Technologizer

Here’s a tidbit from Sony’s recent investor conference call that everyone but TotalVideoGames apparently missed: The Playstation 3 is roughly 70 percent cheaper to build than it was at launch.

This is according to Nobuyuki Oneda, Sony’s executive vice president and chief financial officer, who provided the figure when pressed by investors. More than any of the rumors we’ve been hearing ad nauseum for months, this is the best indication that the Playstation 3 will have a lower price tag this fall.

Nonetheless, it was only a few weeks ago that Sony’s chief executive, Howard Stringer, said the company would lose money on every console sold if the price were lowered. Both claims can’t be right, so one of these Sony execs doesn’t have his facts straight.

Sony hasn’t disclosed the PS3’s original manufacturing cost, but a couple estimates have pegged the number at $800 at launch, dropping to $400 in January 2008. iSuppli’s estimates from last December said the console costs $448.73 to build, so there’s room for error in the unoffficial estimates.

But let’s just say the PS3 build cost was $800 per unit initially. Knock off 70 percent and you’re left with $240 per unit. That means Sony not only gains from each console sold at $400 each, it can afford to bestow the now-mythic $100 price drop and still profit.

Not that a price cut would surprise anyone. Game publishers have on several occasions raised their cries for a cheaper PS3 to a crescendo. The logic says more console sales equals more game sales, but Sony has always insisted it can’t take the hit up front.

The problem is, both console sales and software sales were down last month, and Sony is taking huge losses. There will eventually come a point where it’s more economical for Sony to invigorate both sides of the equation than to keep maxing out earnings on console sales alone. I think that time is coming sooner than later.

Sony likes to boast that it’s selling “future technology” in the Playstation 3, but let’s be honest, most games hardly show it.

An exception could come from Doom 4, a distant release that will apparently take full advantage of the PS3’s Blu-ray discs. In a Game Informer interview (via VG247), id Software’s John Carmack said the game will “almost certainly” be split into three DVDs for the Xbox 360, while the PS3 version will only require one Blu-ray disc.

This, I think, is more important than any advantage you might see in graphics. Give me a big-screen HDTV, and I’ll generally be pretty happy no matter which console you put in front of me. Making me get up after a cliffhanger moment to swap out discs — twice — is a different story.

The Xbox 360’s inability to store everything on one disc poses other challenges if games begin demanding more storage space. Carmack said another upcoming id game, a racing and shooting adventure called Rage, will need two discs for the Xbox 360 version, but still just one for Blu-ray. It would’ve been easier to split Rage in thirds for the Xbox 360 version, Carmack said, but the game is designed around two major wastelands, so three discs wouldn’t work as well.

Now, think about non-linear games, such as Grand Theft Auto. I can’t say it would be impossible to split this kind of adventure into several discs, but it could be problematic unless each disc contained the entire game world.

On the flip side, Carmack said programming for the PS3 required much more “sweat equity” than the Xbox 360, despite its lack of size constraints. But if game developers someday embrace the roominess afforded by the PS3’s Blu-ray discs, Microsoft will find itself at a real technical disadvantage.

Thanks to a partnership with Netflix, Sony Electronics’ Internet-capable Bravia televisions will be able to stream Netflix movies starting this fall.

That’s great news for Bravia owners, but I want to know whether Sony ever intends to bring Netflix to the Playstation 3. The odds of finding out for sure are admittedly slim, so let’s take a look at what’s been said to determine the likelyhood:

The chatter began last year, shortly after Netflix came to the Xbox 360 as part of a major interface update. John Koller, director of hardware marketing for the Playstation, told GamePro in December that the PS3 would focus on rentals and downloads. He cited a focus group in which participants weren’t enthused about Netflix on the Xbox 360, because they could just as easily watch movies on their laptops. Sounds fishy to me, but for our purposes it’s a vote of no Netflix interest on Sony’s part.

In February, Sony got downright nasty, responding to Microsoft’s boasts of one million Netflix sign-ups on the Xbox 360. In a rebuttal, Sony passed around a list of bullet points explaining why its service is better. Chalk this up as another sign Netflix isn’t coming to the PS3.

