The State of the Consoles

You talked a bit about the pickup of the PlayStation 3, as some of the more significant platforms for the title came out, and you said that it's a continuing trend for you.

BM: Yeah, definitely. I think we're seeing the number of new releases that we have from now till the end of the year is close to 100, which is up considerably -- it's almost up 50% from the same time a year ago -- so again they're finally hitting that install base where the publishers are starting to get that development and really bring it over for that format.

TB: Not to mention great exclusives as well, like LittleBigPlanet and Resistance 2. They've got some great exclusives that are system sellers as well, and we saw that before -- Metal Gear Solid and GTA IV were great system sellers for the PS3.

Can you talk about your reaction to the price drop on the Xbox 360?

BM: I'm very pleased with it. I think it was very timely. I think they did a great job. A month ago with the 20 gig configuration on the Pro model, taking that price move just feels like, now, looking back at it, that was a strategic move to get a little gauge for 'em on how reactive that was going to be.

Obviously, within the current 360 cycle, now being positioned, going into Q3 and Q4 with a $199, $299, $399 price point, it really sets it up well for us, as retailers, to get that messaging across. Now they're truly the first next-gen console to make the sub-$200 price point.

Again, we anticipated we would get significant increases in sell-through. It's early; we've had four days now [as of interview time] to compare it to, and we're very pleased. We're actually surprised. The momentum is coming more on the Arcade model than it was on the Pro. But all three have seen more than a two-fold increase in sell-through.

How do you feel about the PlayStation 2 as it slides into its 10-year plan?

BM: When Jack [Tretton] mentioned that, it's two years ago now, at [a Sony retailer event], you kind of went "Ahh, they're not going to get there." But I've got to give 'em credit -- they're doing a good job. I had anticipated and I had hoped it would be a $99 retail by now. We're not, but we're seeing good development on PlayStation 2. Not as much as a year ago, but again, you wouldn't anticipate that.

I didn't realize how hard it was for some of these publishers to make the [leap]. You'd think, "Ahh, it's PlayStation. So you're making a game, make it on PlayStation 3 and PlayStation 2. What's so hard about that?" Now that we've got the games behind us, it's almost a totally different development team [requirement].

It's a big commitment not only for Sony, and for us as retailers to continue with [selling the PS2], but for publishers to continue to make meaningful content, and to make that [commitment], and get the ninth season and hopefully toward the 10^th. There's definitely is plenty of room left in that. The value of it is there. Again, my son, half of the games he's playing, he's playing on PS2.

TB: I thought it was fascinating that in June, the software sales for PS2 were only down 4.7 percent. That's amazing for a system that's eight years old, after the year we had last year.

I don't think we've seen that, ever.

TB: It's an amazing statistic.

Speaking of Sony, there's been a resurgence for the PSP. People really thought the PSP was going to go down for the count, I think, but it's really picked up. Hardware sales have picked up -- software is still a little softer than I think it needs to be. Still, there are some big titles -- particularly Crisis Core and God of War were big.

BM: Yeah. We had really seen significant movement on PSP hardware last year, again, when they took the hardware markdown last year in August, and really, the momentum hasn't let up since that time. Again, it was, strategically, a really great move. It was a great price point -- they really needed to get there.

Now that they've announced the PSP-3000, again, that's something that the consumer really wants. They want something that's newer technology, that's a little bit sleeker, that's got a brighter screen, that's got a built-in microphone.

That might not be meaningful to everybody, but still, having something new that [Sony] can get behind and promote; they've got a renewed interest within Sony as well. They've brought in new people to get after their third party publishing and there will be a significant number of more releases on PSP in 2009 than there have been in 2008.

Square Enix announced a number of compelling games for the system recently, and I've heard about a number of unannounced games that are quite strong and a little bit surprising.

BM: It's great to have two handheld systems, and again, the great thing is that they're really geared toward different consumers. Not totally, but again, the DS is reaching that broader customer, from the younger kids -- again, my daughter has been playing her DS for a couple of years now -- from five years up till some of the Brain Age games and so forth, they're utilizing them inside of nursing homes and so forth. It's really great to have that handheld strength as well as the consoles.