This week Sony had a press conference to announce their next gaming platform, the Playstation 4. I was able to watch much of the announcement and read a few summaries like this one from Penny Arcade. As predicted, this will be an exciting year for gamers…
Sony in 2013
Prior to the event, the talk about Sony was not good. Basically folks were talking about what the F Sony is doing with their current systems.
Several games have released with absolutely zero advertising. Starhawk? PlayStation all-stars? Sly Cooper? Big releases for the PS3 and the Vita with no support from Sony to promote the games.
Added to the lack of advertising, there have been problems at the company. Sony corporate is losing money. They fired their advertising agency. They sued their iconic (and very funny) spokesman “Kevin Butler”.
And they have been announcing that they are dropping support for various game studios that made games for Sony. No DLC, no new games, etc. These announcement are often the death of these small companies that relied on the Sony platform.
These are not the kind of news stories that a healthy, thriving company generates.
February 20, 2013
What Sony has been talking about is their Event on Feb 20th. This event has been an almost complete copy of Apple’s PR playbook.
They scheduled an event of their own, not tied to a trade show like E3 or DICE or GDC. They announced the event early and invited journalists but did not say exactly what it was for. All of which got people to talk about and speculate and get excited about the event. Just like Apple does.
The event itself was pretty solid and smooth. Journalists were invited to attend in NYC and they live-streamed the event for rubes like me so they got wide distribution of their message. Some presenters were a little awkward, some were clearly speaking English as a second language, but overall it was a lengthy, entertaining event for folks that want to see a new game console.
However, Apple announcements do some things that did not happen. Sony did not show the device. They did not announce a price. They did not announce a release date. And the release will not be anytime soon. “Holiday season 2013” is still over six months away.
But I think the event was a success for Sony. They are making the transition to owning the PR cycle like Apple does. They did a solid job. They pre-empted Microsoft even though Microsoft is expected to release their own system first.
Now folks are talking about the Xbox and whether Microsoft will do an event themselves. If there is an Xbox event, will it be one they planned to do anyway or will be seem rushed or forced like the Surface announcement last year? Time will tell.
Unfortunately, the event does not really resolve some of the big problems Sony is facing for a next gen console.
There is no doubt that Sony and Microsoft can build cool products. The big question is whether they can create profitable products given the increased competition and changes in the entertainment industry.
The PS4 looks like a PS3 – expensive hardware that will probably be sold at a loss with the expectation they can make it up with software and services over time. In other words, the PS4 has the same business model as the previous consoles.
It also looks like the same product. A dedicated gaming machine costing $400? $500? Whatever the price it will clearly be much, much more money than a $100 Roku or AppleTV.
We have the data. With 6B people in the world, dedicated game consoles appeal to a limited market. While Apple sold roughly 125M iPhones and 60M iPads last year alone, none of the three consoles has sold more than a 100M units after 6 or 7 years on the market.
The PS3 has sold about 70M systems and that is a lot of devices. However there are two important questions.
- Is there any reason to expect the next system to sell more units?
- If they sell 70M or fewer units, can Sony turn a profit?
Microsoft has sold more units than Sony but they face the very same fundamental questions about their business.
A PC is a PC
As I wrote about before, the PS4 is basically a PC using commodity Intel hardware design.
We can look to Apple for guidance regarding this change. The iMac really took off after Apple moved from low-volume RISC-based hardware from IBM to commodity Intel CPU’s. By moving from low-volume to high-volume, OEM’s are able to provide more for less. Sony is moving from the Cell processor to commodity hardware from AMD. That change will clearly lower their hardware costs and they will probably also lower the costs to developers for making games on the system. Win-win.
Moving to a PC design will raise two big questions:
- Backwards compatibility of games you already own
- How will the platforms differentiate themselves
While the hardware change is a win-win for the OEM and developers, it is a lose for consumers of the current game consoles.
Unlike something like an iPad, every generation of game console moves to a completely different architecture. This time around, Sony is moving from Cell to X86 and Microsoft is moving from PowerPC to X86.