But then, there were some glimmers of hope. March saw a survey asking Netflix subscribers whether they’d stream to their PS3s if all it took was a $10 streaming disc that somehow handled the job. The next month, a Netflix job posting sought an engineer to build out the service on gaming consoles, prompting a Netflix spokesman to say that “for now,” console streaming is exclusive to the Xbox 360. Finally, in May, another Netflix survey appeared, but without the $10 streaming disc fee, and with the possibility of Wii streaming as well.

Which brings us to today. The stars are ever-closer to aligning, but there are barriers. For starters, we don’t know whether Microsoft has Netflix locked in an exclusive console arrangement. Ignoring that, it’d take some serious pride-swallowing for Sony to follow Microsoft in such obvious fashion. And there’s evidence that Sony’s doing just fine without Netflix anyway.

In short, I’m not counting on PS3 Netflix support anytime soon.

I’m getting used to the idea that when an online video portal creates a TV-optimized viewing experience, it won’t let people watch any of the content they actually care about.

Such is the case with Joost’s new video player, designed with the Playstation 3’s Web browser in mind. While it’s good for watching music videos and promotional television clips, Destructoid says Viacom, Warner Bros. and CBS content isn’t available (so, no Ren & Stimpy). CBS imposes similar limitations on YouTube XL, a viewer optimized for television.

The optimized Joost viewer, accessible through labs.joost.com/tv, arranges navigation in a manner similar to YouTube XL. It even turns the PS3 controller into a remote by mapping useful functions to the buttons. Destructoid tried it out and said the video quality looks “just below standard definition” on a 720p monitor. Too bad there’s no television to watch.

Like Hulu, it’s been possible to access Joost through the PS3’s browser since October, when the console updated to include Flash 9. Still, there’s no easy way to go full screen. You can zoom in the browser to fit the video frame, but that compromises video quality. And of course, mapping playback to the PS3 controller is out of the question.

Joost’s full content library, I assume, is still available through the PS3 in non-optimized form, making it just a little more inconvenient to watch. If anyone’s got a PS3 and wants to give the old way a try, I’d be interested to hear the results. But I can’t be responsible for any effects Ren & Stimpy might have on your sanity.

In my mind, I was readying a trend piece on how this year’s E3 was all about broad appeal from the big three console makers. That plan was scrapped after Sony’s press conference, which was tailor-made for the college male demographic.

This was no more evident than in Sony’s motion control demo. The unnamed project used a handheld device with buttons, like the Wii, but tracked it in 3D space with a camera, like Microsoft’s Project Natal.

But while Nintendo continues to push its family-friendly image, and Microsoft strives to prove that Natal will make the Xbox 360 accessible to all, Sony’s tech demo included first-person shooting and swordfighting. Movement on the screen synced perfectly with the demonstrator’s actions, even as he walked around with a virtual gun in hand. To be fair, Dr. Richard Marks, who presented the technology, said Sony’s tech will afford casual experiences as well, but he also dedicated a fair amount of time to what he called “gamers’ games.”

It was a rough demo — far less polished than what Microsoft showed yesterday — but Sony Computer Entertainment of America CEO Jack Tretton said it will launch in the Spring of 2010.

Sony also gave lots of screen time to shooters and action games, including Uncharted 2: Among Thieves, Assassin’s Creed 2, God of War III and MAG, which boasts 256-person online multiplayer.

The company also thrilled the crowd by announcing Final Fantasy XIV (the 13th game is still in production) and showing a trailer for The Last Guardian, by the makers of the critically-acclaimed Ico and Shadow of the Colossus. Both will be PS3 exclusives.

For balance’s sake, Sony tried to fit in a couple of plugs for a Hannah Montana bundle with a pink PSP. It drew guffaws from the audience at every reference.

Sony is boasting about its downloadable movie and TV show offerings on the Playstation Network, telling Video Business that revenues are up 300 percent from the same time last year.

There also appears to be a new demographic in play. “We’re getting people in the households who hadn’t yet interacted with their [Playstation 3] in the past,” Eric Lampel, the Playstation Network’s director of operations, said. “This is the girlfriend, wife and mother.”

He points to the film Bride Wars as an example, as it became a top-ranked movie download after its April 28 release.

I suspect a hint of marketing in Lampel’s statements. Video Business notes that a hefty amount of PSN’s movie offerings are action and animation flicks — not exactly fare for the missus — and Lampel concedes that the service is “very game heavy.” It is a video game console, after all. There’s probably truth in what he says, but I think the “everyone’s digging it” idea is a deliberate message.

