Economic Conditions and Growth
There are several facts which deserve careful consideration when
assessing the current videogame industry.
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Consumers are extremely pessimistic about the current economic outlook,
according to the Conference Board Consumer Confidence Index. The Index
reached a record low in October 2008.
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The National Bureau of Economic Research has determined that
the American economy has been in recession since December 2007.
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Despite those factors, the videogame industry is still
growing, up 22 percent for the year and up 10 percent in November alone.
The conventional wisdom holds that videogames as a medium offer a
significant entertainment-to-dollar ratio compared to alternative
media, and therefore the videogame industry may survive or even
thrive while others struggle through hard times.
So the correct question to ask is not "How can the industry
possibly still be growing?" but rather "How robust would the growth be if
not for the poor state of the economy?" That is, if the industry
can manage 10 percent growth in the midst of the worst economic downturn for
decades, what could it be doing if consumer confidence were higher,
unemployment were lower, and the credit markets were functioning properly?
Sony in a Pinch
Moreover, it is clear that not every player in the videogame
market enjoys the same warm consumer reception. Sony's situation in
particular is worth examining.
Sony is still trying to make the PlayStation 3 business profitable
and start paying off the costs of developing the hardware. Its
software sales are strong, despite weaker hardware sales, but both
will need to improve significantly, and soon. Given Sony's ironclad
devotion to profitability in the near term, the quickest route to higher PS3 sales --
a price drop -- simply is not feasible.
As an alternative, Sony could publish a must-have software title that attracts more consumers willing to pay the price for its hardware. Short of Metal Gear Solid 4 in June 2008, it would appear that no exclusive software has really driven hardware sales. Even Sony's flagship holiday title, LittleBigPlanet, only managed 141,000 units during November.
The PSP hardware business is actually robust and profitable, even
though November hardware sales were down year-on-year. Software sales are
still miserable. Until it finds a way to monetize the PSP market, Sony will
never begin to make the kind of money from its handheld that Nintendo
makes from its Nintendo DS.
For its part, the PS2 is still selling well in its ninth
Christmas season, but is slowly fading out. Two years ago, or even a
year ago, Sony might have been able to point to the PS2 as a solid
source of revenue while the PS3 was finding its footing. That is less
feasible with each passing month.
If Sony can find solutions to its PS3 and PSP problems (price
reduction for the former, much greater software sales for the
latter), then it should compete well against the Xbox 360 and
Nintendo DS in 2009.
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If they release a Dead Space 2 or Mirror's Edge 2 they would do better durring a more lax shopping period. I for one hope they do not can those titles for future development. ME was a such a fresh game to the Halo, Half Life, and Gears sequels.
Also the report does a good job of saying "what if" we wernt in the economic crisis? I know I'd have a few more bucks to shell out for some games. My list itself is 7 titles long and growing!
Getting your consoles sold numbers up the first couple years is key to success. Not making those numbers means publishers need an extremely high attachment rate to your actual customers. No customers, no money. Could selling the PS3 at a much higher cost loss to Sony have helped them move consoles, yeah, probably.
No direction. Yes, I said no direction. Oh, the cell processor... hmm, the teenage kid yelling at the screen because he just fragged you 20 times more than likely doesn't care about that. Yes, there quite a few of those teenagers setting up networks, building their own PCs, but making a system designed for games, but also much more, does kill who runs the show. It slices, it dices.... so what? Game much? With over 23 years of gaming experience, my agenda is still the same; to have fun. Sony's recent direction is to market the fact the PS3 is not just for games. This statement pretty much tells PS3 gamers, hey, the PS3 wasn't just for you. Please sit down and have a seat, it's time to bring the movie fans forward. I, personally, can think of way more better ways to use 500 bucks to get a decent movie experience. Just imagine when Blu-Ray movies get set for downloads: "Only another week before I finish grabbing Speed Racer!". No thank you. Digital downloads have been catching on and until the physical cable wire technology evolves for us to send/receive terabytes, no Blu-Ray downloads for you. But please enjoy your non Blu-Ray movies on your 500 dollar HD system, until such time. Gamers? Oh we didn't forget about you. Please wait until the movie goers save us with our bailout and we might consider PS3 game development again. Man, playing movies with a cell processor is just too much. LOL, I can't wait till I need like two separate PC's to run a game. Then I can use one for gaming and the other's optical drive as a cup holder...(oh, nice one; make it a feature)
Not *knowing* your target audience kills me everytime too. It hurts personally because those gamers getting taken for a ride are my friends and family as well. Why is it at every big family function, the 360, Wii and PS2(two, not three) comes out for fun? I have one nephew and niece that got a PS3. The niece is the teenager and she chats online. Her parents won't get her a laptop since they believe that's all she will do. Lucky for her, she now has a 500 buck internet browser. Good for her since, it's not just for games. The nephew, well, he's not so lucky. All he does is game, so he might not be playing it too often if his sister has her way with it. But gaming, in this purchase choice, was the secondary feature, not the selling point. So no clear customer focus, no clear customer demands, how do you market your machine? Is it for expensive gaming, expensive movie watching, expensive all of the above? Sony being a company and not an emotional bag of carbon like ourselves will make decisions based on what is best for the company. If the gaming department doesn't pull it's share, believe they will take another spin on the PS3. Remember the PS2 hard drive? PS3 gaming might end up the same way if they can't save it. Maybe they'll just yank out the cell processor and all those other parts for gaming and just remake the PS3 as a cheaper Blu-Ray player. Either way, Sony has continued to make mistake after mistake and has turned their die hard customer's willingness to 'take one for the team' into a market strategy. Make some software sales Sony. Keep your developers alive. If you can't, the 360 dev kit I'm sure will start to look a whole lot better to the company that likes to make PROFIT.
Whew, thanks for the read of the wall of text. :)
I feel bad for Sony. They have made the classic real estate mistake. Don't embellish your home too far beyond the other homes in your neighborhood. you may have put $300k into your home you paid $100k for. but if all the other homes in your neighborhood are selling for $120k, you will NEVER sell yours for the $400k you need to recoup your investment. Hello Sony,the average person doesn't care about your technical stats. They just wanna have FUN.
Going out to a fancy restaurant with my wife is cool. The chef's special will be spectacular. Having our friends over for beers and steaks on the grill is cheaper, done more often, and just as much fun.
that's the difference between the HD systems and the Wii.
The real difference is that Nintendo marketed and advertised the Wii so well that it deserves to be called the iConsole. And Sony took every opportunity to alienate their customer base.
Wii appeals to casual gamers and the 360 appeals to dedicated ones. Who wants a PS3…especially at the current price?
Basically, the HD systems do what the PC has been able to do since almost twenty years ago. -------------
PC's? 20 years ago? How old are you? 20 years ago was 1988. The PS1 was doing better then PC's at the time when it came out back in 1994. PC's 20 years ago were cool for the time, but if you showed a PS3 or a 360 to people from 20 years ago they would drop their jaws to the floor.
As for the sales numbers I say Sony needs to get bake to reality. Games, games and more games. Oh, and a huge price drop down to $249.99. That should do it. At least they can make it so their last place achievement is not so bad. I do love my PS3, but Sony needs to get their heads out of the clouds and get their feet back on the ground.