Sony in Trouble/Wii could cause new-gen HD gaming to faulter!

Well this news is MASSIVE. Its is so big it was even on the main news on the radio this morning, one of the few 3-4 bulletins that FM radio detail in their ‘main’ news.
Game publishers/developers are threatening to “reallocate” funding to the Nintendo Wii if Sony dont drop the PS3’s price. Talk about THREATNING!!. Analysts feel they will have to drop by $50-100US because they have to catch up to improve their 3rd placing in the market. Obviously xbox360 isnt much further ahead but Wii controls half the market-share and game developers will be pushing more games on the Wii console. This will SERIOUSLY hinder 720p/1080p gaming this gen(360/PS3).
In a way Sony is being shown what its like to not be the primary console like the luxury they had with the PS2 for oh soooo many years where every developer wanted a title on it. So its new territory for them to compete. Especially considering the PS3 has consecutively dropped in sales in the USA over the past 3 months, difficult times in these economic times.
Check out the details from Bloomberg.com and Gamespot.com. But here’s a basic rundown below:


The call for a price cut is apparently being echoed throughout the publishing community. Bloomberg notes that publishing giant Activision Blizzard derived 39 percent of its revenues during 2008 from the Wii, as opposed to 19 percent from the PS3. Fellow publishing heavyweight Electronic Arts has also begun pouring more effort into the Wii, with CEO John Riccitiello saying as part of his company’s third-quarter earnings report in February that EA must “increase focus on the Nintendo Wii platform.”

“You can’t ignore the guy who has half the market,” EA Sports president and former Microsoft executive Peter Moore told Bloomberg, continuing, “Sony obviously still has a ways to go with their pricing.” Partially EA-owned Ubisoft also expressed optimism over a price reduction, with CEO Yves Guillemot telling Bloomberg, “Anytime a console manufacturer reduces the price, software publishers benefit.”

However, Sony remains committed to the PS3’s current price structure. Speaking with Bloomberg, SCEA senior VP of marketing Peter Dille said that there are “no immediate plans” to shave the price on the PS3. “Everybody in the development community would love for the PS3 to be free, so they could just sell razor blades,” Dille told Bloomberg, going on to say that Sony is concerned with both profitability and installed base.

As part of its third-quarter earnings report in January, Sony’s games division reported sales of ¥393.8 billion ($4.01 billion), down more than 32 percent from the same period of 2007. For the quarter, Sony managed to sell 4.46 million PS3s globally, a dip from the previous year’s 4.9 million units. Anticipating its first company-wide loss since 1995, the Japanese electronics company has also announced a cost-cutting measure that will save $1.1 billion through April 2010–at the price of approximately 16,000 jobs.

Advertisements

5 Responses to “Sony in Trouble/Wii could cause new-gen HD gaming to faulter!”

  1. Wow! Yahoo! The April price drop has been predicted for months and it looks like Sony is getting some serious heat to do it even if they can’t afford to. The global recession has come at a bad time for Sony, in this economy it’s probably not good to be the most expensive console. Personally I hope it drops by at least NZ$150. Then I would just have to wait for Play TV to come out and I would think about throwing down some cash. I think they will still have a strong 2009. They seem to be building momentum but probably haven’t got enough growth to move out of third place this year. I can see where the third party publishers are coming from. Games are developed on PC’s then ported to 360 and PS3. It is harder and takes more development resources for the PS3 conversion and a smaller installed base means they make less money on the PS3 versions all round. I suspect that is why they are squealing at the moment. I wonder what exactly “relocation of development resources” would mean? It’s a bit vague. I’m positive they won’t stop porting multi platform games to PS3 altogether….and I don’t think they would release shoddy ports either. But it does seem to be what they’re threatening?! I guess the thinking is that if they can get Sony to drop the PS3’s price and increase the installed base, the subsequent greater game sales would offset the higher development costs. Problem solved 🙂

