Monday, March 23, 2009

Console Post of the Week: Brass Tacks

To review, here are the February NPD's:

There are plenty of ways to look at that data, and if you're Sony, they're all bad. PS2 and PS3 sales combined, which have been a hallmark of post-announcement PR spin, were down 35% compared to 2008. PS3 sales were roughly flat (276k vs. 281k in 2008), but in February of 2008, PS3 unit sales accounted for 29% of next-gen (360, PS3, Wii) console sales. This year? 19.4%. So Sony's PS3 sales stayed flat in a month with much higher next-gen unit sales overall.

Oh, and PSP sales? Down over 18% in February compared to last year.

Combined, and there's only one word to describe that: freefall.

Here was Sony's response to the NPD numbers, and I'm quoting it in full because it's quite remarkable:
In February, we had a tremendous kickstart to what promises to be another record year for the PlayStation brand with the launch of mega blockbuster hit Killzone 2, which ranked in the top 5 with only two days of sales in February and has been garnering extraordinary reviews, and a noteworthy 92 Metacritic score. We have no doubt this game will deliver a next gen experience and will be responsible for driving hardware sales throughout the year. You can also expect an onslaught of unmatched entertainment offerings to hit across our platforms, such as genre-leading PS3 titles like MLB'09: The Show and inFamous, and new content via the PlayStation Network like movies and TV shows from NBC Universal, and an unprecedented line-up of third and first party exclusives to hit the PSP. We have no doubt 2009 will be another year of continued momentum and we remain confident in delivering the best entertainment experience to our consumers.
— Peter Dille, Senior Vice President of Marketing and the PlayStation Network, Sony Computer Entertainment America

Why is it remarkable? Because even though Sony has used a dizzying array of misleading comparative methods to always claim success, they didn't even mention hardware sales in this statement. Sales were so bad that they couldn't even put a party dress on the pig this time.

What Peter Dille didn't say, and couldn't, is that one of their biggest titles of the year--Killzone 2--didn't move much hardware at all. Last year, January sales for the PS3 (269k) were roughly 30% higher than this year (203k). Let's say that, absent Killzone 2, the same trend would have continued in February. If it had, then the PS3 would have sold about 197k units.

Again, this is absolutely one of the highest-profile exclusives that Sony will release this year, and it moved 72,000 extra units of hardware? That's it? And yes, that's a very quick and dirty comparison, but even if Killzone 2 moved an extra 100,000 units of hardware, that's still a very low number.

This isn't working.

Look, the PS2 wasn't a hardware phenomenon. Even after all of Sony's staggering boasting about the incredible power of the console, the original Xbox, released 14 months later, was more powerful. What Sony did so brilliantly with the PS2 was manage price points and gain developer support.

Ironically, those are the same things they're botching so badly right now. They've made the same claims about the incredible power of the PS3, but if it's more powerful than the 360, it's only a marginal difference. And it should be more powerful, because it was released a year later.

Sony also seems bound and determined to piss off developers and publishers. Read this and start scratching your head:
Until October 1 2008, video game publishers who wanted to offer downloadable content on the Xbox 360 and PlayStation 3 didn’t have to worry about getting a bill from Microsoft and Sony.

The million-plus downloads that a popular demo or map pack might receive could delight gamers, but rack up some expensive bandwidth costs. No problem: the publishers, who already pay a licensing fee to get their games on the two big platforms, could count on the platform holders — Microsoft and Sony — to pay the cost of piping that digital content to gamers.

That situation changed with the PS3 on October 1 of last year, when Sony implemented a 16 cents per Gigabyte fee to publishers for paid and free downloadable content, according to publishing sources familiar with Sony’s policy.

Game publishers are not happy about it.

Well, no shit they're not happy about it. Because it's insane.

Sony's squeezable parts are in a vice here. The PS3 is a sinkhole, financially, and I'm sure that marching orders have been given to reduce losses (turning a profit, for now, seems like a fantasy). Without a significant price cut, though--and by "significant" I mean $100--they're just going to continue bleeding to death.

It's like I said a few weeks ago: start off way behind on cost, and the entire generation will be spent trying to catch up.

I will be shocked if Sony doesn't announce a price cut by the end of April in the U.S. No matter how much money they're losing, I don't see how they have a choice. Here's how it should play out: Sony executives (in the process, almost always violating the prime directive of interviews) will continute to talk about profitability and how they're being "responsible." They'll act outraged when people mention price cuts--what, for the console that came to us from ten years in the future?

Then, out of nowhere, they'll announce a price cut, and those exact same execs will be giving interviews saying "We're bringing THE PAIN, bitches!"

What about Microsoft? Their January/February sales totaled 700,000 this year compared to 485,000 in 2008. That's up 44%. In other words, their most recent round of price cuts are still working.

Nintendo is still moving hardware at an absolutely obscene rate, but I'm growing increasingly concerned about the software side of the equation. Motion Plus, which adds exactly the kind of precise motion-sensing capability to the Wii that we all want, was announced in July of last year. We're almost to April and it's still not here? WTF?

This has run so long that I'll have a separate post about Japan tomorrow.

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