Sony PS3 trails Microsoft in
console war By Ting-I Tsai
TAIPEI - When Sony Computer and
Entertainment's Asia manager Tetsuhiko Yasuda
pushed a button parting black curtains in front of
the long-awaited PlayStation 3 (PS3) video game
console at the Taipei Game Show on February 16,
countless fans and cameramen chaotically squeezed
ahead to get the best photos of the secret
console. The frenzy lasted more than 30 minutes.
However, aside from a demonstration of the
model's silver appearance and a chance to
experience screenshots of several games, there was
no news about the console's release date then.
A
month later, as rival Microsoft launched its Xbox
360 in the Asian market, Sony conceded that issues
over the finalization of copy protection
technology related to its Blu-ray optical disc
technology forced it to delay the official rollout
of the console probably until November. As of
early April, the company had not announced a firm
release date, although key software vendors such
as Namco Bandai were nervously calling for a
release in advance of the Christmas season.
What gave Sony some hope is that the Xbox
360 models on display in Taipei have been standing
unused, most of the time, in the electronics shops
and wholesale markets.
In February, Sony
was confident in its mysterious strategy. Yasuda
said Sony hoped the multi-functional games console
would help it effectively defeat piracy.
Emphasizing the importance of ensuring the PS3's
perfect quality, Yasuda said at a news conference
he was not worried about the Xbox 360's debut.
"Even though [the] Xbox will already have been
launched by then, our silence doesn't mean we are
doing nothing. We would have been really concerned
if we messed up our strategy because of
Microsoft's moves."
Microsoft Xbox 360
faces China obstacles A month later, the
Xbox 360 was available to players in Hong Kong, Taiwan, and Singapore.
Andres Vejarano, regional marketing manager of
Microsoft's Asia and Greater China entertainment
and devices division, noted, "Sony got an 18-month
head start last time [referring to the
introduction of Sony's PlayStation 2 being out
earlier than Microsoft's original Xbox]. In the
next generation, that won't happen. So if we give
developers great software tools, services and
support, and design hardware with great software
and games in mind, we believe we will lead."
Vejarano emphasized that Microsoft has tried to
localize the market by working closely with
Japanese, Korean and Taiwanese game developers,
and plans to offer Chinese games developed by
Taiwanese game developers, including FunTown
World, SoftStar and XPEC, which will be available
later this year.
Since last year, however,
a group of Chinese players has continued to
complain about Microsoft's release plans for the
Xbox 360 in China, venting their frustrations on
Internet game forums. One of the most popular
topics was: "Why is there no China in Microsoft's
eyes?"
Senior Microsoft official Alan
Bowman, the company's general manager of
entertainment and devices for the Asia-Pacific and
greater China regions, said while in South Korea
in late February that his company is taking a very
careful approach in China by actively working with
the Chinese government, noting they don't want to
repeat Sony's mistakes when introducing the
Playstation2 in China.
The PS2 China
fiasco Sony introduced its PS2 to Chinese
players in January 2004, but the rollout was
followed almost immediately by massive piracy of
not only games, but the console itself, which put
Sony in an extremely difficult position. Sony
declined to offer its figures for PS2 sales in
China. Interestingly, recent reports suggest that
the copy-protection issue might be the major
reason for the PS3 release delay: a Forbes report
speculated that Sony might be developing another
layer of copy protection in addition to the
Advanced Access Content System (AACS) copy
protection already found in Blu-ray players
expected to be released in June. The extra
protection would presumably thwart the piracy that
so damaged Sony's results for the PlayStation 2 in
China.
Despite piracy being a serious
problem in China, the size of the Chinese market
is so great that neither Microsoft nor Sony can
afford to neglect it. According to the
Beijing-based research and consulting firm BDA
Limited, the market size of the massively
multiplayer online role-playing game (MMORPG)
market in the country will hit US$651.5 million by
the end of 2006, and may possibly triple to
$1,767.8 million by 2010. As Microsoft's Xbox360
is capable of Internet connections, some analysts
assume that using the new generation game consoles
to tap into the "interactive" (pay-to-play)
revenues MMORPGs offer is the motivation for both
Microsoft and Sony to enter the market again.
At least six years in the making, the PS3,
with a new "Cell" multimedia processor chip
jointly developed by IBM, Sony and Toshiba, plays
high-definition games, Blu-ray next-generation
DVDs and digital music, while offering
high-quality TV output. Furthermore, it can
connect to the Internet to allow game play against
rivals around the world or simply to check
headlines. More specifically, the Cell enables
many of these functions to be carried out at the
same time, realizing many players' dreams of
playing a game and listening to music or
downloading a TV show simultaneously.
Yasuda explained that Sony would like to
launch its latest game console around the world at
the same time, but wide gaps in different areas'
Internet services could make that difficult.
