Rock and a Hard Place: Sony’s Japanese Dilemma

September 25, 2008| schommer| 0 Comment| 12:33 pm

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What a dilemma it is, Sony’s PlayStation 3 isn’t as hot as the Nintendo Wii in Japan. Even the Xbox 360 has had some minor success stories in Japan while Sony sits back saying “wtf?”

President, SCE Worldwide Studios, Shuhei Yoshida is pointing the finger at the publishers saying, “What’s happening is that lack of support from the Japanese publishers – not necessarily from intentions but from development capabilities.” (kotaku) Why, though, would publishers push to produce games on the console that’s currently losing market share?

Sony’s position is very tough to deal with because they’re not market leader so publishers are looking for the biggest bang for their proverbial “buck” and that’s not the PS3 right now. You can produce an expensive game for an expensive console or a cheaper game for a cheaper console and make more money.

How, then, can Sony get out of this situation? They must find a way to promote an incentive for publishers to create Sony exclusives or, at least, a Sony “port” of a game to build up their library of must-have titles. Perhaps Sony’s punishment at the hands of Nintendo and Microsoft in the States has a bit to do with their global marketplace issues — they need to put a concerted effort into one of their regions and champion themselves in one realm before trying for all of them. Right now, they’re a watered down expensive console with very few exclusive titles.

Metal Gear Sold 4, Home and Little Big Planet are great reasons to own a PlayStation 3 if the price was a bit more reasonable. Looking at the future, we’ve got Resistance 2 and a few other titles that may make some waves in the industry, at least in the United States, but it’s going to be an uphill battle in which they are the second best this time.

It’s always easy when you’re on the top. PlayStation 3 is not on the top so it’s time to start struggling, cutting prices or enticing publishers to build good exclusive titles.

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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-sale This 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.

Wii Friends Codes, Not PerfectWii Friends Codes, Not Perfect

Satoru Iwata, president of Nintendo has gone on record with his thoughts of the Wii friends code system. He’s a father, with a daughter, so he’s letting his own personal judgment get in the way of a good community built game system.

In talking about the open access of the Internet he said, “I as a father do not feel like allowing my daughter be engaged in that kind of world.” He’s more inclined to protect his children from the dangers of the Internet and random (often insulting) people by requiring a 1:1 paring with real friends.

For many gamers the Wii friends code system is far from perfect. It’s so far from perfect its a barrier to entry and any form of fun on the console platform. Nobody is against protecting their children, a parent will be the first to admit they’re desire to protect their kids over all else, but clearly someone isn’t thinking outside the box on this topic.

The only way to protect your children is to enforce a large numeric key which you must hand deliver (or e-mail) to your friends in order to play? We’ve got more creative enforcement in child safety on our TV sets using the VCHIP which allows parents to password protect certain television programming.

(more…)

PSN Service Restored (Partially)PSN Service Restored (Partially)

CNet is reporting that partial service PlayStation Network has been restored, allowing gamers to play online and shop in the PSN Store. Nearly its entire portfolio of online games, game forums and Web sites will go back online but the company will also require players to reset their passwords.

Sony states:

As the result of a criminal cyber-attack on the company’s network, SOE shut down its game services in order for the company to undertake an investigation and incorporate rigorous enhancements to the overall security of the network infrastructure. SOE worked with several outside respected security firms during the course of implementing significant security measures that strengthen safeguards against unauthorized activity and provide customers with greater protection of their personal information.
SOE made enhancements to overall data security as well, including updating and adding advanced security technologies, additional software monitoring, performing new penetration and vulnerability testing, and increased levels of encryption.

“Our main priority is the safety and security of our customers’ personal information,” said Kazuo Hirai, Executive Deputy President, Sony Corporation. “We are making consumer data protection a full-time, company-wide commitment, and have applied enhanced security technologies so that our customers can feel protected and confident about playing our games.”

Hirai added, “We are committed to delivering secure and entertaining games for players of all ages and thank each of our players for their patience and support during this difficult time.”

SOE will also be offering its customers a “Welcome Back” program that includes special game content and services to all registered Station Account holders. As part of this program, players will receive 30 days of additional game time plus one day for each day SOE’s services were down.