Betting on Blu-Ray, indeed

So the PlayStation 3 isn’t coming out until November, and up-in-the-air Blu-Ray standards are the reason. What does this mean for Sony?

For starters, despite the headlines, it’s not really a delay. We’ve known for a while that the system wouldn’t hit in the spring. And assuming Sony can pull off its worldwide launch without a hitch, a delayed Japan launch will have zero effect on the PS3-Xbox competish in that country (PS3 has already won; nobody cares about the 360 in Japan).

But despite its plan to churn out a million PS3s a month leading up to launch, Sony likely will have problems like Microsoft did coming up with enough consoles to satisfy demand. If Sony does what Microsoft did and allocates systems evenly among the U.S., Europe, and Japan, there’ll be serious trouble. But Microsoft did that because the original Xbox barely registered in Japan; the 360 global launch was an attempt to grab back even a tiny piece of Japan’s market share from Sony. Sony doesn’t have to worry about that. Via Kotaku, here are game system sales in Japan from Feb. 27 through March 5:

DS Lite: 68,438
DS: 49,118
PSP: 43,110
PS2: 25,778
GBA SP: 5,493
GB Micro: 3,213
Gamecube: 1,489
Xbox 360: 1,240
Xbox: 101
GBA: 98

25 times as many PlayStation 2s as Xbox 360s sold. 95 times as many DSes as 360s sold. Sony could wait until 2008 and the PS3 would still trounce the 360 in Japan. So if the company were smart, it would toss Japanese gamers a few systems and bulk up where it counts: America.

Analyst Michael Pachter of Wedbush Morgan Securities says as much in a GameDaily Biz story:

“What Sony has essentially done is delayed its Japanese and U.S. launch until it feels like it can actually supply the channel… If any region gets starved it’s [actually] Japan, not that they don’t care, but they’re going to dominate in Japan so it doesn’t really matter.”He added, “If they’re going to do 6 million by March, odds are 4.5 million of those, if not more, come to the U.S. and Europe… This is what I expected forever; to me nothing about this is surprising.”

Then there’s the question of cost. I still think $400 is the likeliest launch price, especially if the 360 drops to $300 during the holiday season. But now that a 60 GB hard drive seems to be required to play games, $500 is more realistic. Sony has to know that forcing gamers to buy a hard drive separately is worse than not giving them a system at all.

The wild card in all of this remains Blu-Ray. Does Sony have the infrastructure in place to make enough Blu-Ray drives? Is it hemorrhaging cash to do it? The “delay” till November was partly because of copy protection standards for Blu-Ray discs, which will hold the PS3s games — but was PS2 piracy really that big of a problem? I had a mod chip put in my PS1 and burned copies of those games, but I haven’t heard of rampant PS2 modding. Maybe the worry was that a hard-drive equipped PS3 could play ripped games like the original Xbox does, but how much do those techie Xbox owners really affect Microsoft? Putting games on Blu-Ray discs adds a huge cost just for the media on top of Blu-Ray player costs, and for what? To my knowledge, there haven’t been any 2-disc PS2, Xbox, or Xbox 360 games, which come on 9 GB DVDs. A DVD seems fine, capacity-wise. It’ll be years before a game developer fills even half of a 50 GB double-layer Blu-Ray disc. Even if a game spills over a single DVD’s capacity, it seems worth living with the minimal hassle of two discs instead of having to pay for Blu-Ray games.

None of this is good news. The PS3 seems to be driven almost entirely by Sony’s Blu-Ray obsession. And as I’ve said before, Sony’s obsessions with proprietary technology are dangerous. The New York Times story on the PS3 announcements echoes earlier words of warning in this regard (emphasis added): “Sony has been counting on PlayStation 3 to serve as a showcase for two new technologies upon which the company is betting its future.”

With yesterday’s announcement, the gamble has been made. For Sony’s sake, they better not be bluffing.

— March 16, 2006

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