ShareThisBy RYAN KIM
Tuesday, November 14, 2006
Sony officials like to say the next generation of video gaming doesn't start until they say so.
After some fits and starts and mounting expectations, the world will finally be able to see how the No. 1 video game company intends to transform gaming with the Nov. 17 introduction of its PlayStation 3. The highly anticipated platform is packed with a supercomputer, 40 times more powerful than the PlayStation 2, and is supposed to remain state of the art for the next 10 years.
That's a good thing, because the battle ahead for Sony is shaping up as more challenging than ever for the company. And, even more than in the past, Sony has a tremendous amount riding on its gaming platform because it will be closely linked to its other endeavors in consumer electronics and entertainment content.
Its chief rival, Microsoft, released its next-generation platform, the Xbox 360, a year ago and has sold 6 million units worldwide. Microsoft, which came in a distant second in the last console war, is working on its second round of advanced game titles and expects to sell 10 million consoles by the end of this holiday season.
The Wii, Nintendo's entry in the video game console sweepstakes, has drawn intense media interest in the past six months. Scheduled for a Nov. 19 release, the new console forgoes brute computing power for game play, utilizing a motion-sensing control system that officials for the No. 3 console maker hope will reach a broader audience.
The current generation of video game consoles had its premiere in 2000. Since then, Sony has sold about 106 million PlayStation 2 units worldwide, easily beating the Xbox (25 million units) and the Nintendo Game cube (21 million units).
The original PlayStation, which was released in 1994, saw sales of more than 100 million units, handily beating Nintendo and Sega, which no longer produces a console. Analysts say this time around, PlayStation should maintain its advantage but will lose considerable market share, perhaps dipping below 50 percent of global sales.
While Sony officials are wary of playing the numbers game, they are supremely confident they have a platform that will outperform any of its rivals.
"We want to provide an entertainment experience that is a quantum leap over what consumers have come to know and expect, based on what they've seen in the marketplace. The PlayStation 3 is the next chapter in that evolution," said Jack Tretton, executive vice president and chief operating officer of Sony Computer Entertainment America, based in Foster City, Calif.
Tretton's confidence flows from the technology and thought that has gone into the PlayStation 3. Chief among its features is a 3.2-GHz Cell broadband chip, a processor with eight units that operate at supercomputer speeds. The architecture allows the PlayStation 3 to tackle a handful of intensive operations, including simulating the movement of folds on a piece of cloth, handling computations in physics, giving artificial intelligence to characters and producing advanced sound effects. The engine also allows the system to deliver full high-definition at 1080p, the highest degree of video resolution.
Sony hopes the components will help it deliver what it calls brilliant gaming, an immersive experience that engages players like never before.
Many gamers, though, will have to take Sony's word for now. There will only be about half a million units available initially in the United States, with another half-million by the end of this year. All are expected to sell quickly, thanks to advance orders and hardcore fans who are willing to camp out for available units. Tretton said it probably won't be until spring that the PlayStation 3 will be available in stores in large numbers. That shortage highlights some of the struggles of the new console, which have frustrated gamers during the past year. The company originally announced it would have the system ready in spring, but missed its deadline because of technological problems associated with production of the PlayStation 3's internal Blu-ray DVD drive.
At the E3 video game conference in May, Sony surprised many fans with the hefty price of the PlayStation 3. The $499 model comes with a 20-GB hard drive, while the 60-GB version, which also features built-in Wi-Fi, will be priced at $599. By contrast, a low-end Xbox sells for $299 while a 20-GB Xbox is priced at $399. The Nintendo Wii will be priced at about $250.
More recently, Sony slashed in half the number of units it expects to have available worldwide this year, from about 4 million to about 2 million, and delayed its introduction in Europe until next year.
Michael Pachter, an analyst with Wedbush Morgan Securities, said the biggest problem has been the price, which he says he believes will strike average gamers as awfully steep. "I think that $500 is a lot of money," he said. "That's 1 percent of the average household income to buy a box. People will have to think about it. And if you want to take advantage of high definition, you'll need an HD monitor. Now you're talking about boatload of money."
Sony officials say the PlayStation 3 is a value, in large part because of the built-in Blu-ray DVD player. The player can handle discs with up to 50 GB of material. But more importantly, the PlayStation 3 will be the cheapest way for consumers to buy a next-generation DVD player to watch high-definition movies. The $500 console is about half the price of stand-alone Blu-ray DVD players.
Sony hopes people will see the value in the PlayStation 3's price and snatch up the devices. That would help Sony achieve a related goal of winning the next-generation DVD format competition.
Content will be a major issue for the PlayStation 3. On one hand, independent developers, wary of escalating costs, are producing fewer exclusives for Sony in an attempt to broaden their revenue streams. It means games like Grand Theft Auto, a PlayStation exclusive and one of the most popular titles ever for the PlayStation, will now appear on the Xbox 360 for the first time next year.
But Tretton said even with titles showing up on competing platforms, the computing power in the PS3 will help developers create more exciting games on the PlayStation in the coming years. Analyst P.J. McNealy of American Technology Research said Sony will face increasing pressure from Microsoft in the United States and Nintendo in Japan and Europe. He said it's unlikely the PS3 will top 100 million units like its predecessors. Still, it's too early to underestimate Sony, he said.
"At the end of the day, Sony is still the largest brand on the planet in consumer electronics," said McNealy. "Everyone won't jump off bandwagon overnight."
