Wednesday, September 05, 2007

SCEA's Karraker leaves, Sony to float $3 billion worth of shares



Just how bad is the PlayStation3 doing and just how desperate is Sony as a result? This is a question many people are asking on a regular basis, myself included. And both recent news headlines, SCEA's head of PR leaving and Sony selling billions worth of additional shares to resolve their cash-flow crisis, are compelling incentives to ask those questions again now.

Of course, I have already gone on record saying that PlayStation3 will stay in third place (kind of ironic when you remember that was a marketing slogan for the PS2) and you will have to agree that Sony is in a bit of a pickle. Obviously, the high price is the primary barrier to success and, given SCEI's financial situation, there was little the company could do about it up until now. Introducing a slightly upgraded model, outphasing the bottom-end one and then lowering prices meant that the status quo in terms of price remained - with a slight hardware upgrade thrown in. A disastrous move, no doubt.

The recent starter pack bundle managed to move units and put the PS3 ahead of the Xbox360 in terms of monthly sales in Europe (and the US, I believe). But still, Sony has not even managed to sell half of the units Microsoft has sold. And no developer or publisher is going to make any allowances for the Xbox360's headstart. The only figures that matter are installed hardware base and tie ratio.

In fact, Sony has been losing exclusive third party support at an alarming rate and this trend is set to continue. Many companies (like Electronic Arts) have openly admitted to betting on the wrong horse and announced an adjustment of resources towards Nintendo and away from Sony. And these decisions will not really show until early 2008, which is when a lot of people expect the PlayStation3 to finally start selling. But what games, apart from 'MGS4' (which is all but certain to be released on the Xbox360), are going to move the hardware?

Test yourself and write down all the outstanding exclusives you can think of for each console - and depending on your preferences either Xbox360 or Wii will come out tops. But I seriously doubt that any gamer will be able to list more than a few such titles for the PS3.

At last, Sony is taking measures to get that price down.
Sony Financial Holdings will float $3 billion worth of shares, which is expected to benefit SCEI to a large extent. Some analysts predict that this measure is intended to reduce the PS3's price tag. Is that a good thing? Sure Will it help? Probably not. Even with such a significant cash injection, a $100 price drop (a real one, this time: reducing the top SKU to $499) is all they can stomach. This would still leave the Xbox360 more than $100 cheaper with an undoubtedly better and more plentiful selection of games. And with Blu-ray's recent major setback, consumers are unlikely to consider this feature as a worthwhile bonus.

Dave Karraker's departure from Sony is not the first one, although it is the most high-profile person leaving voluntarily (which can hardly be said about Ken Kutaragi). Moreover, Karraker's tenure with Sony was more of a stint. And this is the main reason why his departure must be seen in this context, as an indicator of Sony's continuing up-hill struggle. While a few commentators are wondering why Karraker left when the PS3 is firmly on the road to recovery, I am asking: is it?

EDIT In an interview with 1UP, Karraker discusses his departure from Sony and his new job with a vodka merchant and remarks: "Still waiting for that pithy pun headline." Just for the record: I was considering the headline ´Sony PR director turns to alcohol´.

EDIT Square Enix president Yoichi Wada has criticized Sony for not marketing the PlayStation3 consistently. Speaking to Reuters, he told the company to "straighten up" their marketing strategy for the console.

Sony first unveiled the PS3 as a mighty home electronics product. Then, after some badgering from game companies, it shifted the position of the console closer to a game machine. (...) [The future of the PS3] would be tough if its marketing strategy is not straightened up.

This is not the first time a third-party executive has given Sony some unwarranted advice. Back in May, Ubisoft CEO Yves Guillemot said: "They have to decrease the price quite significantly."


Sources: Joystiq, Bloomberg, Reuters
Thanks to: Joystiq

16 comments:

Dormant Wii Studios said...

I have a question...
What about exclusives? Does Sony have any exclusive games that would at least hold its own against the current Xbox and Nintendo library? Such as Microsofts Halo, or Nintendos Metroid?

Anonymous said...

No pictures! Posts are obviously boring without pictures.

Anonymous said...

Sony cant lower the price anymore. they wont win a thing(if they are winning something as of now). they are screwed as they are and their only option is to rely on really good exclusive, so they better start showing some god of war 3 if they want to step up.

Matt said...

Unless Sony's got something truly magical up their sleeve, it's just about Game Over for SCE(A). I'd LOVE to see all that money get invested in consumer electronics (I want my OLED TV damn it!), rather than splitting it with their dead-end games division. Sony's kinda leading the way with hot new display tech, but Sammy's right on their tail.

Anonymous said...

