Wednesday, September 26, 2012

Console Post of the Week: the New Sony

That post title is a joke, obviously.

Someone e-mailed me last week and asked questions about Sony's "day and date" digital download strategy.  Sony had been releasing a few major titles (Borderlands 2 and Dead or Alive 5 in particular ) for download on the same day they were available at retail, and it looked like they were trying to expand the program.

Initially, it seemed pretty bright.

First off, Gamestop is remaking itself into less of a game store and more of an Apple used device reseller. And they're not stopping there.  This is particularly interesting:
In March, GameStop purchased for an undisclosed sum. The website calculates the price of used cameras, smartphones, and thousands of other gadgets, then offers to purchase them from the user. “It gives us an Internet opportunity for people to trade with us, and a place where we can cherry-pick devices that will be sent back to the brick-and-mortar stores,” says GameStop President Tony Bartel.

Gaming companies have always had a complicated relationship with Gamestop--a retail booty call that wound up giving them a used game STD. But  Gamestop's percentage of the new game market seem to prevent punitive action.

Now that Gamestop is moving away from games, though, a savvy company might see an opportunity to grab a bigger piece of the distribution pie.

Then Sony announced a new PS3 model at TGS last week. The "ultra-slim" PS3 has two flavors: one with a 500GB hard drive, and one with 320GB.

 I've been saying for years that these companies are idiots are not selling systems with huge hard drives, then selling them gigantic amounts of content to fill up those drives.

Easy, right?

My basic premise was that the ideal strategy was to sell the console as cheaply as possible, get as many units out there as possible, and then sell the hell out of downloadable content. Movies, games, music--everything.

For about thirty seconds, that's what Sony seem to be doing. Then I saw the prices: $270 and $300.

This console launched almost six years ago, and now they're actually raising the price, because the old 160GB unit cost $250.

Awesome strategy.

Even better, here's a great explanation (from Sony America VP of marketing, handhelds and home consoles John Koller):
There's no price drop formally, but the thing that's been happening in the market over the last year or so is that there's been so many retail price promotions, and so many different gift card offers and all those things, being done by all of us (Microsoft, Nintendo and Sony), that we've heard from our consumer, 'Enough with all these weird price moves. What we really want is content and games and value.    

Even after six years of almost uniformly huge losses(eight, really, because the two years before launch had huge write-offs for PS3 development), Sony is still willing to call bullshit goldenrod.

This means they've basically folded for holiday 2012. Oh, and no Vita price drop, either. Even smarter, because Vita is just flying off the shelves like hammers.

Now Sony did officially announce the day and date program, called PSN Day 1 Digital
yesterday, and here's the list of day one games for fall: Resident Evil 6
NBA 2K13
DOOM 3: BFG Edition
007: Legends
Medal Of Honor: Warfighter
Need For Speed: Most Wanted
Assassin’s Creed III

That's a nice list, and you get the honor of paying $59.99 and having no resale value if you want to dowload those titles. Oh, but if you're a Playstation Plus member, you'll get a 10% discount on some of these. Whoo!


Allow me to mention this one more time: publishers who have been telling us for years that games would be so much cheaper if piracy and used games didn't exist are lying. Pricing is a mechanism that is almost completely separated from either factor. Instead, pricing is a tool that some companies (Steam) use highly effectively, and others (Sony) butcher.

What is left of the Sony brand at this point? They're not leading any market in anything (well, except Financial Services--they're kicking ass there), and they're not competing on price. They're run executives in and out, but nothing's really changed.

Prediction: at least two major revisions to expected fiscal year results in the last six months of the fiscal year, and those revisions (combined) will be downward by at least 1 billion dollars.

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