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Analysis: Was Using Original IP The Best Idea For Sony's PS3 Strategy?
Analysis: Was Using Original IP The Best Idea For Sony's PS3 Strategy? Exclusive
June 26, 2009 | By Matt Matthews

June 26, 2009 | By Matt Matthews
Comments
    22 comments
More: Console/PC, Exclusive



[Using U.S. sales data from the NPD Group, Matt Matthews examines the performance of new Sony properties like Resistance and others -- suggesting a focus on sequels might have been more profitable.]

Sony took a number of substantial risks with the design and launch of its PlayStation 3 console.

Sony bet that its new console would be a key part of winning the war for high-definition media formats. The company also expected that consumers would buy the new system at an extravagant price of $500 or $600. It counted on its momentum coming out of the last generation to overcome the challenges presented by its hardware in the new generation.

While Blu-Ray did win the HD format war, Sony continues to face headwinds with its pricing and developer relations.

On top of all these challenges, Sony added another. Instead of launching the PlayStation 3 with sequels to the franchises it owned games like Ratchet & Clank, Sly Cooper and Jak & Daxter Sony worked with its closest development partners to create a portfolio of original and exclusive franchises.

Given recent third-party discontent with PlayStation 3 sales -- like Activision CEO Bobby Kotick's recent threat to reconsider his company's support of Sony's system, a collection of Sony-controlled properties seems a wise hedge.

What seems less sage in retrospect, given the sales of these titles, is the focus on brand-new properties over established franchises.

New is the Strategy

At the November 2006 launch of the PlayStation 3 practically every other launch title was overshadowed by Resistance: Fall of Man, a dark first-person shooter set in an alternate history where humanity is threatened by a mysterious alien plague. There are two key points here.

First, Sony did not launch the PlayStation 2 with quite the same hands-on software approach. The only Sony-branded game available when the PS2 launched in the United States was FantaVision, a rather abstract puzzle game fused with a fireworks simulator.

Second, instead of building on its recognizable and popular Ratchet & Clank series, developer Insomniac Games and Sony chose to start from scratch with Resistance. At the time, Sony's intent was not clear, but we now see that several of its key developers were also given license to create all-new franchises for the nascent PlayStation 3.

Those key partners included the aforementioned Insomniac Games and Sucker Punch Productions, both independent developers whose titles have been almost exclusively published by Sony. Other developers, like Naughty Dog and Evolution Studios, have been bought by Sony and are considered internal studios.

In the case of Naughty Dog, the developer stepped away from its high profile Jak & Daxter series, popular on the PlayStation 2, and built a realistic adventure game for the PlayStation 3. Uncharted: Drake's Fortune tells the story of Nathan Drake, a wise-cracking explorer, and his quest for the treasure of his ancestor, Sir Francis Drake. That game was released in November 2007 and a sequel, Uncharted 2: Among Thieves, is slated for release in late 2009.

Evolution Studios cooperated with Sony to produce and promote Motorstorm, a new offroad racing series whose concept demos impressed many in the industry when footage leaked in March 2006. Previously Evolution had been known for its licensed World Rally Championship series on the PlayStation 2, and while Motorstorm shares an exciting racing motif, it is a far different game from WRC. In September 2007, after the March release of Motorstorm in the U.S., Evolution was acquired by Sony. By October 2008 Evolution had released a sequel, Motorstorm: Pacific Rift.

The Sly Cooper games by Sucker Punch were exclusive and well-known on the PlayStation 2. For its inaugural title on the PlayStation 3, however, Sony and the veteran Sly developer worked together on inFamous, a superhero/supervillain action game set in a city gone amok.

The pattern is clear: instead of relying on established properties these key Sony partners were granted the opportunity to create completely new, top-tier franchises for the PlayStation 3. These were games the competition could never have, ones exclusively owned by Sony. These were the games heavily promoted by Sony across the media, from television to multiple features on its PlayStation blog. These were, one suspects, the games Sony hoped would be system-sellers.

Fruits of the Labor

Unfortunately for Sony and the developers involved, these games have not sold nearly as well as one might have expected given their prominence in Sony's plans.

According to U.S. figures provided by the NPD Group, which partners with retailers and publishers to track videogame sales, only one title out of Sony's new properties has broken a million units: the original Resistance: Fall of Man, at 1.1 million units as of April 2009. (The data provided by the NPD Group does not include units of software bundled with hardware.)

