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Sony is Flirting with Death, and Death is Showing Interest

In the deep jungles of the internet, you will find many individuals who claim that this will be the last console generation for Nintendo (Hell, you might even be one of them). Whatever the reason they feel this way, it is irrelevant.  What matters is that people are expecting Nintendo to go third party or bankrupt this generation.  But if we're talking about losing money, then why does nobody discuss the possibility of Sony dropping out of the hardware market?

The reason I ask is because while the mainstream press would have you believe that Sony has the road paved for them, Sony themselves are telling a different tale: one that will most likely not have a happy ending.

When I first read that Sony was going to have to sell their New York and Tokyo headquarters, I was a little concerned about how they were doing financially.  Then I came across this article, and I was flabbergasted.

To make it easier for you guys, I will summarize the article for you:  Sony lost around six billion dollars this generation.


To put it in perspective, Sony banked hard off the Playstation and Playstation 2.  But in one fell swoop, with the Playstation Portable and Playstation 3 (though mainly the latter), they lost every single cent they made off their game division throughout the ten years prior... and then some.

That alone should tell you that things are not going smoothly for Sony.  If the 3DS and the Wii U not selling well at first is considered enough justification for Satoru Iwata to be replaced, then Kaz Hirai should have been burned at the stake years ago.

Now Sony did tell Eurogamer that they are not planning as big a loss on the Playstation 4 as they did with the Playstation 3.

Well, I certainly hope so!  But I'm not sure if Sony can afford a loss on the Playstation 4 period.  Especially when you take into account their other source of loss at the moment:

The Playstation Vita.

I honestly have no idea what Sony is trying to do with this thing.  Because it clearly isn't 'Make it a Success.'  It's doing bad right now, and Sony knows it.

About a month ago, the internet was pretty much set on fire when it was revealed that Nintendo sold only 160,000 Wii U's throughout the first quarter of this year.  Every gaming website and their mother immediately made articles and about how the Wii U is a lost cause and there is no hope for Nintendo.

Well not too long afterward, Sony released its Q1 financial report.

They didn't even show the sales numbers of the Vita.

Don't believe me?  Check out the report for yourself.  If you look at the top slide on page 8, you'll notice that they combine the sales numbers of the Vita and the PSP.

At least Nintendo has the balls to show the world how bad their product is selling.

And before you say "But look!  They also combine the PS3 and PS2 sales!"  Look at the bottom of the slide.  The third footnote states that the PS2 is not actually included in the report, so there you go.  And even then, the combined sales of the PSP and Vita chart at 0.6 million, so you can only imagine how bad the Vita is really doing.

And not a single major gaming website reported on this.  It just flew right under the radar.

Now let's talk about an apparently integral part of Sony's next-gen plan:  The indie developers.

Not long after Nintendo established a partnership with Unity, Sony did the exact same thing.  At first, I thought this was yet another instance of Sony copying whatever Nintendo was doing while completely missing the point of why Nintendo was doing it in the first place.  But then I saw their E3 presentation.  And after watching that, along with reading a ton of articles about Sony's approach to indies, I was amazed.  I said to myself, "Wow.  Sony actually notices the potential in these guys. They're not shamelessly copying Nintendo.  They're thinking just like them.  I love it!"

Then Gamescom happened.

If you watch Sony's Gamescom presentation, you see a lot of indie games coming to the Vita, but there's next to nothing coming from Sony themselves that make you go "Wow, I should really consider getting a Vita."  I didn't think too much of it at first, but then I came across an article that put it all together.

About two weeks ago, IGN did an interview with Sony's president, Shuhei Yoshida, and he said that bringing Gran Turismo 6 to the Vita would be really hard.

Really hard, he says.

The gap in hardware capability between the Playstation Vita and the Playstation 3 is much smaller than that of the 3DS and the Wii U.  Yet Masahiro Sakurai is crafting Super Smash Bros. for both the 3DS and the Wii U at the same time...


But the Worldwide President of Sony is telling us that bringing the newest entry to their biggest selling IP to their own handheld device, which has not seen a big-selling first party release in its entire year and a half of existence... would be really hard.

Sony is not supporting indies out of the goodness of their heart.  They are doing so because they cannot afford to support both the Playstation 4 and the Playstation Vita by themselves.  And rather than just give up on the Vita, they... Actually, let me tell you what I mean by, "Give up on the Vita."

