Sony shocked attendees at its Tokyo Game Show press conference earlier this week by announcing the PlayStation 3 Super Slim. Unfortunately, the corrugated console itself was not the reason for open-mouthed attendees – that accolade was reserved for its flummoxing price-point. Indeed, as opposed to positioning the aging system at a previously untapped cost-conscious market, the company instead opted to go toe-to-toe with Nintendo’s new Wii U. In Japan you’ll be able to pick up one of Sony’s new machines for a meagre ¥20 (roughly 25 cents) less than Nintendo’s fresh arrivals, and the situation isn’t much better overseas. So, what does the announcement tell us about PlayStation’s future under a much more financially focused regime?
Upper executives have clearly concluded that brawling for market share is no longer worth the financial risk
For those still puzzled by the platform’s existence, the PS3 Super Slim is undoubtedly the product of a cost-cutting exercise. However, unlike the system’s previous refresh, Sony’s decided to pocket the savings for itself. That probably reads a lot more sinisterly than it should, but upper executives have clearly concluded that brawling for market share is no longer worth the risk to the company’s bottom line. As such, engineers have concocted a platform that’s cheaper to produce, and allows Sony to maximise the profit on each console sold. From a purely financial perspective, it makes sense.
However, it emphatically eschews the rules established by several generations of console production. Typically manufacturers choose to lose money on hardware, opting to grow their install base and recoup costs through premium priced supplements such as software and accessories. At a more mainstream $199.99, there’s no doubt that Sony would have been able to capture more customers this Christmas. But whatever your opinion of the organisation’s business acumen, you have to imagine it carefully considered all of the potential outcomes.
That it opted for such a risk averse approach speaks strongly about new CEO Kaz Hirai’s profit-centric philosophy. The former PlayStation boss has stated his intent to unite Sony Corp as a whole and drive it back towards profitability, and that endeavour will no doubt have an impact on the design of the PlayStation 4. With the platform holder adamant it won’t cut the cost of the Vita even in lieu of paltry hardware sales, it’s evident that the company will endeavour to make money from the off next generation.
Alas, that puts the pressure on the division to position the platform properly at launch. The Vita has been far too easily outmuscled by the 3DS, and because of the organisation’s devotion to its bottom line, it’s been unable to properly react. A limp TGS showing compounded the handheld’s woes, with only Soul Sacrifice and God Eater 2 (a title also coming to PSP) worthy of note. Its headaches aren’t too dissimilar to those initially faced by the PS3, but this time it doesn’t have the clout of the PS2 to prop it up. The Vita is caught in a catch-22 at the moment, unable to convince developers or consumers that it’s a platform worth investing in. Even though it’s probably breaking even, the handheld is currently too expensive to turn things around.
Sony may be forced to avoid an arms race with PS4, and opt for a platform that favours value above all else
The PlayStation 4 simply can’t succumb to the same situation. If Sony’s aiming for profitability across the board then it needs to ensure that it can achieve a price-point that’s palatable on a global basis. That may mean that the company’s forced to avoid a technological arms race against Microsoft, and opt for a refined platform that favours value above all else.
It would certainly be a first for a brand that’s defined itself as cutting-edge, but the company’s financial predicament may leave it without a choice. The console needs to be bankable and successful from the start – Sony simply doesn’t have billions of dollars waiting to blow on digging its next commercial disaster out of a quarry-sized hole. Perhaps its recent acquisition of Gaikai will hold the key to it attaining the very best of both worlds.
Either way, the next 12 months are going to be fascinating for PlayStation fans – and followers of the industry alike. With the Wii U braced for impact, and rumours pegging Microsoft and Sony’s next consoles for E3, it’s going to be interesting to see how each of the manufacturers react. The latter’s Tokyo Game Show press conference certainly won’t be remembered for its content – but it may just be looked back upon as a tease of the overall company’s corporate direction.
What do you think is the perfect price-point for the PlayStation 4? Would you prefer the company to produce an expensive console packed with cutting-edge technology, or release a cheaper system that’s a little more refined? Let us know in the comments section below.