Outside of the titles already mentioned, there are other titles Sony has promoted as top-tier exclusives even though they are arguably more third-party than those by Insomniac, Naughty Dog, et al. These include games like Heavenly Sword by Ninja Theory and LittleBigPlanet by Media Molecule.

There are also true sequels to key franchises from prior PlayStation generations. Among these we count Gran Turismo 5: Prologue (by Polyphony Digital), Hot Shots Golf: Out of Bounds (by Clap Hanz), Killzone 2 (by Guerilla), and Ratchet & Clank: Tools of Destruction (Insomniac's second PS3 game, launched in late 2007).

For reference we have listed all these titles together in the chart below, grouped by unit sales through April 2009.



Given the effort and money that Sony and its developers have poured into these exclusive games, the sales figures above have to be seen as somewhat disappointing.

The original Resistance sold well in part because it was the most polished and technically impressive game when the system launched. It reached a significant fraction of the userbase in its first few months. However later games have not proven to have the same kind of system-selling power.

For example, one of the key games at Sony's E3 2009 press conference was Uncharted 2: Among Thieves, yet the original game itself isn't close to breaking the 750,000 unit mark in the United States. According to Jack Tretton, CEO of SCEA, Uncharted has sold more than 2.6 million copies worldwide, however many of those are copies bundled with PS3 systems (which are not counted here), not software directly off store shelves.

One could also look at Resistance 2 which has sold less than 750,000 units in six months on the market, to a userbase of 6 to 7 million owners. For a game promoted as the latest and best on the platform, opening month sales of 385,000 units seems exceptionally weak.

We could, for example, compare to Gears of War on the Xbox 360. The original Gears of War, exclusive to the Xbox 360, racked up a cool million units in its first month on a userbase of only 2.9 million users. By the end of the second month, December 2006, sales were over 1.8 million units.

The sequel, Gears of War 2, launched with sales of 1.56 million units in its first month to an audience of 12.4 million users. By the end of its second month, December 2008, it hit the 2.3 million mark. For both Gears of War and its sequel, sales were far stronger than Sony managed with Resistance and its sequel, even when taking the relative sizes of the userbases into account.

We could also look at a multiplatform action game sequel on the PS3 like Call of Duty: World at War, which just happens to have launched around the same time as Resistance 2. World at War sold over 1.1 million units during the last two months of 2008 while Sony's shooter moved just over 500,000 units.

Sequels Do Well

The games that have sold well on the PlayStation 3 are almost all sequels.

Consider, for example, that Grand Theft Auto IV and Metal Gear Solid 4: Guns of the Patriots both sequels to franchises popularized on Sony systems launched to sales better than any of the Sony-published games listed in the table above. To date, GTA4 has sold at least 1.7 million copies on the PS3 while MGS4 has sold in the neighborhood of 1.1 million.

Then there are annually-released games like Madden NFL (from Electronic Arts) and the aforementioned Call of Duty (from Activision). The latest version of the football franchise, Madden NFL 09, has probably sold over a million copies so far. Combined, Call of Duty 4: Modern Warfare and Call of Duty: World at War have sold an estimated 3 million copies on the PlayStation 3 (in the U.S.).

The five games listed above are probably a good estimation of the top five games on the PlayStation 3 (at least in the United States, measured in units not dollars) and each of them is a sequel. For all of the effort Sony has put into creating its own original hits, those new properties are simply not producing the kind of sales that sequels are generating on the same platform.

(There is one interesting counterexample: Assassin's Creed from Ubisoft. With sales over 1 million units on the PlayStation 3 in the United States, it's certainly an example of a new property that has performed well on Sony's system.)

Microsoft has managed to hit gold with its software strategy on the Xbox 360. Halo 3, by far Microsoft's best first-party effort, reached nearly 50% of all Xbox 360 owners in its first week and moved 4.8 million units between its September launch and the last week in December 2007. Even in the first half of 2009, Halo 3 continues to sell well enough to reach into the monthly top 20 software titles, exhibiting the kind of long-term sales that a first-party game should ideally demonstrate.

And Microsoft has unabashedly pursued third-party sequels, cornering exclusive deals with third-parties for games like Grand Theft Auto IV and Fallout 3, both of which enjoyed exclusivity deals for downloadable content. Those sequels have performed well on the Xbox 360.

