Fortune Magazine: How Nintendo is beating Sony and Microsoft

[John Crichton]

I think it's all about the games for the hardcore AV consumer. These are the people console launches are catering to by design.

The big event, the waiting for days in line, the hype, the high price, for a certain type of hardcore AV consumer, these are all features not bugs. They are one of the elite few.

But eventually, consoles have to appeal to a mass market beyond these people. This is why the prices fall. The 360 will not stay $400 forever. That's a sign that it needs a lower price point for a broader market presence.

Also, it's about time. The PS2 had its first price drop at 20 months. The 360 has been out for 19. So Christmas this year would be about when a price drop would be expected.

The PS3 is clearly realizing they were too high, thus the correction after only 8 months. They thought their brand and their hype machine (which is truly stellar if you think back to the PS-Dreamcast days, the Sony hype machine killed Sega more than the relative merits of the two consoles imo) would be enough for them to say "this is a Rolls-Royce, you know you want it, it's the elite".

But the 360 was stronger than they expected, and the Wii caught Sony completely by surprise and the market they thought they would be releasing into just wasn't there.

Also, the Japanese gaming market has fundamentally shifted toward casual games. This is why both the 360 and PS3 are and will continue to struggle there.

I can't say that I disagree or agree strongly on any points. I will say that the high-price of the PS3 was certainly by design and a brilliant move (you may recall I said the same thing at/before launch). People pay a premium for these new consoles and Sony might as well just take their cut rather than let the ebayers rip people off. The problem is the continuing lack of any real system selling games to get them to Holiday Season 2007. I fully expected Sony to drop the price within the first year as $600 is way too much to keep a console priced at.

Honestly, I'm surprised in the slightest by anything that has happened with the PS3 so far. With the singular exception of not releasing anything but Motorstorm or Resistance worth owning so far (read: Where is the killer action game?).

Yeah, I almost wonder if Sony will at some point just stop licensing PS2 games in an attempt to force an upgrade. Right now the Wii is serving to keep the PS2 in even better shape, since a lot of Wii games are being ported to the PS2.

To me, this is another sign that Sony made a huge blunder. When the PS2 was released, it seemed like time for an upgrade. But I don't think desire for a technology bump, HD, Blue Ray etc had reached anywhere near the critical mass they thought it had.

Does this mean I think the 360 was a mistake too? No. MS needed to do something radical to try and further erode Sony's market share and a technology bump is a good way to do that. But the number of consumers looking to drop $400-600 dollars on a console is very, very small, certainly not enough for TWO companies to be successful there.

This, I agree on with an addendum. I don't think Sony is making a mistake here. Just like I don't think it was a mistake for MS to release the 360 when they did at the price they are selling it at. MS needed the head start and Sony couldn't wait any longer on the PS3. MS made a crummy console and should have spent more money and a little time on QA. The numbers for the extended warranty and the dollars they are losing are staggering.

The PS3 can take the hit of not being a big deal for a year due to the success of the PS2 and PSP. They are still making money off those systems and the PS3 will sell to the higher-end consumer at the current rate. The PS2 is kicking around about as long as I expected and it may go even longer, which is a surprise. It may continue to do well beyond Holiday 2007 if the trends continue. Walk into a gamestore (or the games section of Walmart/Target) and I see that the system is still a big presence. It's eerie!

So, the PS3 doesn't have to be a big deal right now. Sony still has a margin of error. Now, when the big hits do come and the system is around $400 and still is selling badly, then they should really panic.

The Wii showed that people were quite content with the PS2. Wii games look a *little* better than PS2 games and have an added sense of novelty.

I don't think anyone need the Wii to show how great of a system the PS2 was. It's quite possibly the best console of all time in terms of overall game selection.

 

[John Crichton]

Well, basically I think the known big PS3 system sellers (most notably FFXIII and MGS4) aren't going to drive any more console purchases than the known big Xbox 360 system sellers (most notably Halo 3, Mass Effect, and Bioshock), and that a $500 price point is still too high for most people who already have a 360 (or even a Wii) to think about picking up a PS3.

