PS3, The Good, The Bad, the Ugly and the Uglier

Doom and gloom over the Sony’s PS3 is a favorite sport lately, we want to play too! since one of our favourite things is to try to predict the future of the gaming industry(rather accurately I might add) we’d like to put a spin on the ugly situation Sony Entertainment will be faced with in this financial year that will end March 2008. Oh we also like to see bloated pompus companies fall flat on their smug faces but that’s just a fringe benefit…look out Nintendo y o u  a r e  n e x t! mouhaha

Japanese Nikkei newspaper and other Japanese sources are saying the PS3 has sold 3 million units worldwide since it’s November ’06 release, that seems ok because it’s lots of zeros unfortunately Sony has put 5-6 million(accounts vary) PS3′s into the worldwide sales channel*, that means the channel is SATURATED, in economic terms there is more supply than demand and why you see display cases overflowing with PS3′s at your local mall. That’s not good but The ugly part is yet to come.

Sony intends to push at least 10 MILLION units into the sales channel by March 2008(11 months from now). There is no way in hell Sony is going to sell 10 million units at retail by March ’08 at the current price…not if Jesus Christ himself showed up to do PS3 commercials. Most people who are willing to spend $600 to $1000US(depending on where you are outside Japan) have bought a PS3, most everyone else is window shopping at this point. There is the possibility of over 4 millions game consoles clogging up the sales channel by March ’08, that’s unheard of. Less ps3′s sold means less PS3 software sold, software is where the money is made. This is no doubt starting to stick in the throat of retailers whose valuable display space is being clogged up with $700 door stops that are not making any money for them and that lump in their throat is going to get bigger and more irritating as the months go by and thoughts of xmas 07 profit dances in their heads.

The other spectre for Sony is the PS2, currently the engine that drives the console gaming industry. Everyone is still Sony’s bitch because everyone makes money off the PS2, retailers, distributers, software publishers, peripheral makers, magazines, even websites. In fact the PS2 easily outsells the PS3 in hardware and software worldwide currently. That is not going to last forever, the PS2′s money making ability has begun to diminish and will continue to dim consistently in the next few years before it dims out, if you listen very closely you can hear the chorus singing ‘what have you done for us lately Sony’. Sony’s answer is a machine that costs 5 times more than a PS2, whose games cost at least twice as much to create….but hold the presses it can play Talledega Nights on Blu Ray disk!…whoopdee fuckin doo. There exists the possibility that things may get very bad indeed over the coming year for Playstation, much worse than what we’ve seen so far.

By this point you must be thinking ‘why the doom and gloom Mike, chill out”. Despite the previous we also must say we believe in some way the PS3 will ultimately be successful and even win this generation of consoles in numbers sold(not in profit, Nintendo has already won that battle), it’s a competitive product if the price is right and the games come. The PS3 will have a substantial price cut this year, this is not a guess it’s a fact I’ll bet my right nut on. Sony simply has no choice because the market dictates it, they know this and are figuring out how and when to do it as I write this, my guess is it will take the form of $150 ‘instant rebates’(100GBP). It probably means the PS3 will never make it’s money back but it will mean more units sold leading to more software sold and further price cuts and sales down the road(years) which means Sony Playstation division lives to fight another day. The only reason this is possible is because Sony is a large and diverse company that can siphon money from profitable divisions like TV manufacturing and Sony Pictures to the sick Playstation division. The PS3 misstep would have crippled most companies just like the Atari Jaguar did in it’s day and Sega Dreamcast in it’s day but Sony like microsoft is large enough to throw literally billions at products that cannot stand on their own.

*sales channel means the chain from factory to your local store, it can include several levels of sales and distribution.

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