In spirit, Sony has already given up on the Vita.  Yoshida pretty much solidified that assertion. But the Vita is being sold at a loss, and with the recent price drop, that only means they are going to lose even more money with each unit sold. And rather than just stop manufacturing the thing and simply kill it off to slow down the money-bleeding, they are just going to leave it to the indies and hope that they will bring in the cheddar.

And they won't.  Why?  Well let's take a look at the 3DS, the system that the Vita is competing against.  The top ten best selling games for the 3DS are ALL developed and/or published by Nintendo, with the exception of Monster Hunter 3 Ultimate, which sits at number 8. Why is this? Well, it's because it's Nintendo.  They made the system. They know how to make quality games for it.  That's why the 3DS is selling very well.  

As a lot of people say, especially when it comes to Nintendo:  First party games sell systems.  The Vita is no exception.  It's not special.  And if Sony, the guys who made the damn thing, can't even get it off the ground, what makes you think anyone else can?  You can't just make a product and expect someone else who wasn't involved in its development to make it a success.  It doesn't work that way.

And you may say, "Well, when the Playstation 4 launches, Remote Play is going to turn the Vita into a massive success!"

No it's not.  Why?  Well, it's for the exact same reason why the PSP failed to beat the DS, and why the 3DS is trampling over the Vita as if it doesn't even know it's there. The purpose of Remote Play is for people to able to play their Playstation 4 games on the go. That right there is the reason why it's not going to be a success.  If consumers wanted to play a console game (or console 'experience,' as Sony likes to call their portable games), they would do so on a console. The only people who will take advantage of Remote Play are the hardcore Playstation gamers who either already have a Vita, or will get one just so they can get their Playstation 4 fix wherever they are.  

General consumers, however, do not buy handheld devices to play console games, and they especially do not buy them as companion devices for their home consoles.  They buy handheld devices to play handheld games.  And next month, when the 2DS launches, Nintendo is going to prove this... for the third time in a row.

So given everything we know so far, what does it all mean for the Playstation 4?

Well, simply put, if Sony wants to live to see another generation, they need the Playstation 4 to dominate.  And I don't just mean that it needs to outsell the Xbox One and the Wii U.  I mean it needs to be a multi-million unit selling success, right out the gate, every month, with no sales slumps whatsoever.  

In addition, they need a high software attach rate (a good guess would be two digital first party games per unit) and a high PS+ attach rate (there's a reason Sony is charging for online multiplayer now). Otherwise, they will just continue to bleed money with every console sold.

And you may say, "Well don't worry!  Since it has over a million preorders, the Playstation 4 is bound to dominate!"

History disagrees.

The Playstation 3 had a million preorders as well. The Wii U's preorders were sold out in its first week, and its launch sales outpaced those of the Playstation 3 and the Xbox 360.  The Gamecube's launch sales outpaced those of the Playstation 2 and the Xbox.  The Dreamcast had the most successful USA launch at the time.  The 3DS was Amazon UK's most preordered console ever, and in the United States, its preorder numbers doubled the Wii's.  In Japan, the PSP's launch sales outpaced those of the DS.

Preorder numbers and launch sales mean nothing.  They are not indicators of long-term success.  Never were, never will be.  Plus, I think it's a bit much to expect the Playstation 4 to sell millions this holiday season, especially considering that the Wii was cheap to manufacture (and therefore, purchase), the economy wasn't the complete shithole it is now, and it only sold 3 million units from launch in November '06 to the end of that year.

If you still need convincing, here's another thing that is overlooked by many:

No home console in history has ever been able gain adequate market share post-launch while maintaining a price point above $300. The NES, SNES, and Genesis were all priced no higher than $200. The Playstation struck it rich from the start at $300. The Nintendo 64, despite being greatly outsold by the Playstation, was a success thanks in part to its $200 price point. The Saturn, on the other hand, was a complete failure, thanks in part to having a $400 price point before the Playstation's launch. The Playstation 2 dominated, but mostly because, at $300, it was the cheapest DVD player you could get at the time. The Wii pretty much took over the world at $250. The Playstation 3 and Xbox 360 didn't become hits of their own until they got into the $200-$300 range. 

As I said before, in order for Sony to succeed this generation, they need to settle for nothing less than total domination.  And the way I see it, in order for that to happen, they need nothing less than a miracle.

To tie back to the story analogy I used earlier in this blog, if this tale is to have a happy ending, then there needs to be some sort of deus ex machina implemented into the story.

And I don't think the author has enough ink for that.
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About The Bowels of Trogdorone of us since 7:13 PM on 03.09.2013

Legitimate business.