    As for the Wii…. good luck there guys, third party publishers don’t get a look in!! Nintendo published games totally dominate the best seller lists . With such a large installed base there is definitely huge opportunities for the third party publishers and I’m surprised that none have been able to take full advantage of it yet. Sounds like some of them are about to start trying harder which will be good news for Wii owners 🙂

  2. I guess it’s just basic math. Sony and Microsofts numbers combined is about 50 Million world wide. Nintendo Wii, with no (lasting) signs of slowing down, is around 48 Million. I would say the developers (mostly) see Xbox and PS3 as the same from a dev point of view, as in you can dev a game and reasonably easily put it on both those systems without the kind of massive rejigging required to get it on Wii. And you need to because HD dev is expensive so you need to recoup the costs with as higher sales as possible. If these two systems COMBINED have a smaller install base than the Wii alone then it makes sense for companies to put their dev resources into Wii especially when Wii dev is cheaper (you’re just dealing with one system for starters). Even if the third party games don’t sell as big as Nintendo games (nobody on any system sells as big as Nintendo so it’s a moot point) the dev costs are lower and the potential for sales is greater, you just have to make GOOD games which they are currently struggling to do (average Wii review score on IGN was under 5 out of 10) because they don’t take Wii seriously. RE4 almost sold 2 million units and it was a port that had been on two other systems before but it was a GREAT game so it sold and sold well. Now if you want to keep dev’ing HD games then you need the combined HD install base beyond that of Wii for it to make sense to put your resources there and I think Microsoft are doing EVERYTHING in their powers to grow their install base. They have slashed the price to the bone and beyond so I don’t think they have much more potential for the kind of growth that’s required. Therefore the pressure is on Sony who probably could grow their install base if they would just drop the price. This would in turn increase the overall HD base and I guess the developers need it to be significantly bigger than the Wii base to be able to justify the higher development costs and the cost of porting / coding for two very different machines. Sony, on the other hand doesn’t want to lose more money than it is already and they can see that even with massive price cuts the Xbox didn’t exactly massively increase their sales recently and Sony doesn’t have Microsofts deep deep pockets to be able to do such a thing for potentially little gain in sales. However if the industry are actually going to hold them to ransom over it they wont have any choice? We live in interesting times.

  3. In related news, the Wii could be set for a price increase in the UK, due to the crappy pound…

  4. roscopct Says:

    Very bad news for Sony methinks. Surprising that the Wii has such a huge market share?!

  5. In some ways I call BS though. I mean come ON!? Last gen the Gamecube and Xbox sold a total of about 20 MILLION consoles each in their ENTIRE product life cycles and there were tonnes of games developed for them (and gamecube was profitable for Nintendo even though they expressed disappointment at the numbers). Sony sold well over 100 MIL PS2’s by comparison (and continues to sell, reaching 140 MIL). This gen the Wii probably will manage to pull of “a PS2” and sell over 100 MIL (they’er easily outpacing the PS2 sales curve) I would say that the PS3 and Xbox 360 will still sell at least 40-50 MIL each (in their lifecycle) which just means the market has grown overall and how is that a bad thing?! In it’s first couple of years the PS2 sold about 24 MIL, the PS3 had sold over 15 MIL. So about 2/3 the sales in it’s first two years but it’s 2/3 the sales of the biggest selling console of all time?! I don’t think that’s such a terrible state to be in?! So yeah, I call BS. EA have always wanted a one console environment. It would make their life easy. But it’s a stupid pipe dream. Who’s gonna decide what this one console should be like?

    Sony just want to stay profitable I’m sure and more consoles sold doesn’t mean more profit if you lose hundreds more on each one sold just to do it. If publishers stop publishing HD and go all out Wii then we’re back to the late 80’s when Nintendo was basically a monopoly and maybe that’s what publishers really want. A one console, no brainer, development environment?! But that’s a bad state of affairs for consumers.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: