Wednesday, July 18, 2007

Advice for Sony's PS3 Division

I can't help but wonder what Sony is up to with their PS3. If you haven't been following gaming news lately (don't worry, you're not alone), Sony isn't doing so well with the new generation of consoles. Basically, their consoles are not selling nearly as well as what Sony expected. It must be hard going from the number 1 console to last place in the industry. Sony came out with the most graphically advanced and most expensive system. Unfortunately, gamers are struggling to justify spending so much money given the other options in the market. After months of watching, without being in the board room, here's what I think Sony should do.

First of all, a price reduction is not the answer. Unless Sony has market research showing that dropping their price 20% will given them a 100% increase in market share it probably isn't worth the gamble. Besides, Microsoft can easily match any price war Sony wants to start - and nobody should mess with Microsoft when it comes to finding out how deep in the pockets you're willing to go (yes, I do think Google is playing a risky game too with Microsoft). Instead, Sony should focus on what makes them different and help gamers justify the high cost of their system.

Focusing on something different needs to go beyond Blu-ray and "amazing graphics" because gamers already know that. Sony needs to start sharing a different story to peak gamer's interest again. The only real place to do with this with games. How will great games played on a graphically superior console benefit gamers that no other system can match? Talk about the games.

Here's a crazy idea. Instead of dropping the system price by $100, give the money you were willing to give up to companies like EA and Rockstar to help them fund game development. Those companies want to produce games that will earn them the most profit, which is a factor of that console's install base, gamer's ability and willingness to purchase the game and their development costs. (price x volume - costs = profit). If Sony can decrease developer's costs, they will be willing to spending the time to make better games which will ultimately increase the number of games sold. True, this is also like giving a price reduction to software developers, but this is a gamble to spur on innovation which will lead to purchases.

Sony, if you're reading, continue to take the high road with better games. Don't just give up on that dream and play the cost game. At the same time, spend more money/time doing research to find out which gamers you want to serve and be happy when you win them instead of simply going for the whole market.

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