The Trials And Tribulations Of The PS3 Sales Story

April 14th, 2007

The PS3, the Bluray "Secret Weapon", not doing so well

Despite the support of yet another Sony “viral marketing” fake site (see “Three Speech Muddying The Journalistic Waters”) PS3 sales appear to have slowed dramatically.

Worse yet, perhaps, the UK PS3 launch has whimpered off the line with all the fire of a damp squib. Well, actually, to be fair, it didn't start that well, really. You see, shortly before the launch of the PS3, a rather "simple" attempt was made to auction the PS3 off at a rock concert, for charity, you see. The bidding started at 100 Euros, but didn't get much further - at which point the Sony boss, Phil Harrison jumped on stage and restarted the bidding at 600 Euros (apparently negating the 100 Euros offered by the previous bidder). For several minutes, apparently, the audience was cajoled, but no increase could be had on the new starting price. You can read about it here.

Anyway, after what was reported to be a storming first week - which was celebrated with loads of Press Releases and big talk - the sales of the PS3 plunged by over 80% the very following week (See also "PS3 UK sales rocket... then plummet"). If initial demand was so easily satisfied in one week, I would suggest that the PS3 is in very big trouble. I've also seen some posts online which seemed to question whether the "sales" figure mentioned for the first week in the UK, were actually just units "sold" to stores (normally referred to as "shipped", not "sold"), which would pretty much explain the sales crash the following week if no one bought them. I will admit that I don't know if this "shipped" versus "sold" thing is true - but it seems to makes sense. There's a discussion thread over here that expresses serious doubts about the "sales" numbers touted for the opening week.

However, what's almost ABSURD, is the continued "spin" that seems to be applied to almost every potentially negative public statement some folks in the company make. For instance, if you read all the press releases, one might be inclined to believe (if one were exceptionally dense) that Sony is is having such massive succes in Europe that they are being forced to cut nearly 10% of their work force in SCEE (yep, that's the PS3 division): "Sony Europe Success Means 160 Staff To Go".

But wait, there's more. After apparently selling only 29,000 units the second week, the PS3's third week on sale was even worse - at only 17,000 units. To make things worse, the Nintendo Wii "clobbered" the PS3, too, at 25,000 units. All this when you can hardly find a Wii to buy, and while plenty of PS3s can be seen on the shelves. Yikes. TechNewsWorld calls it like it is, and wonders "Was PS3's European Debut a Dud?" We hear that ChartTrack has taken internal action to try to prevent future information leaks!

And how could the UK be that much different from France, in one article quoted here, we learn that the PS3 launch in France has been called "A Complete And Utter Disaster", with 95% of the PS3s remaining unsold! With the PS3 selling for the equivalent of $779 and $840 in France and the UK, respectively, you decide. According to this story, the streets around the Eiffel Tower, which was chosen as "ground zero" for the official launch, were virtually empty on the day of the launch, with only about 40 people showing up, about the same number as the police which had been recruited to fight back the missing massive crowds of fans that had been hoped for. To add insult to injury, at 10 pm, the journalists present for the PS3 event receive a friendly SMS text message from the "XBox Team", right before a military boat dressed with "XBox Loves You" sails past the group!! I kid you not! An unmitigated disaster. Of the 1,000 PS3s brought to the event to sell to the "crowds", only about 50 were sold!

Perhaps Europeans were shocked to hear that Sony had “removed” the "Emotion Engine" compatibility chip, which was supposed to help the PS3 be able to play more PS1 and PS2 games properly.

Worse yet, on the PS3's home turf in Japan, the Nintendo Wii has been clobbering the heck out of the PS3 in sales and popularity. Recent Enterbrain figures at Game Industry report meeting on April 13th 2007 paint a very sad picture for the PS3. Through April 18th, the Nintendo Wii sold 2,038,951units in Japan, the DS over 15,000,000 - and the PS3? ...810,000... This after we've been repeatedly told that the PS3 is dominating the Japan market? A report from Enterbrain the previous week helps give an idea of how much each console is moving (or not) for the week.

Said Enterbrain President Hamamura, on the poor sales, "Not enough supply and killer application at PS3 launch time. And very much counted on Blu Ray disk did not start very well." Nicely understated.

It seems that even Sony's Chief Howard Stringer has weighed in on the matter, which you can read here: "PS3 could fail, but Blu-ray will win, Sony chief says". Odd comment, that, in my opinion, considering that some consider the Playstation franchise to be rather vital to Sony's financial future. Oh well.... easy come, easy go, I guess.

In another very surprising move, Sony quite suddenly decided to “kill” the 20 Gig version of the PS3, which was the cheapest unit, at $500. According to Sony, “due to The overwhelming demand” for the more expensive 60 Gig model, they listened to customer feedback and eliminated the cheaper model…. This assertion despite the fact that retailers are saying that consumers want the 20 Gig version. Makes you wonder if they actually asked anyone, huh?

