June 22, 2006
TheStreet.com Talks to Sony About Playstation 3
TheStreet.com interviewed Jack Tretton, co-chief operating officer of Sony Computer Entertainment America, about the challenges that Sony will potentially face this holiday season with the Playstation 3. Overall, Tretton stays within the Sony’s talking points on the PS3 and doesn’t reveal a lot of new information, but does offer some interesting perspective on where Sony sits in the upcoming next generation console battle. Again, the issue of the “disappointing” E3 presentation was tackled, and Tretton, like others at Sony before him, believes that overall the presentation was a success. While consumers and the gaming press may not have been enthused with the information presented, Sony’s stand is that the key stakeholders in the upcoming battle, retailers and third-party developers came away with the information they needed, and from that point of view, their presentation succeeded. Winning over the consumer at this level would have been a great bonus, but Sony believes that their long-term strategy will address the concerns of the average gamer, and didn’t need to be fully addressed at E3.
Part of this comes into play when addressing the price point; Sony’s position is that once the consumer understands the value proposition of the technology included in the PS3 versus the Xbox 360, then $499 will become an acceptable outlay. Whether Sony can successfully message this remains to be seen, but there are still a number of months before the launch, and earnest marketing hasn’t really started yet.
Tretton also believes that the head start the Xbox 360 has on the Playstation 3 is insignificant, stating that if “a competitor gets to 6 to 10 million worldwide, I would not consider that to be a significant advantage or a significant disadvantage as far as we’re concerned.” This is because Sony’s position is that the race is a marathon and not a sprint; their targets are at 100-million units worldwide and 50-million in America alone. However, there must be some point at which a competitor’s lead becomes insurmountable, and Sony has never faced a situation where they’ve ceded that much ground to a competitor before.
Finally, Sony downplays third-party exclusivity, particularly the loss of Grand Theft Auto 4 as an exclusive Playstation 3 title. Tretton believes that ultimately, this will become a losing proposition, that “with the cost of development, not many developers can afford to do exclusivity.” First party games, for Sony, will become the driver of exclusive sales. This is somewhat of an interesting statement; ten years ago, one could have said that the best producers of first-party content were Sega and Nintendo. Sega titles didn’t save the Dreamcast from oblivion, and the hottest first party titles from Nintendo couldn’t elevate the Gamecube above third place in the console wars. This is somewhat turning around in the portable market, with the DS, but from history, this doesn’t seem to be the guarantor of success that Sony believes it to be.
The interview really tackles what the competition is going to be like from a business perspective. It seems like Sony is in a comeback position now, but the company has yet to fail, and the next year in the console wars will certainly be an interesting one.