AT THE END OF THE DAY PRICE CUTS ETC ALL MEEN NOTHING
360 AND PS3 ARE "OBSOLETE GAMING DESIGNS

THE WHOLE INDUSTRE HAS SIDE SHIFTED WITH WII AND DS I LOOK AT PSP PS3 AND 360 AS TOTALLY MEANINGLESS AND OUT DATED AS A CONSEPT TO PLAY GAMES ON

WHO WANTS TO FPS ON ANYTHING BUT WIIMOTE AND NUNCHUCK ONLY IDIOTS AS FAR AS IM CONSERNED

Anonymous said...

To the guy above me,

Every console has something to offer. Sure the wii is kicking ass right now but that doesnt mean that the xbox 360 is not selling, at least in the US. It's very ignorant of you to call the competitor obsolete. On the last generation, the ps2 was the clear winner, and nintendo was on third place. but that didnt mean that the console was obsolete or that it wasnt selling well. What im trying to say is that while nintendo looks like the clear winner, the competitor are still winning their parts.

ials said...

DA ALL CAPITALS GUY IS ON THE MONEY

;)))))))


-IALS

Anonymous said...

You're incorrect, the PS3 still didn't manage to outsell the 360 after its price cut in the USA, at least in the previous sales announcements

Grandmaster B said...

AT THE END OF THE DAY PRICE CUTS ETC ALL MEEN NOTHING
360 AND PS3 ARE "OBSOLETE GAMING DESIGNS

THE WHOLE INDUSTRE HAS SIDE SHIFTED WITH WII AND DS I LOOK AT PSP PS3 AND 360 AS TOTALLY MEANINGLESS AND OUT DATED AS A CONSEPT TO PLAY GAMES ON

WHO WANTS TO FPS ON ANYTHING BUT WIIMOTE AND NUNCHUCK ONLY IDIOTS AS FAR AS IM CONSERNED


Yamauchi comes to this blog?Heh.

Benjamin Fennell said...

Why am I not surprised to see this now? With how the PSP's performed, and how badly the PS3's done since day one, the SCE exodus has begun. Sony's on their way to cutting the division off like a gangrenous limb. Going from supporting the whole company to hemorrhaging money like there's no tomorrow - as if they don't get rid of SCE soon, there isn't for them - is something the higher ups and stockholders can't and won't ignore. Sony has a future, but it isn't in gaming hardware, that's for sure. Ah well, they dug their own grave, so this is exactly what was naturally going to happen. These are the days of our gaming industry.

Anonymous said...

TO THE GUY EVERY CONSOLE HAS SUMTHING TO OFFER IS THAT SO LIST OF FACTS FOLLOW

JOYSTICK BECAME OBSOLETE DUE TO D-PAD WHO DID THIS NINTENDO

D-PAD BECAME SECONDERY TO ANOLOG WHO MADE THIS SO NINTENDO

THE SAME GOES RUMBLE SHOULDER BUTTONS ETC

THE CONTROL INTERFACE JUST LIKE GPU CPU HAS EVOLVED WHO LED AND MASTERED THIS EVOLMENT

NINTENDO AND NO BODY ELSE

THE FACT STILL REMAINS WIIMOTE AND NUNCHUCK HAVE TECH OBSOLETED THE COMPETING CONSOLES INTERFACE/CONTROLS/GAMEPLAY

THAT IS 100% FACT

I REPEAT THAT FACT NOT OPINION WIIMOTE AND NUNCHUCK ARE NEW AND FYUTURE 360 AND PS3 CONTROL AND GAMEPLAY WISE ARE CLEARLY TO ANY HONEAST NON FANBOY

O-B-S-O-L-E-T-E

LOOK THE WORD UP 36-0 FANBITCHACH

u carnt defend 360s and ps3s controls with out looking utterly stupid out dated gameplay is exactly what it says on the tin OBSOLETE

Anonymous said...

hahaha this guy (^^^) is awesome :)

he should do a speech at e3 or something. that'd be so great :)

-"superfan" tactics.

also: sony got punked by wada.

Anonymous said...

Perhaps a good move from SONY, at last...

http://www.dailytech.com/article.aspx?newsid=8810

Now we could have an interesting price point...not the best, but getting better nevertheless.

Is it enough to put SONY back on track? like falafel said, many exclusives have been lost. But perhaps this decision will help SONY reassure third parties dev.

My guess : a second place in this gen war is still possible, given the fact that microsoft is quite new to the market, and american (and thus not in the best of position vis à vis japanese devs)...for a first place, however...

[mec] rincewind

Anonymous said...

I think you mean to say unsolicited (meaning not asked for) rather than unwarranted (which means incorrect or inappropriate).

-Chris

Anonymous said...

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Anonymous said...

What imGW2 Gold trying to say is that while nintendo looks like the clear winner, the competitor Diablo 3 Items are still winning their parts.