Nevertheless, he said to avoid some traders taking
advantage of currency and time gaps among Japan,
Hong Kong and Taiwan (ie, by buying up units sold
in one market for sale in the others at a large
markup), Sony would try to make the console
available simultaneously in the three markets. He
confidently expressed, "I believe we will achieve
our goal in a shorter period of time than [was the
case for the PS2]."
The delay in the PS3's
launch has been attributed mostly to Sony's
ambitious design. According to a Merrill Lynch
report released in mid-February, "Sony's design
choices for the PS3 [have] resulted in an
expensive and difficult-to-manufacture product,
and we think that we're seeing the consequences of
[those] choices being played out now," noting that
the Sony Cell processor and the Blu-ray drive may
be the source of problems. The report estimated
the console could cost Sony $900 initially,
falling to $320 three years from launch. It is not
yet clear how much the company plans to charge its
Asian customers, but the Xbox 360 now sells for
NT$12,980 (US$430) in Taiwan, restraining Sony's
pricing options. In addition, vice president of
Sony Computer Entertainment Europe George Fornay
stated in a French radio interview in early April
that the high-end gaming machine will cost between
499 euros and 599 euros (US$600-$730) in the EU,
which gives some indication of Sony's pricing
intentions for other markets.
Whether
hardcore game players will appreciate the game
console's various functions, and how much they
will be willing to pay for them, remains to be
seen. Playing his PlayStation Portable while
taking a train in Taiwan, a loyal PlayStation
system player, who identified himself only by his
surname, Chu, said it is impossible for him to pay
more than US$500, explaining, "It is just a game
console. Those multipurpose services are not
practical. If I want to connect to the Net, I
would prefer a personal digital assistant (PDA)."
Liu Yin-miao, 27, a Taipei-based seasoned
game player who started playing games when she was
10, also named $500 as her maximum budget. She
also raised concerns that the PS3's advanced Cell
might create obstructions for her to play her old
games or for game creators to develop compatible
games. "I am really not interested in any other
functions. Taking [the] Blu-ray DVD [function] as
an example, I would rather use a [dedicated] DVD
player instead," she said. Even so, she said she
simply couldn't appreciate the Xbox360 at all,
after she tried it at the Carrefour wholesale
market in Taipei. "In the first place, we're
already so used to the [PlayStation] system. It is
simply difficult for us to switch to [the] Xbox
system now."
Hsu Kuei-fen, an analyst at
the Taiwan-based Market Intelligence Center (MIC)
under the Institute for Information Industry,
noted that Sony would still be able to dominate
the Asian market, as long as it launches the PS3
this year. "As with cartoons, Asian players still
appreciate Japanese games more."
Microsoft
officially introduced its Xbox 360 at the end of
November. According to official company
statistics, sales of the updated console hit some
2.5 million as of late February, and between 4.5
and 5.5 million units will be shipped worldwide by
the end of June. Hsu at Taiwan's MIC, meanwhile,
said it was too early to predict the sales of the
PS3, as its launch date would make a big
difference.
As Sony is positioning the PS3
as more than a game console, some analysts have
also raised concerns about its software sales,
citing the fact that historically, game players
have bought fewer games for multifunction
consoles. Yasuda, who used to be a software
salesperson, noted that piracy has always been a
crucial element, and Sony hoped its emphasis on
the hardware would eventually reduce its reliance
on software for profits (many game consoles are
sold at a loss in the first part of their product
lifetimes, with profitability being maintained
through software sales). According to game player
Liu, most Taiwanese players play pirated games
purchased from illegal vendors, because official
games have been 10 times more expensive than
pirated ones.
Nintendo: The other
option Sony and Microsoft are the dominant,
but not the only players in the game console
market. Another console hardcore players have been
eagerly waiting for is Nintendo's Revolution,
which comes with a remote-control-like freestyle
controller that contains a gyroscopic mechanism
that can pick up even the slightest movements of a
player's hand. Furthermore, the Revolution could
be as cheap as $200, easier for young game players
to afford. It is not yet clear when Nintendo will
launch the new console, but company president
Satoru Iwata told the Japanese media in
mid-January that his company aimed to release it
in the US before the Thanksgiving holiday, in
November. A report released by Citigroup in
mid-January estimated that some 3.9 million
Revolution systems would be sold by 2008.
Hsu hinted that the Nintendo Revolution's
lower price may allow it to become a second game
console for players, since it would be too costly
for a Xbox 360 player to afford a PS3 or the other
way around. "Whether the new generation game
consoles [can] really attract multimedia
entertainment customers will be a crucial element
[in] the growth of their sales," noted an MIC
paper.
Ting-I Tsai is a
Taipei-based freelance writer.
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