Sony, What Doesn’t Kill Them Makes Them Stronger

David Reeves, Sony Europe’s President said, “we simply have to suffer a little” when talking about the PS3, Europe and the competition. He was talking specifically about Sony’s loss of market share, mind-share and overall performance in the latest competitive console arena. While Sony’s president dismisses Nintendo as in a separate market, David Reeves said, “we’ve learned from Nintendo how to grow the market and move from hand-held device to device – they’ve done it brilliantly.”

Buster Douglas Takes Down Mike TysonWhat Sony may be dealing with is the fact that they’re not top dog in the latest battle for consoles. Europe has taken to the PlayStation 3 better than the United States and they’ve got plenty of fans in the region. There has been a recent upside to it all, some light at the end of the tunnel:

“PS3 games sales are up 53% and there’s a healthy 1.1m pre-order book for Killzone 2, the first of a new batch of IPs that Sony will be counting on.” (guardian.co.uk)

Although it’s reported the PSP says are down 15% and PS2 software sales are down 51%, at least the PlayStation 3 is filling in the gap for some of those losses. At some point you’d expect the PlayStation 2 to decline, gamers are probably migrating over to the new hardware.

They’ve got some things to be proud of:

  • PlayStation Network increases revenues by 200% in 2008
  • 55% of all PlayStation owners are on PSN
  • 17.5 million PSN subscribers
  • 53% rise in software sales on PS3
  • Won HD format war

Unfortunately PS3 sales were down last quarter by about 9%, perhaps a response to the harsh economic times. And, of course, the fact that Sony’s VP’s are constantly defending their position in the market is a bit disconcerting. As David Reeves said:

“It’s like Ali v Foreman – go eight or nine rounds and let him punch himself out. We’re still standing, we’re still profitable and there’s a lot of fight in us. I don’t say we will land a knockout blow, but we’re there and we’re fighting.” (guardian.co.uk)

Sony is playing the defensive, guarding themselves against the punches of the competition. Nintendo making headlines for sales, Microsoft coming out of nowhere to try to build market share, while Sony holds out for the tenth round to win it in the end? We’re not yet sure if it’s Ali vs. Foreman or if Microsoft is the next Buster Douglas.

(Thanks, Guardian)

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Nintendo’s Non-Gamer 50+ CrowdNintendo’s Non-Gamer 50+ Crowd

While Sony and Microsoft one-up each other with fire sales on old hardware and blockbuster titles like Gears of War 2 and Resistance 2, Nintendo goes for something completely different… older people.

You’re only as old as you feel, but it’s hard to discount Nintendo’s attack on a demographic when they visit the American Association of Retired People’s Life@50+ Expo in Washington, D.C. this week. Odd move, indeed… or is it?

Retired people may have a bit more time than a busy adult with two kids and a few jobs to hold down. While young adults may want to game, they may not always have the time in their schedule, especially in the United States where people forget what “vacation” means. Retirement is a time to reflect upon your life, your deeds and enjoy the fruits of your labor with your grandchildren; it’s time to get a Wii.

The Wii is the perfect gift for retired folk who want to entertain themselves with something new and different without having to keep up with game releases. The Wii doesn’t have very many games when compared to the 360 and, although many get low review scores, retired folks aren’t scanning the Internet for weekly game reviews and news. They may not be the most in-touch with the industry but that’s okay, they’re non-gamers.

All that Nintendo has to do is sell the unit to them, it may sit on the shelf for months or only get pulled out when the grandchildren visit, but it’s a low-cost unit with games like Wii Sports and Wii Fit, what more do they need?

(Thanks, Kotaku)

Episode 245: Hello 2012Episode 245: Hello 2012

This week is double-stuffed full of goodness, with over two hours of podcast, as Jonah, Paul and Jordan cover not only the news of the last week, but also recap 2011, talking about games that pleased and disappointed them.

Aside from the biggest news of 2011, the current news items the gang listed to include:

  • Microsoft, Nintendo, Sony all pull support from SOPA – sort of
  • Wii U launch price expected to be $399
  • Guitar Hero may return in 2012
  • Judge ruling deals Silicon Knights a serious blow in suit against Epic Games
  • FlatOut 3 dev calls Modern Warfare 3 a “beta
  • Bioware defends The Old Republic subscription model, teases free-to-play for older IPs

The podcast also received a ton of new Reader Feedback, while the Question of the Week is “Which would you rather game on – a handheld console or a mobile device?”

Wallets Shrink, Used Game Market GrowsWallets Shrink, Used Game Market Grows

Over the last year we’ve seen developers scrambling to find “value add” features to new game purchases. Their goal is to convince the customer to buy new instead of used because developers don’t see a penny from a used game sale. While GameStop sees 48% profit margins from the used game market developers struggle to stay floating in the industry.

for-saleThis is not the fault of GameStop and their 48% profit margins because they’re only getting 7% to 20% profit margins (say analysts) on new game sales. As someone that’s run a game store online, if you’re getting 15%+ on a new game you’ve got some great hookups in the distribution channel or are buying in huge quantities.

Buying games in huge quantities to build profit margins can be a huge mistake in this industry. Gamers are fickle little creatures and they’re going to buy their top tier games for a few weeks and then sales will drop significantly. No retail chain wants to purchase a thousand copies of GTA IV (only as an example) and sell seven hundred over the first few week to be stuck holding onto a few hundred copies when the dust settles. Now you’ll have to put them on sale to get them out of the store because the hardcore gamer have already done their shopping and you’re not going to get any price protection if you’re not a major player in the industry.

Why take 7% profit margins when you can get 48% on a used game? The gamers don’t seem to mind because they’ll trade in a used copy of a sports title like Madden to save $5.00 on the latest franchise release. Gamers will buy Fable 2, beat it in a week and rush to the store to get the “most for their dollar” before the game gets stale and buy-back prices drop like a stone. Why not rent Fable 2 and save yourself $50.00? Of course, renting pisses off developers as well because they see no additional revenue.

While the economy struggles and consumers fight for their jobs, the entertainment side of life continues to grow. People would rather “cocoon” in their homes playing video games and watching movies on their brand new HD television because it takes them away from the low points of the economy if only for a few hours. History has shown us trends in entertainment during the down points of economies, it’s natural to want to get away for a bit.

But, consumers want to play these games on the cheap because their job may not be there tomorrow. Saving $5.00 knowing the store just took the title in for half the price doesn’t bother you; $5.00 in your pocket is better than in their pocket right? The fact that they just pocketed upward of 40% on the game doesn’t matter to you — it’s all about your bottom line!

While we’re bargain hunting during the recession developers are going to try and up sell you to a new copy of the game. If that means giving you special game items and features with a “one time code” upon purchase, it will be up to you to decide if it’s valuable. All the while GameStop will lock out the game industry from selling used games because 42% of their overall gross profit is from used game sales.

You, the consumer, benefits from a slightly cheaper game, bargain bin fire sales and additional game features if you do choose to buy new. The economic down turn is a great time to be a gamer, as long as you remain employed.