The Nintendo Wii has also had its share of successful franchise sequels. Super Smash Bros. Brawl, continuing a series that began on the Nintendo 64, sold 4.2 million units in 9 months during 2008. Mario Kart Wii has reached over 6 million units since its April 2008 launch and continues to sell in the top 10 each month even through mid-2009.

One could say that comparing Microsoft's and Nintendo's biggest hits to Sony's games is unfair. However, the issue is quite simple: Of Sony's biggest software ventures of the past three years, which have been as successful as Microsoft's on the Xbox 360 or Nintendo's on the Wii? Even adjusting for the installed bases, Sony's hits on the PlayStation 3 simply aren't of the same magnitude as those of its competition on their respective platforms.

It is notable that Sony's biggest first-party property, Gran Turismo, still is not officially out on the PlayStation 3. The version that is out Gran Turismo 5: Prologue is a introductory version that is not considered a full successor to the last game, Gran Turismo 4 on the PlayStation 2. Once GT5 and God of War 3 are released, presumably sometime in 2010, Sony will have migrated its biggest franchises to the PS3 more than three years after it launched the system.

Surely, there are flaws in these comparisons marketing has been neglected here but they provide some context for what one might expect a Sony-backed, well-funded game to sell on the PlayStation 3.

What If...?

Sony isn't the only big publisher to bet on new properties recently. In 2008 Electronic Arts also put significant resources into brand new ventures, most notably Dead Space and Mirror's Edge.

Despite EA's significant promotion efforts and strong positive internet buzz, both of these games fell flat in sales. Electronic Arts has said it is committed to continuing to develop these franchises and that it has learned how better to launch new games.

One does wonder what Sony (or EA) would say if they had it to do all over again. Would Sony set aside the franchises it had already paid for on the PlayStation 2 and spend its software treasury on so many new ones Resistance, Uncharted, Motorstorm, inFAMOUS? It seems possible, even probable, that Sony might have achieved software sales just as strong with its established franchises instead of building new ones from scratch.

Regardless, Sony has promoted and published some fine software, according to critics and fans. All the Sony-published titles in the table above, with the exception of one, have Metacritic ratings between 81 and 95. (Heavenly Sword is the odd one out, with an aggregate score of 79.) These games, even if they aren't system-sellers, are certainly the games that define Sony's platform this generation.

But the question remains: Was it worth it?

[Acknowledgments: Thanks to the NPD Group, and David Riley in particular, for their assistance with this work. Thanks also to two colleagues for their helpful criticism: Simon Carless and donny2112 (of NeoGAF).]


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Comments


Brian Murphy
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This is why I keep coming back to Sony, honestly, I understand that what they've done this cycle, hasn't excatly benefited them. But look at the games they're delivering...all fresh ideas, from solid developers. No constant regurgitation of the same IP over and over and over. Sony's always going in so many directions with their various developers (granted, they have more than Nintendo and MS), but they're so diverse in the IP they deliver. When I buy a Sony machine, I know I'm not just getting FPS', or family friendly games. I'm getting a broad spectrum of diverse IP. I prefer the numerous choices, myself.



And fyi, I have every title on that list except the Motorstorms and R & C.





Brian

Kouga Saejima
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"But the question remains: Was it worth it?"

Sorry but this is a strange question and awful way to end an analysis. Sounds like the end of a Kotaku article or the end of the first post on a NEOGAF forum thread.

Yannick Boucher
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Sony probably saw it's role as a "quality and innovation pusher" for the console, leaving the 3rd parties to do their thing when it comes to sequels. It might not have been with the goal of seeing the results of each game individually, but as a whole portfolio, one on which they could build on. And to be honest, they've succeeded in that, at least critically. (and Killzone 2 is technically a sequel, just fyi... )



But how many highly-successful franchises does SCE have that were not exploited on PS3 anyways? Ratchet & Clank is there, Gran Turismo is there, God of War is coming, a 3rd one from the Ico team... Jak & Daxter and Syphon Filter have unfortunately fallen out of favor somewhat, so has Siren... so, how else could they have played it, from a first-party perspective?



I mean, what was the Xbox's biggest hit? Halo... a brand new franchise, that was also a launch title. You gotta start somewhere, right? And I think that's where they took their cue (with Resistance, it was pretty obvious).

Amir Sharar
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These original games are for the most part excellent. The only retail stinker I can think of is LAIR (which wasn't mentioned in the article, it was published by SCEA) and perhaps Heavenly Sword (very short experience).



You can't fault Sony for asking high profile developers to create new IPs for them. And we can't fault Sony for wanting new IPs (in many ways it's commendable).



But we can fault them for not aiming for a reasonable balance. God of War was the hottest thing at the time of the PS3's release, it made no sense for them to wait this long to start its development. Reminded me of when SEGA didn't have a proper Sonic title for the Saturn. Beyond all sense, really. Developing a GoW title alongside other original IPs would have made sense. Sony didn't even plan for a balanced portfolio of rabidly anticipated sequels along with new IPs. It has to be said, some existing IPs were mishandled (ie. Wip3out should have been a retail game).



As the article admits, it hasn't discussed marketing...and I think it has a lot to do with this situation of poor game sales. Assassin's Creed, being a heavily marketed 3rd party title, got a lot of exposure. A PS3 owner could see a TV spot for the 360 version of AC, and be made aware of it. They could then go to the store and see it on the PS3 shelves. That, and the fact that a new IP like Gears of War had a more memorable campaign than say for, Uncharted. Again, Sony had great games on their hands...they just had to sell them to their loyal fanbase who were willing to shell quite a bit for a PS3 to begin with. So I think marketing is a big factor when it came to these disappointing sales.

Brian Murphy
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Well, I think the actual bigger seller of the bunch is Gran Turismo, looking at the sales stats, the 'demo' as many like to call it, outsold GoW2. According to vgchartz.com, anyway. It's interesting, because, when you think about all the hooplah over the GoW franchise, when released on a 120,000,000 strong platform (PS2) can't even outsell Prologue...released on a console that has less than what, 13 million unit market penetration at the time? Take a look:



GoW2 - 2.47 Million

Gran Turismo 5: Prologue: 3.05 Million





I think that speaks volumes both to how big GoW is for Sony, and how monstrous GT5 will be for Sony. As I've stated many a time, if Sony targets their next price cut, with the launch of GT5, during this years holiday season...I think we'll see one of the biggest holidays for Sony, they've ever seen.











Brian

Uyiosa Iyamu
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Can't really put the blame on original IPs.



Outside of God of War and Gran Turismo series non of Sony's IP have been successful enough to have their sequels be considered system sellers. At the time of release they knew already Xbox 360 would be their bigger competitor and the Xbox was known as the action shooter console, so they tried to make a Halo killer out the gate to draw in FPS fans. Not a bad move when you consider that the western market is much larger then the Japanese market at this point.





But the truth remains that what has hurt the PS3 from launch has been and still remains its price and its lack of a exclusive strength over its competitors. It is very much like the Xbox of the previous generation minus the near exclusive hold with online gaming that the original Xbox had with Live.

Mohammad Musa
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The PS3 came out after the Xbox360 without significant technical advantages yet it was much harder to develop for. Factor 5's Lair looked so promising but failed miserably with a 53 average metacritic score. Its really a shame that great games like Uncharted and LBP have not been super mega hits for the PS3.



I applaud Sony for going the new IP route, but fundamentally Sony did not listen to what people were saying. This pattern keeps happening again and again. The whole industry complained about LAIR way before its release. Heavenly Sword had amazing animations and game techniques but the final package just didn't deliver. Developers complained that the PS3 was very hard to develop for since the early dev kit days (again if the PS3 offered significant improvements over the Xbox360 then it would be at least justified). The whole point of new hardware is to get rid of old limitations. Having to sit down and optimize assembly code for the SPUs is no different of how we used to do things 20 years ago.



To answer your question, Yes. I think it's worth it only if Sony learns from this generation's mistakes and applies that knowledge going forward.

Brian Murphy
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@ Derek - My launch 60g does just fine.



The reason they had to drop support for full PS2 BC (All PS3's read PS1 games, no matter which SKU you're talking about), is because of the original price point being too expensive for _most_ consumers. Myself aside. Take a look at the difference in the main circuit board in the PS3 that was originally launched, at what's launched now. Notice it's about a quarter smaller. They literally had the PS2 chip/internals, as part of the PS3 mobo. And it was the only thing they could cut, to be able to drop the price dramatically enough for anyone to care. All in all, the complaints about the price, removed your PS2 BC. Sorry, but that's reality.



