Inside Track: Two Towers

Jump quickly to the other parts of this special editorial series:
AMN 360 (Fellowship of the Ring)
AMN PS3 (The Two Towers)
AMN Wii (Return of the King)

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Disclaimer: The proceeding article is editorial content. The views expressed are those of the author and do not neccessarily reflect the official position of the Advanced Media Network.

If you’ve read my previous columns, you know I’m not the biggest Sony fan in the world. I don’t believe that the company is somehow inherently evil, I just dislike their general philosophy on gaming and the sense of arrogance that seems to emanate from the core of the corporation. That said, I should probably hope no one at Sony catches wind of this piece or holds any similar ideas, because it just might outline what they need to do to save the PlayStation 3.

The PS3 is obviously off to a rough start. Supplies were extremely limited at launch, few games stood out as true winners and some players have had problems with their televisions displaying in true 1080p as advertised. Executive shuffles were announced shortly after the console’s debut, and even just today some media analysts are beginning to claim that HD-DVD has leapfrogged past Blu-Ray by such a wide margin that it won’t be able to catch up for at least another year. Bad news abounds. So what has caused this array of bad news? The answer is internal conflict within Sony.

Since the PS3 project’s inception, Sony as a full company has not been able to decide exactly what the PlayStation 3 is, or what it should do. The chief issue is that Sony is really two large companies in one. One half of the company is media-based, including their movie studios, music labels and television production. The other half is hardware based, including age-old Sony products like cameras, televisions, disc players and more. These two competing elements have been waging a battle over the PlayStation 3 for years now. This battle was accentuated by the backgrounds of two major Sony executives. Howard Stringer, the CEO of Sony, hails from its media division, while Ken Kutaragi, the President of Sony Computer Entertainment until recently, came from the hardware side of the company. Sectarian lines were drawn from the very beginning, with these two towers storming within.

For the past few years, Howard Stringer has wanted desperately to defeat the iPod and reclaim Sony’s old Walkman-based dominance of pocket audio. Of course, accomplishing such a feat requires a hardware solution. Stringer and like-minded executives raided the PlayStation Portable project, hoping to use the PlayStation brand to topple the iPod. In addition to audio, Stringer was a major proponent behind UMD-based movies, meant to offer superior video playback compared to what an iPod could manage. Soon the PlayStation Portable was no longer a portable gaming device designed to steal Nintendo’s crown but was a multimedia machine. The problem with this was that the PSP did not have a hard drive and couldn’t hold much music on Memory Sticks and suffered from poor battery life, making movie-viewing capabilities limited.

Of course, when the PSP finally hit the market, what began as a well-designed entry meant for portable gaming had been transformed into a hobbled multi-media player. Internal squabbling at Sony has since caused movies to be released on Memory Stick, UMD releases to be stopped and started, music to be made available for a while on a poorly conceived online store, and more. The poor PSP has sailed on, now listing to one side and floating adrift, somewhere between the iPod Ocean and the DS Sea. By attempting to best two leading companies in two different product sectors with the same device, Sony succeeded at neither.

The PlayStation 3 now faces the same sort of problem. Sony’s executives, even following the platform’s launch, cannot seem to get on the same page in describing exactly what the PlayStation 3 is. One Sony suit from Australia even accidentally called the Wii “more fun” than the PS3! (Whoops.) If Sony’s stewards are wise, they will observe the failure of the PSP and learn from the hard lessons it offers. They need to decide very quickly what defines the PlayStation 3, as well as what defines Sony. If it is meant to be an entry-level Blu-Ray player, so be it. They should market it as the next-gen movie player that also has some games. This might allow them to beat Apple’s iTV product to the punch. If it’s meant to be a true gaming device, they need to market it as such with clarity. This will pose it directly against the 360 and the Wii. Convergence can be sold to the public, but only when one main feature is spotlighted with the others appearing to be great bonuses. People bought the PlayStation 2 because it played games and happened to be a movie player. On the other hand, low pack-in ratios show that people are buying PlayStation 3s primarily to watch movies or barter on eBay, with gaming coming in a distant second more often than not. The PS3’s purpose in life seems clouded.

Sony does have several major cards left in its hand. Without meaning this as a sleight to Sony, it could be that consumer ignorance ends up making them victorious. What I mean is that people used to the PlayStation brand name may line up for the new console as supplies become available simply because it’s the “new PlayStation”, regardless of the competition. Even if, hypothetically, every expert agreed that the Wii or the 360 was infinitely superior to the PS3, these unquestioning consumers would still line up for Sony’s product. In addition, even the more savvy buyers may have large PS2 collections that they wish to play with backwards compatibility on their new machine. Finally, blockbuster titles like Metal Gear Solid 4 and Final Fantasy XIII will likely only be seen on the PS3, providing some serious firepower in favor of the system.

Yet Sony must realize that they cannot survive on this momentum alone. Unlike the operating system market, for example, customers aren’t basically bound into choosing the PS3. While PC users wishing to upgrade their current system from Windows XP only really have Vista to choose from, video gamers are left with an open playing field by virtue of having to buy an entirely new machine. While past momentum can certainly help to give a new system credibility, a new platform can’t survive based on the last generation alone. Sony must find ways to lower the cost of the PS3 (and their loss margin) as quickly as possible, and must develop their online infrastructure and game library immediately.

Sony needs to make some tough decisions overall as a company. Do they see a way to regain profitability in their hardware business or do they want to lean further into the world of media and content? Where does the PS3 fit into this? How can the PS3 properly combat the 360 on a technical level and the Wii on a fun level? What is the PS3? Hopefully the recent change in management will begin the philosophical overhaul for which the company is well overdue. If it does, the PS3 may yet soar to the top of this generation, making three in a row for Sony. If not, the PS3 may live a life as confused as its portable cousin, a fate that would leave Sony globally in critical condition.

Casey Ayers is Editorial Content Director and host of the Inside Track Podcast for Advanced Media. Though most of the time he works behind the scenes coordinating our various opinion columnists, you can always expect to hear from him when big news hits the presses.