Why Sony is Ready to Self Destruct

jammmma writes "Before even launching the PS3, Sony is ready to self destruct." From the article: "PS3 is doomed, thanks to Sony's ignorant attitude. None of us had the chance to seriously evaluate PS3 and the experience it has to offer. It's impossible without a series of titles and an official product at hand, but from where we stand, Sony's damaging attitude is all it takes to diminish the value of PS3. Kutaragi may be right in defending PS3; after all, he can't criticize his own product, but instead of exciting users with valuable features and winning them over so they can start saving, Kutaragi makes bearish statements in response to Nintendo's announcement and Microsoft's take on Sony. Last I heard companies were at E3 to impress media personnel, which yielded positive publicity, not make childish remarks when chances were against them."

Comments

it's been ongoing for a while

[yagu]

SONY isn't ready to self-destruct, but it may be nearing the final disposition of its actions the past ten years including more and more proprietary technology, higher prices, and disdain for the customers.

Consider:

• Ten years ago, SONY began making integrated stereo components, designed to interact with each other. I found this an exciting and enticing trend until I discovered if I wanted to take advantage of it, I'd have to completely replace all components in my system -- no accommodations for any "foreign" components. I know their ultimate motivation is to sell SONY, but with even a modicum of extended compatibility I would have considered their new systems. In its "introduced" form, I not only refused to buy, I steered any prospective customers away (and I had lots of people asking for recommendations).
• Also about ten years ago SONY introduced the mini-disk. It was cool before mp3, but it was theirs. I took a chance at the high school dance and got a recordable mini-disk unit... knowing (thought so) the prices would plummet in a year or so and I could round out my collection with much more reasonably priced players. It never happened. When pressed for an explanation, my local favorite salesman explained SONY refused to license the technology for anything less than exorbitant fees so no one was offering the technology other than SONY, or if they did, it was for continued outrageous prices. (This was about the time I really started developing the "fuck you SONY" attitude.)
• SONY jumped into the small-gadget fray by gambling they could introduce their idea of what was the perfect storage device, the memory stick. Memory ick ! It was expensive, held less data, and once again jealously guarded by SONY. If the rest of the world didn't like SONY's game, SONY would just take their ball and go home.
• SONY and RootKit-gate. 'nuff said.

I don't know who's truly at the helm at SONY, but it's almost as if they've intentionally dug this hole, about six feet deep. I long ago eBay'ed and divested myself of all SONY equipment (still have SONY music CDs, sorry... ) and swore that, until SONY plays a little more nice, I'll never buy, recommend, anything SONY again.

I've never been a video game fan, so I don't know about SONY's escapades around those, but from what I see and hear it seems SONY is consistent across their offerings and markets.

So, it isn't SONY "ready to self-destruct", it's SONY reaping the rewards of what it's sown. It's too bad, they've shown they're capable of creating sophisticated and innovative new technologies.

Re:it's been ongoing for a while

[TheRealFixer]

If you think the launch was bad, you should see the game now.

Overall, even with all the faults that SWG had at launch, it still was really one of the most innovative MMORPGs out there. You really could follow your own path in the game. It appealed to all kinds of people, both male and female. If combat was your thing, there was plenty of choice in that path, and plenty of challenge. If you'd prefer to sit on the sidelines, non-combat professions were a very valued part of the community. Even people who just prefered the social aspects of the MMO world could server a purpose. From a community simulation perspective, it was easily the most flexable game around.

But, there was a serious lack of game content at launch. Promised features like player cities and vehicles were conspiciously missing from the game. Other features like instanced battlefields that could support massive numbers never worked correctly outside of the test lab and were abandoned shortly after launch. Quests would lead nowhere (Vader says, "Go speak to the Emperor." The Emperor says, "Go speak with Vader."). The overall point of the game (the Galactic Civil War) wasn't even really implimented, as PvP battles served no purpose other than virtual chest beating and bragging rights, and had no big-picture impact on the game. The game itself was beautiful, but shallow. Players tried their best to make up their own content, with player-hosted events and pointless (but still fun) battles in NPC cities. But by December of '03, the game was really bleeding subscriptions badly.

Then, some brilliant person at SoE decided that what everyone really wanted was to be a Jedi, and that would magically stop the exodus from the game. So, instead of adding the missing content, they dangled the prospect of unlocking a Jedi character in front of every player (something they had promised would not be the case). And it did keep a certain element from cancelling. Thus was born the Great Holiday Hologrind, which severly damaged the social aspects of the game, and also wrecked havoc on what had been a fairly healthy in-game economy.