My opinion? Bollocks! Sony shipped 90% of their PS3s to the US as the 60 Gig version, and they are all over store shelves in most places. The one unit that cannot be found and has demand has been the cheaper 20 Gig unit - and in fact there are reports that the 20Gig model is getting higher prices on eBay than the 60Gigs reatil. Coincidentally, Sony is said to lose a lot more money on each sale of the cheaper unit. Lack of demand? Uh huh.

This seems to be a pretty obvious effort to stem the losses which resulted from each sale of the 20 Gig unit, in my view. And the elimination of the "Emotion Engine" PS1/PS2 software compatibility chip in the European version of the PS3 would seem to back up this theory quite well.

(UPDATE: I hadn't seen this article in Video Business, called "PS3 Feels Blu", when I was writing this piece, but it came to my attention today, and I think that the writer, Paul Sweeting, is SPOT ON.)

(UPDATE: It seems possible that Sony may soon be replacing the drive in the PS3 60 Gig model with a larger drive, after looking at this report here: "Sony Admits That PS3 Could Need A Bigger HDD".

It's my firm opinion that the loss in value of the US Dollar against various currencies, but particularly the Japanese Yen, has thrown Sony's loss expectation calculations to the wind, and that they are now frantically looking for ways to stem the losses from the PS3.

As evidence, one only need look at the selling prices of the unit in Europe. According to the same article about the French PS3 launch, the same unit that sells for $599 in the US is selling for the equivalent of $779 in France, and $840 in the UK. Since they launched later in these markets, it would seem that the selling prices are more in line with the losses they could afford, maybe?

Even an article about good PS3 sales in Austria had to be rescinded, after a reader sent in pictures of an estimated 100 PS3s stacked all around just one store - unsold. See the story here, and the picture below.

Of course, Sony often enjoys the limelight for saying some pretty dumb things in public, so we would be remiss if we didn't include at least one here. In a recent interview for gamesindustry.biz, covered by Playthrough.net here, SCE EU VP Jamie MacDonald had this little gem to offer:

Q: What would you say to consumers who like Sony and want to buy your products, but perhaps feel that because they’re in Europe they’re always last in line?

A: European consumers have shown that historically they don’t mind that, because they end up buying as many PlayStations, if not more, than the US and Japan. In Europe, it doesn’t seem that the release of our platforms after the US and Japan - in the long run - affects how consumers feel.

But since I'm on the subject of humorous Sony quotes, you have GOT to check out this nice little Top "Ten Things Sony execs may regret saying about the PS3" by reghardware.com - it's peaches. :)

So why has the PS3 fallen on such hard times?

In previous opinion pieces, I think I have outlined my thoughts on this, but I'm not alone. The universal opinion appears to be a combination of things, but primarily Bluray. The inclusion of Bluray in the PS3 caused a jump in the price. The high price has hurt sales. The lack of sales has screwed much of the chances of getting a good software lineup of games. And at the end of the day, THAT's what the PS3 is supposed to be - a game machine. No one is going to want to buy the most expensive games machine with the least amount of games - why should they.

Even Sony Chief Howard Stringer seems to agree with me, saying in a recent interview: "If we fail, it is because we positioned PS3 sales as the Mercedes of the videogame field". Whoa! Game developers depend on volume to recoup their investment, don't they?

Sony has indeed recognized a problem, it seems. But rather than drop Bluray and the PS3's price, they have made public statements that they are going to write more of their own proprietary games for the PS3. But I wonder... are game enthusiasts going to go for it, when their favourite games are already starting to migrate to the XBox 360 and Wii - and are no longer PS3 exclusive?

And other folks are now openly saying that it would probably be better if the PS3 did not include Bluray support – even the creator of the “Gods of War” game - "Jaffe: I Would Not Have Included Bluray In PS3"

I've said in the past that Bluray could be the undoping of the PS3 - and Sony. I feel that they have gambled FAR too much on the success of Bluray, and sacrificed too much in risk protection. If they lose this round, it could be the last they'll be able to afford. The Bluray / HD DVD battle is far too contentious to have involved the PS3 in, in my opinion. I believe that Microsoft made a smart choice by leaving HD DVD as an add-on option for those who wanted it, and focused on the XBox as a game machine. It is now far too late for Sony to remove the Bluray drive from the PS3. Although doing so would likely save the future of the Playstation franchise, it would also signal the death of Bluray.

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Copyright 2006, 2007 Edward Downer. The opinions expressed on this site are those of its creators. We hope that you'll enjoy these pages! - Edward.