The reason for the price discrepency is simple. When PS2 was launched, DVD players were manufactured by a number of sources, same with the CD players in the PS1. Blu Ray, on the other hand, was a completely new tech with the PS3, and, exacerbating price issues, is Rambus' XDR Ram, and the Cell chip, both have 1 manufacturer (Rambus, and I believe Toshiba). So, with regards to XDR ram, there's no commercial availability there, which means, nobody else is making them to compete with Rambus' pricing. Secondly, the Cell is made by 1 company also (Sony sold their Cell plant to Toshiba after HD-DVD tanked, I believe), again, no commercial availability, thus the prices don't drop as dramatically/quickly as DVD/CD Players and general purpose CPU's.



The prices will come down, but the problem for ya'll is, what will you lose from the original models, as the prices are dropped.

Christopher Plummer
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I'm glad they chose the strategy they did. If they hadn't I wouldn't have bought a PS3 and I'm sure a lot of other people wouldn't have either.



They ask people to pay a premium for their innovative and future focused hardware so they can't provide anything short of that on the software end. And in that regard, I feel like they are succeeding.

The sales may be barely breaking into double digit attach rates but the quality, with very few exceptions, is all top tier. And that's what I care about as a gamer, and I'm sure that it's what the public will care about as the years in this generation drag on.



If we are going to criticize Sony's game publishing arm, I think the first place and the biggest problem is scheduling. They completely dropped the ball in this area. They launched with barely anything, at least in America (the success in Europe has showed how much of a difference even 1 extra game makes). And in each successive year they cannibalized their own sales by competing against their own products.



Holiday '07 - Year of the single player action games (Lair, Heavenly Sword, Ratchet & Clank, Uncharted, (Metal Gear solid Hype that ends in 6 month delay)

Holiday '08 - Year of the online shooters (SOCOM, Resistance 2, Killzone 2 (hype surpassing both of those))



They've gotten a lot better each year and this year they may finally get it right, although with all the trickery about fiscal vs calendar year we won't know until it's too late.

Brighton gardiner
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@Brian,



As far as cutting out hardware, Sony could easily remove Wireless from the system if they are looking to cut costs.

Brian Murphy
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@ Brighton - True enough, however, it's a lose lose situation as many would decry that loss. Which is exactly the same thing that happened when they took out BC. Sony really can't win no matter what they do, with regards to price drops/changing the SKU configuration. So, they're left with waiting for manfucturing costs to drop, in order to please the broadest section of their fanbase.

An Dang
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I love my PS3 exclusives. All of them, including Heavenly Sword, have been very enjoyable.



However, when it comes to business and finances, I'm not sure if this was the best way for Sony to go. Then again, Jak & Daxter, Ratchet & Clank, and Sly Cooper are all bit cartoony, and I haven't played any one of them despite owning a pretty good PS2 library of games. I think Sony anticipated that their target audience, the core gamers, would not be looking for cartoony fare. As for God of War 3 and Gran Turismo 5, I'm sure Sony wants to make sure those are of the highest quality and that they make use of the PS3's particular engineering.



As a gamer who actually played these PS3 exclusives, Sony's decisions were definitely worth it. Too bad most folks haven't really given the PS3 exclusives a chance.

Tom Newman
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I disagree 100% with this analysis. Every successful sequel was at one time an original IP. The reason these games did not do so well is because they were not great games to begin with. Resistance was not nearly as great as promised. When that title came out there were several 360 games that looked and played much better, which disproved Sony's claims that their system was superior. Also at that time 360 games started coming out in 1080p, where as most of the PS3 games were only 720p despite Sony touting 1080p before the system launched. The other early exclusives, Motorstorm, Uncharted, Heavenly Sword; etc were all decent, but not nearly as great as many of us had hoped (I won't even mention Lair, ... well I guess I just did). All of this has nothing to do with these games being original IPs, and I feel is much better explanation of the numbers.

An Dang
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Tom: Sure, every successful sequel started with original IP. However, it's fairly common knowledge that sequels are safer to work with (in movies, books, and video games). In the case of video games, sequels tend to do better because the first game created a reputation and generated hype.