Eventually it was passed around that the big, mysterious secret to unlocking it was nothing more than just mastering every profession in the game in turn. Now, Jedi were originally planned to be *extremely* rare, even to the point of being random and only a handful on each server. Since god-mode characters are generally not a good idea in an online game, their power would be offset by the threat of perma-death for the character, forcing you to start all over again. When enough people started unlocking Jedi characters, the ritilan-addicted "power gamer" element whined and complained about perma-death, SoE capitulated, and it was removed. Now, you had high-level Jedi running around one-hit killing everyone with no consequences. Even if by some miracle you took one down, it did little good. PvP battles became nothing more than competitions to see which side could pull out the most Jedi. People who had no interest in playing Jedi (otherwise defined as "subscribers with real long-term potential") were forced into hiding.

SoE made one blunder after another after that. Each modification to game balance seemed to throw the game further and further off-base. This can directly be traced to overpopulation of Jedi and the fact that they were never meant to be a balanced profession in the first place. The type of player who was attracted to playing a Jedi (and who could sit there and grind combat XP for 16 hours a day for a month) seemed to be the type of person who had little to no patience for complex combat systems that required forethought and strategy. So, SoE took their unique "HAM" multi-health-bar system, and turned it into EQ-style combat, dumbing it down to simple hack-and-slash.

Eventually, SoE made the amazing decision to eliminate the profession system altogether, and force everyone into clones of the same 8 "classes" and dub it the "New Game Experience". They completely eliminated

Re:it's been ongoing for a while

[Lumpy]

all the way back to Beta days. When it finally conceded defeat and released VHS decks

Conceded defeat? they never did that. Sony simply took the BetaMax and refined it to BetaCam and BetaCAM SP and owned the professional video market ever cince. Only now is sony losing it's fooding in the pro video market with the digital standard set up by JVC called MiniDV and DVCAM. Which is robust enough to handle the HD signals on the new HD camera systems.

Sony even tried to wedge in there with their own tiny digital camcorder tape. It died a horrible death just like SACD did.

In pro video Sony is still the defacto standard. Live events still use a DME9000 editing suite made by sony, most remote live semi-trailer studios are mostly sony gear as well still to this day.

Re:Yeah, sure.

[Gothic_Walrus]

The $600 price tag and the $60 games, on the other hand, might just cause those "millions and millions of kids and their moms around the world to decide not to buy a PS3."

Honestly, if you had the choice between the PS3, Xbox 360, and Wii for your kids...well, I sure as hell wouldn't choose the one that costs more than the other two combined.

While Nintendo may have won E3, Sony ...

[WillAffleckUW]

Hmmm. While I do think that it is true that Nintendo won E3, based on all the blogs at Washington Post, Seattle Times, Seattle PI, and New York Times, as well as more typical ones on gamer sites, I don't know that, as an investor, I'd say that Sony killed themselves.

I would instead say that they missed an opportunity and need to rethink their marketing price points and possibly their game releases.

Sure, Microsoft (nope, don't own it, sold it to lock in a technical loss, and as of today don't own any of these companies) did manage to get the media to cover their GTA release on the xBox360 and most press never clued in that it is releasing on both the P3 and the 360.

Sure, Nintendo got all the buzz and those of us who really aren't into FPS very much are buying the Wii (hate the name). Heck, they even demo'd a really cool FPS or two, and Red Steel swordplay sold me on the controller more than even the fishing and driving demos.

But, in the end, if they pick themselves up, dust themselves off, reset the retail price for the non-crippled P3 to something reasonable - as in, less than $500 US and less than 500 EUs - then they can still regain the market.

Battles frequently can be won even with major setbacks - sure, Sony was routed at E3, but they've got six months to get their act in gear and learn from their mistakes.

Re:While Nintendo may have won E3, Sony ...

[thebdj]

Battles frequently can be won even with major setbacks - sure, Sony was routed at E3, but they've got six months to get their act in gear and learn from their mistakes.

You seriously think they will adjust the price point? Sony is going to ride this $600 to their demise. To think they will drop it is absurd. Sony is notorious for over-pricing products in the hopes of selling on some sort of reputations, which they still have with many normal consumers.

Now, granted they have undershot the price of their launch Blu-Ray player (and everyone elses really), but if they go much lower the other companies will start screaming foul, which they already should be, because Sony is technically selling a BD player for almost 1/2 the market price. Though I still believe Blu-ray players will drop below the PS3 price sooner rather than later.

