-Christmas ramp-up period. The publication will be separated into four different sections highlighting the HD capabilities of the PS3, upcoming Blu-ray movie titles and games, as well as the console's robust online features. The hope is that the brochure will provide prospective PS3 owners with all the possible information they need to convince them that Sony's console is the one to choose this holiday.
It will be interesting to see how well Sony's high-end marketing campaign will work in the UK. The cost of the PS3 there is astronomical (by American standards at least) so embracing the luxury market may be a good idea. At the same time, it might not do much for the actual sales of the PS3. Think about it -- who sold more cars last year? Ferrari or Toyota?
A book was recently released in Japan called "プレステ3はなぜ失敗したのか?" tries to answer the question "Why did the PS3 fail?" It's a bit early, but the sensational title certainly will turn heads (as it did ours).
It's clear that system sales did not meet Sony's expectations. However, it's premature to declare any system a "winner" or "loser" in a generation that has been in motion for less than two years.
It's time once again to look into the future. That's right, Michael Pachter of Wedbush Morgan Securities, all the way to the year 2008! And what does he see? He says that we should "expect a price cut no later than April, likely to $399 for the 80Gb model" of the PS3.