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