Also, using estimated number the penetration of HDTVs has been projected, at best, near 30%...by 2010. This means that nearly 70% of televisions (probably close to 80-90% now) will have no gain from the new format, making Blu-Ray (and HD-DVD) largely pointless for most Americans. I think Sony might be signing their deathwish by making the console with a blu-ray player.

I do not want to come out sounding too much like a conspiracy nut, but Sony is trying to use the PS3 to launch BD and not the console itself. There is much more money to be made in movies then in the game market, since movies are a much more "universal" form of entertainment. If Sony made the console with only DVD support, like 360 and Wii, I would almost bet that they would have pricing that is much more competitive to the other consoles; however, I think their true competitor is HD-DVD and other Blu-Ray drive makers.

Why Sony is ready to self destruct:

[Anonymous Coward]

Because people on the internet hate them. I mean, just read any Slashdot article and you'll see. And just look at these cooltechzone.com people. They're clearly really cheesed off.

With the combined might of the Slashdot userbase and "cooltechzone.com" aligned against them, how can Sony possibly survive?

NeoGeo

[Anonymous Coward]

Let's not forget video game history. The most recent example I can think of that's similar to what the PS3 is making itself out to be is the NeoGeo home system. The system was more expensive than its competitors (Genesis/SNES/TGX-16) and the games were up to $200. The system WAS higher quality. It DID bring the arcade experience home. But guess what? It was way more expensive than the competition and sold poorly (except as a coin-op machine).

I'm looking forward to seeing the PS3 in action on its release. And I'm wondering if the $600 price tag will stick for very long. It will be interesting to see what will happen. Will Sony get poor sales (at least initially)? I think so, but could be wrong. Will reducing the price of the system cost Sony a TON of money because of the major cut they will face at "giving" it away for less than it costs to manufacture, or will the adoption of the system and licensing fees balance it out and make the endeavor still profitable? It's tough to say, but if I was betting on this, I'd bet that Sony may have their first living room console flop.

It seems a lot of bad PR is coming up lately.

I'm not sure that spells the end of Sony in the video game arena, however. Anything can happen and Sony, as a whole, is not doing too shabby (yet).

Only time will tell...

bollocks

[theantix]

Sony is not going to self-destruct because their console is priced high on release day, it was simply a tactical decision to attempt to capitalize on the willingness of their most eager fans to spend whatever it takes to get one on or near release day. Recall how with many console releases they can sell out the initial batches to the point where it is difficult to find one in a store for the first while? Sony is avoiding that by pricing their console higher on day one, they will make more money from the initial adopters and run less risk of selling out. THEN, when they have ramped up production and can produce more units at lower lost, then they will drop the price to a more reasonable level and all of a sudden the console looks a lot more affordable in comparison with the less-powered consoles from Nintendo and Microsoft.

At least that is the theory. It could easily backfire, as it seems to be doing judging by comments on this and other sites, by having a backlash against the initial price so strong that it actually turns people away from the console and onto the other platforms instead of them waiting for the price of the PS3 to drop as it inevitably will. But still, people are looking at this scene like it's all based on what happens in November and December of this year instead of looking at it like it's a multi-year game. In 1 year, in 2 years, in 3 -- the initial price of the PS3 will not be a big deal anymore.

Too much credit for the common man

[nosredna]

I don't think Sony is going to have nearly as big a problem with this generation of the console wars as people think. The entire American consumer system is based on a flawed precept anyway, and Sony is well-poised to take advantage of that.

It is expected that people will push their spending to match their income. This results in people with a lot more house than they need, a lot more car than they need, and so on. It's not uncommon for people working low-end jobs to have a new car that they can't actually afford, and sure as hell don't need (as an example, my brother works as a restaurant manager... he has a 2001 Honda something or other, with a $119/month car payment. One of his employees, a waitress, has just traded in her previous car, a 2004 something or other, because she couldn't afford the $379/month payment. Her solution: Get a 2006 something or other with a $325/month payment). This is, unfortunately, not the exception to the rule.

People will buy expensive stuff as a status symbol. How often have you been at some gathering of people (high school reunions are notorious) and heard people talking not about their kids, but about how much they spent on their boat? Doesn't matter that they're going to estate sales every weekend to stock their pantry (Sweet, 10 cents for a box of cereal, just because the guy who died opened it and had a bowl or two? I'm there!), they still have the status symbol of the boat, and their 3,000 square foot house, and their brand new H3.