Sony has ambitions to expand the PS3’s role. Lampel said PSN wants to be a major source for original, mainstream (as in, not nerdy anime?) programming. He speaks of broadening the console’s audience “not necessarily around gaming” and mentions HBO’s exclusive content creation as a model worth following. Can you imagine the Playstation 3 churning out edgy dramas and comedies? Perhaps it could happen through cooperation with Sony Pictures.

One thing I’ll add, alluded to Lampel’s quote about wives and girlfriends: If the Playstation 3 (and the Xbox 360, for that matter) are going to gain broad appeal beyond the stereotypical college male gamer demographic, it’ll take those dedicted gamers to reel in the outsiders. That means the original content has to be so good, it’s worth evangelizing. Let’s see what Sony comes up with.

The last time everyone got excited for a Playstation 3 price cut, only to be disappointed, I swore off reporting on the matter, but only on the word of analysts, retailers, game publishers or other blogs. Here’s my loophole:

The whispers are now coming directly from Sony. In a conference call with overseas investors, the company said it plans to sell 30 percent more consoles this year than in 2008, CNBC reports. Asked specifically by an analyst about price cuts, corporate executive officer Nobuyuki Oneda said Sony had nothing to announce at the moment, indicating that he couldn’t discuss pricing strategies because it would affect inventory.

But then, another analyst asked how, exactly, Sony planned to reach 13 million PS3 sales this year. “Well, I think you have to guess what will be our pricing strategy,” Oneda said.

I would have liked to hear the tone of Oneda’s voice. It was probably straightforward, but I’m imagining a “that’s for me to know and you to find out” kind of coyness. Anyhow, there’s more reason than ever to speculate when, rather than if, the PS3’s price will come down.

E3 would be the obvious time to make grand announcement, but there’s also a feeling Sony will wait until August to squeeze out some more higher-priced sales before entering the holiday season. As CNBC points out, though, even a little sign like this is a warning to consumers. That’s why Sony has been so adamant in denying every previous rumor. Now it’s creating one, so why wait to seal the deal?

It’s worth mentioning that Nintendo projects flat sales figures for the current fiscal year, meaning it’ll sell roughly the same 26 million Wiis and 30 million Nintendo DSs this year as it did last year. Granted, Sony and Nintendo are in different boats, but we’ve had two months in a row of US sales declines for the PS3 compared to 2008, and two months of overall losses for the industry. The recession may finally be taking its toll.

For Sony to battle declining sales, it’ll have to do something drastic. I think we’ll have to guess what that will be.

Boxing in customers is rarely a good idea, and Sony CEO Howard Stringer says he’s come around to that reasoning.

In an interview with Nikkei Electronics Asia, Stringer spoke of how his company didn’t take open technology very seriously in the past, pointing to the failed Sony Connect music store as an example. The site’s tunes came in the proprietary ATRAC format, which only worked with Sony’s music hardware and obviously displeased freedom-seeking customers. Connect was phased out beginning in 2007.

Stringer blames the store’s failure on a type of proprietary digital rights management. “At the time, we thought we would make more money that way than with open technology, because we could manage the customers and their downloads,” he said. “This approach, however, created a problem: customers couldn’t download music from any Websites except those that contracted with Sony. If we had gone with open technology from the start, I think we probably would have beaten Apple Inc of the US.”

The interview, published this month, seems slightly dated, as Stringer talks about Apple’s use of FairPlay DRM and how Sony can maybe exploit that weakness. Of course, Apple removed DRM from iTunes last month.

Beyond Stringer’s “open vs. closed” epiphanies, the interview’s other main takeaways deal with the Playstation Network. He drops some hints about an expansion of the network “to hardware other than the PS3″ and speaks of “evolving the PS3 into a platform for Web services,” but doesn’t elaborate in specifics.

With the exception of Bravia TVs and maybe the revamped Walkman X-Series, I don’t see much room for expansion. Owners of a Playstation 3 and PSP can already transfer movies and TV shows between the two, and the PS3 is the only home console that can access Hulu, albeit through the machine’s Web browser. That’s not to say those two pieces of hardware wouldn’t benefit from an online media store.

And besides, Hulu and video downloads are relatively recent developments anyway, taking hold in the second half of last year. Perhaps Stringer’s shift in thinking began a while ago.