I don’t expect either company to be able to provide backwards compatibility for existing games on the next systems. There is no way a consumer will be able to stick a disc in and have it just play.
Sony tried to provide backwards compat with the original PS3’s by literally including the chips from a PS2 in the box; this was expensive and not a success. This time, Sony has hinted that they may be able to solve the problem with game streaming; an interesting idea.
Platform owners want to sell you a new platform and if possible they want to sell you your favorite games all over again. Its an open question whether this will be a hurdle that customers will balk at.
If Sony, Microsoft and Windows are all providing essentially the same X86 hardware, how will these companies attract purchasers?
Some folks are brand-loyal. While most games will be multi-platform, there will be a few platform exclusive titles. If you want to play Halo, you will need an Xbox for instance.
I think the real selling point however will be the services. This is an area that I think both Sony and Microsoft are fairly weak in (in different ways) so it will be exciting to see this improve.
The first service is the user interface of the device. The main area of differentiation though will be the online features, including a store. Sony talked a fair amount about new services for the PS4.
Sharing, Streaming, Remote Play
Right off the bat, Vita owners will be able to pretend they have a (better looking) Nintendo WiiU. They will be able to play PS4 games on their Vita instead of on the TV. I thought this was a lame idea when Nintendo launched it and this has not change my mind but perhaps it will have appeal for some people. This is similar but different from Microsoft’s “Smart Glass”. Perhaps someone will find something creative to do with combining portable and dedicate hardware.
Sony talked about “personalization” and I thought “Amazon”. Doing this in their online stores is a no-brainer.
Changing the experience of the device to better match the interests of each customer sounds great. It can also be really difficult to implement and support but I wish them luck.
As a gamer, I buy these devices to do one thing: play games. I never want to see commercials for movies or music or things I don’t want; unfortunately those are the things these companies want to sell me. So there is an inherent conflict in the idea of “personalization” for this kind of device. Companies can differentiate by making different decisions on the balance.
Sony talked for a while about sharing online. They purchased the game streaming company Gaikai and then went silent. It looks like they are trying to use that technology to add various types of streaming content to the PS4. It is exciting to see some new ideas being tried.
I don’t have enough gamer friends for sharing game recordings to be compelling to me but perhaps this will be a solid hook for younger gamers. A dedicated button for sharing content, a way to making game recordings, an online version of couch co-op. This is something new. Sony is not known for their skill in Internet services and the Internet is not a core experience for Japanese gamers as a whole but I am intrigued and hope they can execute.
Media devices and Instant-on
For years Sony and Microsoft have talked about taking over the living room with game consoles. They can play games and they can watch movies!
The “watching movie” market is much larger than the game market so this is an attempt to reach a larger audience, as mentioned earlier. However it competes head on with media boxes like the Apple TV and Roku. Watching movies over the Internet takes much less hardware to do well so dedicated solutions can be offered at a much lower price.
Years ago, we used a Windows PC to watch Hulu and ESPN3 on our TV. I also tried to watch ESPN on my Xbox360 but the PC was a better experience (and free). Then we started to use our PS3 for watching Netflix and Hulu. The experience with all of these devices was similarly lacking: Turn on the machine, wait for it to boot up, find the app, wait for it to launch, browse the app and start a show. It worked but…
Then I bought a $99 Roku and never used the PC or PS3 again. The Roku is tiny, low power (so I don’t feel guilty about the Earth), silent, and always on. I turn on the TV, the thing is ready to go. If I change apps, it takes a minute but there is no comparison to the Xbox or PS3 or Windows.
So I was impressed when Sony mentioned that they understood this complaint and that they are adding ‘instant-on’ to the PS4. If that really works, they might finally have media streaming solution I would use and we could get rid of one device in the living room.
All in all, Im enjoying the hype. Im excited to buy a next gen system. I know that execution almost always falls short of the hype but Im hopeful for entertainment this yet. The ps4 announcement was a solid effort. Sony Corporation has been having some difficult years but I hope the PS4 is able to find enough success to stay in business. This should be an entertaining year as the hype train has just started.