It's soulless and evil to take advantage of that attitude, but Sony never claimed to be a church. And there are enough people out there who will buy the more expensive console for either the status symbol, or just to shut their kids up about the damn thing (you might be amazed how far that one will push parents... ever done a price-check on a Disney World vacation? Compare that with a run to DC to hit up the Smithsonian museums for a week). And hell, they don't even need the high market share they've enjoyed in the past... with that price point, they'll have outstanding revenues even if the number of units sold is only 30% of what the PS2 did.

As much as I hate to admit it (the side of me that co-owns a business is fighting with my pseudo-hippie minimalist personal life on this), my hat is off to Sony for this. I think they've found a capitalist's utopia for this cycle.

Re:Well...yeah.

[The-Bus]

If anyone can get away for charging a premium on their hardware, it's Sony. When we look at their other consumer lines, it's not so out of place.

Their consumer TVs? Circuit City right now has several 32" conventional TVs to choose from. At the low-end you have a Sylvania for $340. Other brands, like Sharp, Magnavox, Phillips and RCA, command up to $499. The Sony TV? $649.

What about MP3 players? Sony has their bean-shaped Walkman players (1GB) available for $120-$160 depending on features. Compare that to an iPod shuffle for $100 or an iPod Nano for $140.

Sony has, through a combination of marketing and engineering, managed to convince a lot of people that their products are of a certain quality and demand a premium. It doesn't mean their worth the extra price, it just means people are convinced (In the same way that Mercedes-Benz, Starbucks, Bose, and Banana Republic customers are convinced).

Outside of consoles, paying 50% to 200% more for something with Sony in the title is commonplace. So I can see how they can continue to expect that. Whether consumers will follow suit is another story completely. I'm thoroughly convinced that if the PS3 launched at $899 with LuminesBlu and Ridge Racer 7, they would sell out of their initial 3 million in shipments. Whether they reach 100 million in shipments again is an entirely different matter.

Re:Well...yeah.

[Jason Earl]

You are assuming that HDTV is going to hit critical mass by 2008. You are also assuming that HD-DVD or Blu-Ray will become the preferred medium for movies in the next few years. Heck, it's far from certain that Blu-Ray won't become the next Betamax.

The fact of the matter is that Sony is using the PS3 in an attempt to drive the market towards HDTV and Blu-Ray because Sony sells HDTV sets and owns the Blu-Ray format. Worse, Sony is apparently willing to gamble its lead in the ridiculously profitable gaming industry on the off chance that it helps it maintain an edge in the electronics market where margins are razor thin.

Sure, the PS3 might be a value to consumers that already have a HDTV and $600 burning a hole in their pocket, and who happen to be looking for a gaming console combined with a Blu-Ray player, but that's a ridiculously small segment of the community compared to folks that simply want to play some games on an existing "normal" TV set, and are willing to spend $300-$400 on new hardware. While the PS3 might sound like a better deal when transported to a mythical HDTV/Blu-Ray future, the PS3 has to compete with the XBox360 and the Nintendo Wii today in a world where HDTVs are relatively rare and where no Blu-Ray content is available.

If the PS3 doesn't sell in today's marketplace then developers won't support it, and the PS3 will find a place in the gaming history books with the NeoGeo and the 3DO.

Re:Well...yeah.

[drinkypoo]

It's nice to see that history hasn't taught them that the "We're the best, so people will like us no matter what!" attitude doesn't work too well.

One of the basic tenets of business is that the quickest way to go from the #1 spot to the #2 spot is to act like you're #1. The best way to stay in the #1 spot is to keep acting like you're #2, always driving to improve your products and your methods of business.

Sony clearly does not have a handle on this principle.

Worse Than Damn Lies

[blainn]

Looking around at a lot of these posts, it seems even the basic facts aren't being referenced (just more alarmist articles from other sources). Let's get back to basics for a second.

from google finance

Sony (ADR)
2006 Revenue (USD): 67.53B
Net Profit Margin: 1.47%
2006 Employees: 152,700

Microsoft (MSFT)
2005 Revenue (USD): 39.79B
Net Profit Margin: 31.59%
2005 Employees: 61,000

What do these basic, high level overviews tell me?

Not much, really. I don't even know how revenue is calculated, and based on the posts I've seen, neither do you. It's okay. If you think the PS3 costs too much, that's fine. If you think Blu-Ray will fail, that's fine. But please, pretty please even, don't confuse your convictions with actual knowledge.

There are three kinds of ignorance: ignorance, abject ignorance, and quoting random statistics.