We’re just over a month away from the release of Wii MotionPlus, an attachment to the Wii Remote that adds much-needed precision. Two EA Sports games, Tiger Woods 10 and Grand Slam Tennis, will be the first to show off the new technology, and hopefully they’ll be the antidote to Wii Sports’ heartless wrist flicking.

But an opinion piece by Crave’s Jeff Bakalar, titled “Is MotionPlus too little, too late for Nintendo?” got me thinking. The article brings up a familiar criticism of some Wii games’ tacked-on waggle controls when simple button presses would do and wonders, without a definitive conclusion, whether motion control’s ship has sailed.

For me, at least, accurate swordplay and sports simulation — both ideas that currently exist in half-baked form — still sound like a blast. To answer the core question, though, Nintendo may have missed its opportunity to dominate that experience.

It depends on whether Microsoft and Sony unveil their own motion control devices in the near future. Rumors of motion-tracking camera technology coming to the Xbox 360, which we reported on in February, have surfaced again, and Sony reportedly has its own motion controller in store. Now that everyone’s expected to cough up extra money for a cool gaming peripheral, the playing field is level.

As year after year of dominant Wii sales suggests, the average buyer of Nintendo’s console either didn’t know or didn’t care about the Wii Remote’s lack of accuracy when making the purchase. In more dedicated gaming circles, however, you still hear talk of “1:1″ control — that elusive idea of seeing one’s gestures mimicked precisely on screen, no matter how complex. Nintendo may be working with a bigger install base, but I don’t think its customers will be more inclined to pick up a new peripheral than owners of the other two consoles.

Come E3, if motion control comes to the Xbox 360 and Playstation 3, it’s anybody’s game. Best of all, the competition could inspire some great video games for everyone.

The boy takes the longtime girlfriend out to a fancy dinner and says he’s got a surprise for her. Excitement builds. She’s waiting for the engagement ring. Instead, he pulls out season tickets to the Yankees. This is a scenario I’ve surely seen in a movie, TV show or commercial, but wouldn’t you know, I can’t recall a specific example.

Anyway, I’m reminded of this as the gaming world eagerly awaits Sony’s “global announcement,” reportedly set for tomorrow. Kotaku writes it this way: “Sony dropped Kotaku a line to let us know that something is going down on Tuesday, March 31st. Could it be the long-rumored price cut is finally upon us?”

The excitement, so palpable in those anticipatory words, had to be crushed later in the day. No, Sony tells Joystiq, a Playstation 3 price drop is not in the works. We’ve heard Sony deny the PS3 pricing rumors before, but there’s such finality in the way spokesman Al De Leon delivered the news this time. “SCEA remains focused on the long-term momentum of PS3,” he said. “With the industry’s best software lineup this year, combined with our most aggressive marketing campaign to date, we remain confident in our approach and the value we’re delivering with PS3.”

What’s the big surprise for tomorrow, then? Probably a price cut for the Playstation 2, from $129.99 to $99.99. Joystiq and Kotaku are both calling this one with help from a well-placed KMart source who has access to the store’s price database. Whoopie.

Business Insider also throws out a couple other possibilities, such as a streaming video service for the PS3 (Netflix or otherwise) and a successor to the Playstation Portable. Maybe a big game reveal is in the pipe as well. Whatever. It’s hard to get enthusiastic with all these price cut rumors floating around.

That’s why I’m done. No more writing about PS3 pricing on the word of analysts, retailers, game publishers or other blogs. The thrill is gone; my heart’s just not in it anymore.

The story, linked in Harry’s 5Words, is getting old. Sony’s attempts to hush the calls for a Playstation 3 price cut resemble a substitute teacher trying to calm the classroom — a momentary lull that slowly grows into even greater cacophony.

The latest round began earlier this month, when Electronic Arts Redwood Shores manager Glen Schofield said he hoped Sony could figure out how to reconcile the PS3’s high price tag with the current economic climate. Last week, Media Molecule founder Alex Evans — whose company developed LittleBigPlanet — expressed to Gamasutra that the console’s price should go down soon. Analysts have added to the chatter as well, and today, Bloomberg writes that Sony is facing pressure from publishers.

“Sony obviously still has a ways to go with their pricing,” said Peter Moore, the head of EA Sports. Yves Guillemot, CEO of Ubisoft Entertainment SA, said game makers stand to gain any time a console slashes its price.

