Can PlayStation 4 get Sony back in the game?

Japanese electronics giant is pinning its hopes of a revival on the latest version of its iconic console

For the Sony Corp, a tech industry also-ran, the moment of reckoning is here.

The first three generations of PlayStation sold more than 300 million units, pioneered a new style of serious video games and produced hefty profits. PlayStation 4, introduced by Sony on Wednesday evening, is a bold bid to recapture those glory days of innovation and success.

The first new PlayStation in seven years was promoted by Sony as being like a “supercharged PC”. It has a souped-up eight-core processor to juggle more complex tasks simultaneously, enhanced graphics, the ability to play games even as they are being downloaded, and a new controller designed in tandem with a stereo camera that can sense the depth of the environment in front of it.

All of that should make for more compelling play for the hard-core gamers at the heart of the PlayStation market.

The blood effects in Killzone: Shadow Fall, shown to a preview audience of 1,200 at the Hammerstein at New York’s Manhattan Center on Wednesday night, looked chillingly real.

The console itself was not shown during the two-hour presentation. No release date was given, although before Christmas is a good possibility. No price was mentioned.

With PlayStation 4, serious games are about to become much more social. A player can broadcast a game play in real time, and a friend can peek into the game and hop in to help. Also, players will be able to upload recordings of themselves playing and send them to their friends.

Excitement

Still, these and other new features cannot hide the fact that PlayStation 4 is still a console, a way of playing games on compact discs that was cool when cellphones were not smart.

Much of the excitement in video games has shifted to the web and mobile devices, which is cheap, easy and fast. Nintendo’s new Wii, introduced in November, has been a disappointment. Microsoft’s Xbox, the third major console, is racing to become a home entertainment centre as fast as it can.

“Today marks a moment of truth and a bold step forward for PlayStation,” Andrew House, chief executive of Sony Computer Entertainment, told the crowd. He said the new device “represents a significant shift of thinking of PlayStation as merely a box or console to thinking as a leading authority on play”.

But the new PlayStation will have a difficult time, like the character in Killzone who was shooting at the people in the helicopter while hanging from the helicopter. Sales of consoles from all makers peaked in 2008, when about 55 million units were sold, according to the research firm IDC. By last year, that was down to 34 million.

For 2014, Lewis Ward, IDC’s research manager for video games, forecast a recovery to about 44.5 million.

“From peak to peak, we’ll be down about 10 million,” he said. “There was attrition to alternative gaming platforms like tablets, but the trough was exacerbated by the 2008-9 recession. It did not permit as many people to buy who under normal economic conditions would have bought a console.”

That was reflected in Sony’s miserable financial results. The company has lost money for the past three years, hampered not only by slower console sales but also by a range of unexciting electronic products, a strong yen and the 2011 tsunami that struck Japan.

Analysts have made dire remarks about the one-time powerhouse’s viability. But Sony seems to have bottomed out, helped by a yen that has now weakened. Sony executives said this month that they expected a profit in 2013.

Sony’s new chief executive, Kazuo Hirai, has a longtime personal connection to the PlayStation franchise and is making it one of the core elements of a more tightly focused company.

Hirai became known for some of his more confident statements about the PlayStation, particularly a 2006 swipe at Microsoft: “The next generation doesn’t start until we say it does.”

These days, the next generation is playing games on the web. Console makers typically sell their consoles for a loss and generate profit through sales of games. In 2012, US consumers spent $14.8 billion on game content, including computer and video games, down from $16.34 billion in the previous year, according to the NDP Group, a research firm.

Instead of buying traditional games, which typically cost $50 or more, many consumers are being drawn to the cheaper, sometimes free games available for their smartphones and tablets, analysts say.

PlayStation 4 games can be streamed to the PlayStation Vita, Sony’s portable game device, among other features.

“The architecture is like a PC in many ways, but supercharged to bring out its full potential as a gaming platform,” said Mark Cerny, Sony’s lead system architect.

James L McQuivey, a Forrester analyst, said that for the PlayStation 4 to succeed, Sony needed to think beyond games. The console will have to provide other types of content and services, like video conferencing, third-party apps and a TV service to create a deeper, long-term relationship with the customer.

Digital content

By comparison, Apple, the world’s leading consumer electronics maker, does not just sell hardware. It also has a universe of digital content including apps, music, movies and ebooks to make people come back for more Apple gear every year.

Apple generally takes an enviable 30 per cent cut of all media it sells. Microsoft, Google and Amazon are making similar moves to create such a product array.

“Then and only then can Sony hope to learn enough about its users to overcome its own bias toward preferring to design products in response to engineering principles rather than customer needs,” McQuivey said. – (New York Times)