Sweet Validation of My Views on PS2
I discovered this gaming blogger Bruce - he's really smart, cerebral and experienced. But most importantly, it seems that he and I are on the same wavelength as it relates to Sony's PS2 strategy. And he really knows gaming. I just kind of know the Internet and finance. So I'm feeling pretty good about this.
His most recent post, titled PS makeover, goes into some of the details of Sony's new version of the PS2 being released in Japan:
Sony Japan are to start selling a new version of the PS2 (the SCPH-90000) in Japan later this year which will then be rolled out to other markets in the new year. Initially it will be at the same price as the old model. This is pretty much what Sony did with the original playstation.
The reason for this is very simple, despite being 7 years old and with over 120 million sold, the PS2 still has a few years to go (three, maybe four). By re-engineering it to be cheaper to manufacture Sony will make more profit on every unit sold to help support the cash hole that is the PS3. Also it gives them more headroom to sell at lower prices, especially in emerging markets like India and China. And especially to compete with the Nintendo Wii.
Uh, yeah! Kind of like what I said at the beginning of October:
So, if I'm Sony, am I worried about people focusing on the PS3, or not cannibalizing my far more profitable cash cow, the PS2? Come on, guys. The answer is right in front of you. Sony is actually being economically rational for a change. The last thing they want is for PS2 console sales to slow to a trickle, sales that attract a far greater margin than PS3. Further, they are selling many more PS2 titles than PS3. And Sony is enjoying that nice license stream off of PS2 games. So bottom line, they are using PS2s profits to subsidize PS3s losses to offset a slower-then-expected adoption cycle. And they are making the bet that the PS3 has the technology and will have the game library to overtake Xbox 360 and the Wii over the long haul, ergo their 10 year console life cycle positioning.
And Bruce goes on to talk about how the PS2 has lots of life-cycle left, is easier to develop for than the PS3 and stands to make people lots of money during the latter phase of its life:
It is amazing that so many developers gave up on the PS2 two years ago. Then it had at least 5 years production life left in it as well as that massive installed user base. It is now well known by development staff with lots of proven tools available. So it is very easy to develop for, unlike the PS3. There is a lot of money to be made in the second half of a console lifecycle.
Bruce also has a really good post from mid-October discussing transitioning from one platform to another. Those interested in such dynamics should check it out. Bruce is a lucid thinker and a good writer. I am glad my friend Rob turned me on to him. I can never get enough of smart people with domain knowledge. This is why the Internet rocks.
It's the same 10 year strategy they did with the Playstation One and it will be the same thing they will do with the Playstation 3.
Like i said many times it's all about the software. The Playstation 2 still moves software.
http://kotaku.com/gaming/electronic-arts/ea-sales-broken-down-by-platform-retailer-320179.php
Check out EA sales between the PS2, Wii, and 360.
Posted by: Richard A. | November 08, 2007 at 08:33 AM