Sony’s decision to delay the launch of the Playstation 3 console from spring to November has given Microsoft’s Xbox 360 time to gain a bigger foothold in the gaming market.
Sony announced plans for the PS3 last May with much fanfare, but then they went unheard for months, giving Microsoft the opportunity it was looking for to steal the spotlight with the Xbox 360. The Xbox 360 launch was filled with as much laughter, tears, and heartache as any daytime soap opera, and Microsoft has been able to make this noise because they are currently uncontested: there is no competing product for the Xbox 360, and won’t be for most of this year.
Microsoft knows when it rules the roost, and they know how to play for keeps. They have publicly stated that the third installment of their most profitable franchise, Halo, will be strategically released to compete with the Playstation 3. Industry insiders have confirmed that Halo 3 is already completed and ready to ship, but Microsoft was holding off until spring. Now it appears that Halo 3 may as well be vaporware, because in all likelihood Microsoft will delay its release until November.
Sony promised a spring 2006 launch, but as the winter thawed, the $11 billion video game industry started to grow impatient. Key game developers were even being kept in the dark of the PS3’s status… until last Wednesday in Tokyo when Sony’s game unit President Ken Kutaragi announced that Sony’s killer console would be pushed back to November.
This news arrived just before the Game Developers Conference in San Jose, California, and will certainly be the hot topic. Sony is expected to deliver an address on this issue at the conference.
There are many key items that still have big question marks. Right now all we have is speculation, but we can piece together the answers from what we know.
What will the PS3’s launch price be?
Industry analysts predict a $400 to $500 price point, more than even the Xbox 360’s enhanced system. These analysts also predict the Playstation 3 will cost $900 to make. The silver lining to this delay is that it will give Sony time to bring production costs down, but also increases the time before the PS3 becomes profitable.
Will there be an online community?
There better be, if Sony intends to actually stay on top. Microsoft knew what it was doing with the original Xbox and Xbox Live; they were cornering the marketplace, strategically setting the stage for the real battle which has already started to unfold. Sony actually compared the Playstation 2 to “the Matrix” when hyping its online depth, but online play hasn’t even been a footnote in the entire Playstation 2 lineup. Sony had better have a solid multiplayer framework ready in November, or the PS3 will likely go the way of the Sega Dreamcast.
What home entertainment features will the PS3 have?
Sony is reportedly aiming to digitally distribute movies, games and other content to the console via its online community. Sony has control of many aspects of the recording and movie industries, and can probably strong-arm entertainment distributors the same way Microsoft has a grapple on the technology industry.
Microsoft has already started to distribute movie trailers on Xbox Live, and has been in bed with DirecTV and Comcast. It is speculated that additional Xbox 360 “living room” features will be unveiled (like PVR functionality), but Microsoft is probably waiting to reveal these so Sony cannot counter with its own implementation.
Microsoft was expecting Sony to say anything over the holidays to prevent people from buying the 360. Xbox chief Peter Moore told reporters in January he was baffled by Sony’s silence. Industry insiders believe that this silence was a “poker play” to lead consumers to believe that the PS3 release was just around the corner. In the meantime, Microsoft is still on track to sell over 5 million consoles by June.
Sony’s delay doesn’t mean Microsoft can relax; they are still trying to crank out as many Xbox 360s as they can. Micorosft’s Steve Ballmer was quoted as saying “The first console to reach 10 million units has been the market leader for that generation.” Sony’s delay will definitely give Microsoft a sizable head start towards this goal… but being first doesn’t necessarily ensure success in the gaming market…
Remember the Sega Dreamcast? It also beat Sony’s Playstation 2 to shelves by almost a year, but Sony countered with better hardware, more developer support and major cash. It is possible that Sony can deliver a system with higher technical specifications, but the rival companies are now equally matched in terms of developer support, and don’t even get me started on how much cash each company has to throw down. November will bring us the most brutal bout between two heavyweights – and it’s pay-per-view, baby!
Sony is planning a major worldwide launch, debuting in Japan, Europe, and North America on the same day, which would be an industry first, and the industry is skeptical Sony can pull it off. Microsoft launched the Xbox 360 in these same regions within weeks of each other, but had supply problems and still hasn’t fully recovered.
Looking at the technical specs, one can assume the consoles will have about the same amount of power under the hood, but Sony is including their own Blu-Ray high-definition DVD player. The Blu-Ray technology is expensive to produce, and is reportedly the main reason for Sony’s delay. Microsoft has announced an external HD-DVD drive for the 360 using similar “blue laser” technology, and will be released sometime this year.
The PS3 is the center of Sony’s next-generation entertainment strategy and is also the core of Sony’s financial future. The success of the Playstation 3 will determine the success of Sony, as they have struggled to remain profitable for the past two years. Sony has a goal to reach 5 percent operating profit by 2008.
Here are the facts facing Sony and its Playstation 3:
Sony is unveiling a console a year after its key rival, introducing a brand new video format, building an exorbitantly expensive unit, and still hasn’t figured out the Internet…
You can just about trace the path of the downward spiral.