I think I already said something to the effect of this before, but yeah, I don't expect the PS3 to surpass the 360 with just two big hits. The system that consistently pumps out quality games that cover every major console genre (I exclude 4x & RTS games from the long list) will win this console cycle. I believe Sony has the edge here based on history and partnerships with many Japanese devs. The PS3 is also built to last for at least 5-6 years and games will look and play better as time goes on. The way the 360 is going, there will continue to be excellent games for it but people will need to see more than a smattering of RPGs and lots of racing/FPS games. GTA and Resident Evil 5 being on both consoles helps MS, for sure.

 

[Arnwyn]

In any case, the PS3 price drop is good news for consumers - especially Canadians. M$ has been ripping Canadians off for quite a while (Sony has always appropriately priced here), so the competition looks good.

Current prices:

360 Elite = $550
PS3 = $549
360 = $500

(Yeah, there really is that dollar difference between the Elite and PS3 here...)

M$'s consoles are overpriced by ~$60 here.

 

[Ankh-Morpork Guard]

In any case, the PS3 price drop is good news for consumers - especially Canadians. M$ has been ripping Canadians off for quite a while (Sony has always appropriately priced here), so the competition looks good.

Current prices:

360 Elite = $550
PS3 = $549
360 = $500

(Yeah, there really is that dollar difference between the Elite and PS3 here...)

M$'s consoles are overpriced by ~$60 here.

Analysts have been saying they're expected to see Microsoft also announce a price drop. Seems kind of soon to me with the Elite having just came out, but I don't think it would really surprise me.

Being the middle of the road price-wise isn't doing badly for them.

 

[Ankh-Morpork Guard]

http://www.gamespot.com/news/6173911.html?action=convert&om_clk=latestnews&tag=latestnews;title;0

And now it looks like Konami is considering a multiplatform MGS4, even AFTER the price drop for the PS3. If that happens, it really could just murder the system. Game wise, that would really leave only FFXIII, as even the next Katamari has been moved(apparently, the PS3 version was CANCELLED in favour of a 360 and Wii version).

 

[John Crichton]

http://www.gamespot.com/news/6173911.html?action=convert&om_clk=latestnews&tag=latestnews;title;0

And now it looks like Konami is considering a multiplatform MGS4, even AFTER the price drop for the PS3. If that happens, it really could just murder the system. Game wise, that would really leave only FFXIII, as even the next Katamari has been moved(apparently, the PS3 version was CANCELLED in favour of a 360 and Wii version).

I thought they were already mulling it over, but that could be just my mind already assuming every dev is already doing it behind closed doors, if not publicly.

 

[Vigilance]

I thought they were already mulling it over, but that could be just my mind already assuming every dev is already doing it behind closed doors, if not publicly.

I'm sure they've been talking about privately. I think mentioning it publicly is a ploy to see if Sony will pony up some cash to keep MGS4 exclusive.

 

[John Crichton]

I'm sure they've been talking about privately. I think mentioning it publicly is a ploy to see if Sony will pony up some cash to keep MGS4 exclusive.

Hmm, could be true. Not a bad tactic.

The industry certainly seems to be going further down the route of console makers buying developers outright or sinking big money into shares of the company and the like. It's probably the only way any console maker will be getting exclusives later in this generation and beyond.

 

[Ankh-Morpork Guard]

http://www.gamespot.com/news/show_b...vert&om_clk=latestnews&tag=latestnews;title;1

And now a twist on the PS3 Price drop.

Sure, the 60GB is going to be cheaper and the 80GB is coming out at the 'old' price of $599, but it looks like the 60GB is being phased out completely in North America, meaning its not really a price drop at all.

 

[drothgery]

http://www.gamespot.com/news/show_b...vert&om_clk=latestnews&tag=latestnews;title;1

And now a twist on the PS3 Price drop.

Sure, the 60GB is going to be cheaper and the 80GB is coming out at the 'old' price of $599, but it looks like the 60GB is being phased out completely in North America, meaning its not really a price drop at all.

Looking back on what Sony's done in the console industry since the PlayStation launch, it seems more astonishing that the PS2 was a success than that the PS3 is, at best, off to a very slow start.