I must say that the PS3's 2007 library was pretty slim. However, not all of the games were disappointing. Uncharted exceeded my expectations. Though it is partially due to the lower-than-deserved ratings I read online before playing, the game was engrossing and played very well. Resistance, to me, is just as good as any other shooter in terms of the campaign and general gameplay, including the oft touted Halo 3 and Gears of War. Though I feel that Halo 3's multiplayer is superior, I believe it's because Halo 3 is a sequel which had the benefit of a previously successful formula, which they stuck very close to (including the recycling many of their multiplayer maps from Halo 2--why fix it or throw it away if it's not broken, I suppose), and an established community.

Randy Overbeck
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Several of your number and dates are wrong in this article. Gears of War 1 launched in November of 2006. (Not 2007) and the NPD number for XBox 360's sold through the end of 2006 in the US was

3.896 Million. Gears of War 1 sales were 1.8 Million or 0.46 attach rate.



Resistance Fall of Man launched in November of 2006. PS3 sold at the end of 2006 - 688,000 Resistance sales - 345,000 units or a 0.50 attach rate. (Again US Numbers only)



Looking at your article I think there needs to be quite a bit more research and a much more through process laid out. I think listing sales in a percentage of install base method would be a much more even and comparable way to organize this data as obviously a platform that only sells 688,000 units can't sell 1 million copies of a game in 1 month.



Also a really big note is how much was spent on marketing these titles and what were there development budgets. That is really what determines if it was a hit or not.



I am usually impressed with the detail of gamasutra articles but this one left much to be desired.

Matt Matthews
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@Randy Overbeck:



You are correct, the date for Gears of War should be 2006. I will make that correction. However, my records show hardware sales for the Xbox 360 were 4.5 million systems through the end of 2006, not 3.9 million.



Percentages (i.e. attach rates) are one way of looking at software sales, but certainly not the only one, and attach rates have their own flaws. A 0.5 attach rate isn't necessarily healthy for a system with very low hardware sales. Similarly, attach rates even for hit games on system with very large installed bases can be exceptionally low. A game with a 0.07 attach rate on the PlayStation 2 today would have sales of 3 million units. Hardly weak sales, no? Finally, attach rates for a main launch title like Resistance are often high.



The article notes that other factors (marketing, development, etc) weren't considered. Marketing and development costs, especially for these types of games, are not typically available. Speculating on them would be even less sound.

Alan Rimkeit
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Right? Wrong? For one as a gamer I am very happy that Sony supports so many new IP's like Uncharted. It has made playing my PS3 a very enjoyable experience. Sometimes I just want to tune out the so called console wars and just play great games.

Mohammad Musa
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@Jeffrey:



My comment is mainly concerned with games quality. Are there any games that can only run on the PS3 because of its unique computing power? As far as 3rd party titles are concerned, the PS3 and Xbox360 have been on par (I'm not aware of any multi-platform title that is lower quality on the Xbox360). All the points that you mentioned are valid; blu-ray, 1080p support, on-board wireless, and backwards compatibility are all great. The separate, powerful, atomic processors offer great advantages but when it comes to practice, people have had great difficulty getting the most out of the SPUs.



Reading up on the Cell architecture back in early 2006, I thought that other consoles and even high end PCs won't compete with the PS3 gaming power.



I guess I should close by saying that I'm a big Sony fanboy and while I'm criticizing some of Sony's decisions, I'm immensely enjoying my PS3 and I think its a great system with great content.

An Dang
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Mohammad:



I believe Burnout Paradise is supposed to run better on the PS3, because it was developed with the PS3 as the lead platform. Generally, however, people develop with the 360 as the lead because it is easier to code for and, guess, they leave the most difficult for last.



If everyone had the PS3 as the lead, would we see better PS3 versions without detriment to 360 versions?

Kouga Saejima
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Mohammad Musa:



Burnout Paradise, Wanted and Colin McRae's DiRT for example. But yes the majority of muliplatform titles look better on X360. You should consider reading the Game Developer issue August 2007. Brad Bulkley, Stuart Denman, Chris Hecker, Clinton Keith and Bruce Rogers had a nice Programmers' Roundtable.

Andrew Cunningham
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According to interviews with Criterion a few weeks ago, Burnout Paradise has no lead platform.

An Dang
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Maybe not for their new DLC content, Andrew.


none
 
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