At the MI6 marketing conference in San Francisco on Thursday, SCEA's SVP of marketing and PlayStation Network, Peter Dille, delivered a presentation entitled Redefining the Digital Living Room, in which he discussed the company's vision for connected entertainment devices.
Dille spoke of a world where mobile devices and stationary units like PlayStation 3 work together seamlessly, a world that is increasingly digital.
According to research Dille has, "this might sound a little counterintuitive, but in a tough economy we're seeing more digital adoption." This is because "families are spending more time at home," rather than splurging on vacations or other expensive out-of-home entertainment.
While consumers are ready for convergence, it's the companies that are lagging, said Dille. "The products are catching up. TVs are now hooking up directly to the internet to stream audio and video," and consumers "are embracing it and they want more of it."
Dille said that by 2014 "HD will be in about 70 percent of American homes." And as the market to bring digital content to the TV enlarges, said Dille, "consoles are the most utilized devices to bring web content to TV."
Though consumers currently do sit and watch TV while using Facebook and other online content, "multitasking isn't the same as convergence. Dragging all of your devices in front of the television isn't a shift in technology... There are still multiple devices being used for very separate functions," Dille said.
When it comes tho the PS3, which Sony sees as this convergence device, "we struggled with our messaging early on to illustrate the value proposition." Said Dille, "our research proved that consumers were ready for a convergence product, and we knew we would position the PS3 as a total entertainment solution for the home."
"We think [the current PS3 slogan] 'It only does everything' itself is future-proof. It refers to all of the things that the PS3 can do and what it will do tomorrow and for many years to come," said Dille, including being "the first in-home platform for delivery for 3D digital media content."
PlayStation As A "Networked Entertainment Company"
"We started as a gaming company and we're very proud of a gaming heritage, but we don't see ourselves as just a game company," said Dille, but "gaming will always be at the core of everything we're doing."
However, he said, "with our roots firmly in the gaming arena, we actually regard ourselves more as a networked entertainment company today. We're managing a network which allows for new business models and fosters a new relationship with consumers."
In addition to his role overseeing PlayStation at Sony in Japan, Kaz Hirai was appointed to an additional role as head of the company's "network products and services group" to bring his expertise in networking to all of Sony's businesses, from PlayStation to mobile to Vaio laptops. The goal is to "reuse that backbone of distribution into other devices," Dille said.
PSN is also home to original content such as games, and it's also moving onto TV programs such as The Tester, as well as "entirely new categories," said Dille. "We're going to continue to grow and iterate. We're developing programming for our audience that we study, understand, and nurture." Dille seems to see the "network" in PlayStation Network in both the online sense and also the programming sense -- i.e. the same way that NBC and Fox are networks. And this network currently has over 40 million global users, including over 20 million in the U.S.
PSN now also has an advertising sales department, which inserts takeover ads into PSN and pushes content to consumers.
Said Dille, "Online gaming isn't just about competition, it's also about socializing with your friends. The game console has become a powerful communication device." Online gaming is "a brand statement, it's a shared experience, it's a form of communication all rolled into one."
Consumers choose a game like Modern Warfare 2 said Dille, not just because it's interesting, but also because it's where their friends meet, and it also says something about their identity -- like choosing Nikes vs. Reeboks.
Dille also said that the company plans to "continue to push" the PSP-to-PS3 connection, since the digital living room isn't just a room anymore. However, "we need to improve the experience and... articulate what's already possible."
Dille believes that "the need for connectivity, ease of use, and value will become the tipping point for purchases." For example, he said, "when we launched the PS3 we were criticized for building a product around Blu-ray, but today that very feature is credited with building the product's momentum and cementing its value proposition."
"Satisfied" With PSP Go Performance
When asked by an audience member about the performance of the PSP Go, he said that it was unfairly judged because "there was a volume expectation. The PSP Go was a new version of the PSP," and there was an expectation it would perform on par with the existing device. In truth, said Dille, Go "would sit above the PSP... And the product is not for everyone," but instead a high-end choice in the lineup.
However, he admitted, "from a go-forward perspective we need to do a better job at retail. From day one we've adjusted our margin structure to make [PSP Go] attractive to [retailers]," he said, referring to its high cost above the older PSP-3000. "As a percentage of the overall PSP marketplace, we're satisfied with where we are overall [with the PSP Go]."
On changing to services instead of simple game marketing, said Dille, "the advent of the network is a sea change for us as an industry and certainly for PlayStation as a company. We've changed a lot and brought a lot of folks on board" with network experience.
When it comes to getting the consumer, games and even the network itself will work when you "nurture that with content, and the content becomes the marketing," Dille said -- that is, DLC, new programs and downloadable games are what spread the word about a product among consumers.
"Digital, to us, is going to augment retail, not replace retail, at least in the foreseeable future," he added. "And some of that is back to what consumers like doing. We are not willing to undercut retail because we don't want the business to suffer," said Dille, noting that conversations with Walmart have been tough. "It's not always an easy seesaw to maneuver."