But Sony is in a bind now, because its console is still too expensive to manufacture. In October, market researcher iSuppli cracked open the Playstation 3 and analyzed its innards. The total cost was down 30 percent from the first-generation, to $448.73, but that still means Sony is losing money on every $399 console it sells. A price drop doesn’t seem wise after the company posted its first annual loss in 14 years.

Appropriately, Sony’s senior marketing VP Peter Dille fired back at critics. “Everybody in the development community would love for the PS3 to be free, so they could just sell razor blades,” he said, adding that the company has to worry about profits as well as the console’s install base.

I’ve read elsewhere that if Sony announces a price cut, it’ll happen at the end of March, after the company closes its financial year. My first thought was “bad call,” as most of this season’s major releases — Street Fighter IV, Resident Evil 5 and the PS3-exclusive Killzone 2 — have come and gone. On the other hand, maybe a price cut is the right prescription as the industry braces for a momentary lull. That way, Sony will be good and ready for the summer and holiday season.

While there’s much fawning over the Xbox 360’s streaming Netflix service, it appears that Sony is doing quite well distributing movies on its own over the Playstation Network.

The story in Variety notes that Sony has made $180 million on “pieces of digital content” — more than 380 million downloads in all — since the company brought TV and movies the Playstation 3’s online service last summer. Praise for both Microsoft and Sony follows, saying that they “may have achieved something of a breakthrough as studios try to figure out the digital age.”

It seems obvious that the Xbox 360 and Playstation 3 are prime candidates for digital distribution onto televisions. With total worldwide sales easily topping 20 million for both consoles, the install base is already there. Plus, a lot of it is that golden 18-35 demograhic, particularly with the PS3. They’re downloading “The Dark Knight,” “Iron Man” and “The Pineapple Express” in mass quantities, Variety says. Of Sony’s digital offerings, the company says 65 percent are purchased, and the rest are rented.

I never expected video on demand to do as well on consoles as this report suggests. My money was always on free streaming video sites like Hulu to swoop in and offer content gratis. With the exception of YouTube, that hasn’t happened, and Hulu is having it’s own distribution issues right now.

Meanwhile, it doesn’t seem like the studios need those other services. If people are willing to pay for on demand video over their consoles, why offer it for free?

When Microsoft boasted of 1 million sign-ups for the Xbox 360’s Netflix application — covered briefly Thursday in Harry’s “5Words” news roundup — Sony struck back, saying the Playstation 3’s movies and rentals download faster and don’t require subscription fees. Ouch.

But this was just the latest in an endless back-and-forth between the rival companies. Taken as a whole, this record of petty bickering actually makes for a good overview of each console’s pros and cons. Join us after the jump for more snipes, disses and burns. Continue reading this story…

I think somebody’s off their rocker. In comments to the company’s official rag PlayStation Magazine, Sony Computer Entertainment Chief Kaz Hirai made the unusual claim that install base numbers are worthless: the PS3 is still the official leader in the industry.

Pay no attention to the fact that the console is in third in overall console sales, that it was outsold by the Xbox by a 2-to-1 margin over the holiday, or that it still cannot attract decent exclusives. Because Mr. Hirai says it, we shall all bow to the PS3’s power.

Of course, Hirai’s comments are peppered with jabs at its competitors: that the Xbox is aimed at short term success while the PS3 is on a ten-year plan, and that Nintendo operates “in a different world.”

Nevermind that the console is difficult to program for because Sony did that on purpose, Hirai claims. His argument is this: if the console was easy to develop for, then developers would not take full advantage of the consoles power.

Okay, that makes sense. Make life difficult for the people who sell your equipment. That should work! I bet any game developer wants to spend twice the amount of time just to develop for a console that in the end has a smaller install base than its competitors.

I think its time for Sony to start realizing that the PS3’s business model did NOT work. I sure hope when it comes around to the fourth generation the company applies what it learns, but as stubborn as Sony is, I’m betting that won’t happen.

Admittedly I’m no Michael Pachter when it comes to foretelling the future of video games, but with Microsoft exec Robbie Bach saying that we won’t see a new Xbox 360 for a while, the temptation to speculate is too overwhelming. So join me as I wildly predict when the next round of consoles will come along.

Continue reading this story…