The Great PS3 Debacle - are new sales numbers telling the real story?

[rabbitc]

The Editor Gets a Playstation 3--for Movies - Opinions by ExtremeTech

Sony's paradox machine created a black hole and that black hole is starting to get bigger. Last months sales reported an estimated 405,000 units sold in North America (as reported by NPD) yet only one game, Metal Gear Solid 4 made it to the top ten list. Yes, it was #1 - but there's interesting issues with this whole scenario.

First off, MGS4 only sold 775,000 units which some consider a bit on the low side considering the hype it received. After all, MGS4 was 'THE' game for the PS3 leaving two years of anticipation in its wake. No one will argue that 775k is a bad result - but is that the result that Sony really expected for their #1 candidate?

Second, we have this whole 'is it a console or a BD player' problem - and what we DO know is that Blu-Ray is taking off bigtime. Home Cinema news is reporting that blu-ray sales have exceeded 350% over last year's HDDVD and Blu-Ray sales combined. Home Cinema News

As the market shows confidence in the new format - consumers are investing in players and are researching hard to find the best blu-ray player, updated with all the audio and video codecs and providing the best value for money: you guessed it, the PS3.

This poses a bittersweet problem for Sony. While the end result is selling more PS3's (undoubtedly a good thing) - it is confirmed that many PS3 sales are attributed to exclusively to home cinema junkies who have no interest in playing games whatsoever - and percentage is increasing.

In fact - I recently chatted online with one of my old colleagues from the Retail Electronics trade: Mike Osadciw. Mike is still quite involved in the industry although more from an editorial point of view. He conducts regular reviews of home cinema equipment from low/mid to high-end offerings - and despite testing some Blu-ray players venturing into the thousands of US dollars, even Mike admits that there's no reason to look anywhere else but a PS3 if you are seeking the best player on the market.

You can see Mike's setup here: THE HIGHEST FIDELITY
(scroll to the bottom for the pictures)

I trust Mike's opinion - because quite frankly, apart from the fact that he is my friend, I am unaware of anyone who is more informed on the home theatre market than he is. He even runs a small business professionally calibrating displays to industry standard for videophiles. Point being: Mike will tell you all sorts of great things about the PS3 apart from one thing- gaming. He doesn't (and probably never will) own a single PS3 gaming title.

So while Sony is definitely raking it in right now - blu-ray is doing well and the PS3's are launching out the door. The big question in my mind is: in terms of gaming, is the PS3 as successful as Sony would like us to believe? If the number of PS3 purchases for home-cinema related use are at a measly 30% (which is where Mike think's it is right now) - that means that Sony only beat the X360 by 100,000 units in June - a month that the PS3 was expected to smash everyone else with MGS4's release. Not so impressive.

Many say that you can often tell the true story by the attach rates, and without sounding fanboyish about it, Microsoft is quite right to promote the fact that their games outsell PS3 2:1.

Reality is: no one is in any danger anymore. All three consoles have solid install bases and will stay strong until the next generation - but it does beg the question: what happens to the PS3 when a better standalone Blu-Ray player suddenly becomes the cheaper option?

[Ultramafia]

i was watching a history of video game consoles on msnbc last night. you know it really is funny how console makers consistently lose money on their systems. Microsoft was losing millions of dollars every quarter on the original xbox. I think sony built there initial install base on bluray, junes numbers showed a DRAMATIC increase in console sales in the united states (even more than the 360) and the main reason for that MGS4. Your friend has never owned a game but thats because theres been no reason to own a game until june 12th. which in reality MGS is not everyones cup of tea. I just see it the same as when xbox came out. ps2 had the game library and xbox was losing bad. I payed 600 dollars for my original xbox bundle, people bitched about the price, just like they do with the ps3. It will come around the price will get lower the game library will get higher and the market will even out. Just my take, but great post rabbit.

[rabbitc]

Your friend has never owned a game but thats because theres been no reason to own a game until june 12th.

...and yet they only sold 775k units in the US????

It will come around the price will get lower the game library will get higher and the market will even out. Just my take, but great post rabbit.

Actually - I tend to agree - I think pricepoint is critical and the PS3 hasn't quite hit that lucky number yet. Problem is - there's pressure on Sony not to drop it too fast because the current price is already hurting BD partners who don't have the resources to dump the market with players below cost.

I don't think that anyone can argue that the PS3 is anything but a complete success (and will continue to be) - but beneath the surface, I think Sony has seriously damaged confidence with technology partners to the point that - if Sony ever does attempt to head up a replacement for BluRay - the partners will be few and far between.

Sony has, through genius or folly, created an incredible product that seems to be performing well in two completely different market sectors...but I think they've lost a lot of friends in the process - especially Panasonic and Pioneer. That's not a good thing.

[blu_yu_away]

Nice post Rabbit. I purchased my ps3 mainly for MGS4 and some other exclusives coming out in the future. I have a rather large collection of dvds and do not plan on purchasing blu ray until they are cheaper (with the possible exception of repurchasing a few of my favorites). In my opinion MS has a much better selection of exclusives out now and releasing soon; Gears 1 & 2, Mass Effect, Fable 2, Halo3 (although I'm not a fan) all come to mind. Historical Sony exclusives seem to be dropping like flies as well with GTA and Final Fantasy going multi platform. With the high cost they spent on the system development, Sony doesn't seem to have enough money to secure an exclusive library like MS's. Add in the fact that most multi platform games play and look better on 360 and with the exception of a few exclusives (MGS4, GT5 prologue, Drakes fortune, etc) no games seem to really get the most out of ps3. With all of this, it is really no surprise that Xbox360 is the system of choice for gaming while the ps3 remains a home theater powerhouse.
In my opinion, Sony has a much stronger lineup of announced exclusives in the woodwork; God of War 3, GT5, MAG, Killzone 2, Infamous, Little Big Planet, Heavy Rain, etc. The problem with most of these games is that they do not have a release date and many could be well over a year away. Microsoft most likely has a slew of unannounced exclusive titles to combat these. All of this could change as developers get more and more comfortable using the ps3. The system itself has incredible untapped power. I could see that eventually most cross platform games being developed for the ps3 and ported to the 360 rather than vice versa (we'll have to see how FF13 turns out). This would end the era of cross platform games being inferior on ps3 and would entice more dual platform owners to buy for ps3 over 360. In the end, all the talk about how powerful the ps3 doesn't matter when it is not being harnessed. Exclusives are the only games that truly showcase the power of the ps3. Because of this, Sony is desperate for a larger selection of triple A exclusives.
As for the price, with the announcement of the new skus I feel that the ps3 is clearly the better deal. $350 for a 60gb 360 compared to $400 for the 80gb ps3 which includes the blu ray drive. I think MS is making a huge mistake with this decision as I feel many people will be swayed from buying a 360 in order to get a ps3 for only $50 more. Also, there is still a HUGE number of people still playing last gen with their ps2's. Ps2 has a massive game library that continues to grow while the system continues to sell. Many are unlikely to upgrade until ps2 production is phased out, and when they do many will retain Sony loyalty. Add in the fact that the playstation network seems to be making huge improvements while remaining free and the system may begin to appeal to those gamers who mostly play online and have preferred xbox live. Also, the 775k only included standalone copies. If the bundle is included sales were over 1 mil.
Gamasutra - MGS4 Dominates June NPD, Drives PS3 Sales