With a console that's been branded future proof numerous times, it's vital to Sony's succes that PlayStation 3 continues to evolve (both via software and firmware revisions). Speaking to 1UP last week at DICE, Phil Harrison, President, Worldwide Studios, Sony Computer Entertainment, discussed how the platform would evolve, if the PlayStation Network can catch up with Microsoft's Xbox Live and reminded us that Sony is in the videogame industry to make money. 1UP: Digital distribution appears to be the future of PlayStation 3. We've already seen Gran Turismo HD, Tekken's coming out, we've heard rumblings from other big name games that are going to be digital only. Is this Sony trying to get rid of the used game market, trying to get rid of retail -- where is this going?
Phil Harrison: Well, let's talk about the trend first of all. I completely agree that the ability to deliver content into somebody's home through broadband network is not just the future it's the reality of now. Look at the way that people are consuming music, the way people are consuming television shows -- games clearly are going to be the next that trend. But this is not to replace Blu-ray disc. This is to operate beside Blu-ray disc and the games that you buy on Blu-ray disc may actually end up being a key that takes you into a dynamic content-lead experience where you meet other people, you see other people's content.
It's not just about digital distribution of the game itself, but it's about re-distribution of the experience after you've bought into that particular game. It's got nothing to do with any plan that we have to eliminate retail. That's just ridiculous. I mean clearly the cheapest and most efficient way of getting 50GBs of stuff into somebody's home is to put it on a Blu-ray disc and to sell it in a store. But we think there are opportunities to engage users and players in very meaningful ways after they buy that game, either through commercial or non-commercial means.
1UP: Do you feel that these digital downloads like Gran Turismo HD aren't getting the word out to the public because there's no point of purchase. If you go to a store, you don't now that GTHD exists and there is no commercial for it. Do you feel Sony's maybe missing the opportunity in terms of informing the consumers about these downloads?
PH: Well I think we're just starting out with what the PlayStation network means and how people engage with the PlayStation network, but to correct you, we did run a TV commercial. We ran it in Japan only.
But we did do a call to action in Japan to say that the PlayStation network is there, you can download game, and you can experience all this richer world of content through your broadband connection. But the attachment ratio of the broadband network for the PlayStation 3 is phenomenal. So, people who are online, they are downloading this content. Obviously this is part of a plan to get as many connected consoles as we can for the future of our business.
1UP: And do you think the fact that PS3 has larger downloadable games -- that aren't mini-games, they're not Xbox Live Arcade titles -- gives you an edge that your competitors don't have?
PH: Well we made a very conscious decision in putting a hard drive in every machine and a minimum of 20GB, 60GB and who knows in the future, maybe that will rise -- you know, that tends to be a trend.
The decision we made to put a hard drive in every PlayStation 3 was because we saw the long term benefit. The ten year plan of allowing people to download all kinds of digital content to their PlayStation 3 -- not just games but movies, music, HD, standard definition TV, you name it. And that was a significant investment, but it was absolutely the right thing to do.
1UP: Microsoft's Video Marketplace has been a successful feature for them. Considering Sony is a media company, will the PlayStation Network see downloadable TV and movies soon, or is that a bit further off?
PH: I think it's incredibly important that we establish what PlayStation 3 stands for. And I think PlayStation 3 needs to stand for gaming and digital entertainment in the living room pushing the envelope of high definition, pushing the envelope of broadband, and of course that includes more than just games. We don't have the announcements that you're probably looking for today, but it is digital data. We have a hard drive, we have a commerce engine, it doesn't take a rocket scientist to figure out we will have that on the network very shortly.
1UP: With Microsoft readying their biggest guns for 2007, does Sony need a big showing at something like GDC next month? Sony needs to compete with Microsoft this holiday season, are March and GDC going to be Sony's coming out party where we see some firm plans for the rest of the year.
PH: Well, I'm not, unfortunately, going to enlighten you on my plans for GDC although we have some interesting announcements to make. I think it's no secret that we're going to make a couple of exclusive announcements there. But it's important to understand from our point of view, we are not focused on one competitor, trying to adjust or change our strategy because of what one competitor is doing in the market. We have our strategy, we're here to grow the market, we're here to build out the PlayStation brand and experience on a worldwide basis, building on the success that we have and we're continuing to do that. We're not going to slate our lineup just because of competitive activity. We'll continue to plow our own furrow.
1UP: Is the extended lifecycle of the PlayStation 2 part of the strategy to combat potentially slow adoption rates for PlayStation 3 because of the barriers to entry the system faces (price point, availability)?
PH: Yeah, I think that's fair. I think we have that tremendous advantage of having those loyal consumers who were enjoying PlayStation brand in whatever incarnation that might be and different consumers buy into new technology at different times at different price points when different kinds of games are available. This has been the tradition of the industry and therefore no surprise to us now. But what we're seeing with PlayStation 2 is not just the kind of demographic reach changing -- we're getting to a really really wide section of the population -- we're also seeing the geographic reach of the console expanding as well. We're seeing a market evolving really rapidly in Eastern Europe and Russia which never existed before, and this will keep the economics of the business going strongly for developers and publishers for a long time to come.
1UP: Recently, Takao Yuhara indicated that price drops are a part of Sony's plan to expand the market when the timing is right. Is it damaging, this early in the console's lifecycle and just ahead of the system's launch in Europe to already be talking about price drops?
PH: Well, do you know what he said was, cost reduction, not price drop, and there's a big difference between cost reduction and price drop. So, that I believe is where the confusion came from. Obviously, we are investing our money in making PlayStation 3s cheaper to manufacture -- that's part of our business plan.
1UP: You're not going to pass the savings along?
PH: When we can, when there are savings to pass along to the consumer, we would obviously choose to do that. That's the business model.
1UP: Wait? You guys are doing this to make money? Really?
PH: That's videogame hardware 101.
Source
Phil Harrison: Well, let's talk about the trend first of all. I completely agree that the ability to deliver content into somebody's home through broadband network is not just the future it's the reality of now. Look at the way that people are consuming music, the way people are consuming television shows -- games clearly are going to be the next that trend. But this is not to replace Blu-ray disc. This is to operate beside Blu-ray disc and the games that you buy on Blu-ray disc may actually end up being a key that takes you into a dynamic content-lead experience where you meet other people, you see other people's content.
It's not just about digital distribution of the game itself, but it's about re-distribution of the experience after you've bought into that particular game. It's got nothing to do with any plan that we have to eliminate retail. That's just ridiculous. I mean clearly the cheapest and most efficient way of getting 50GBs of stuff into somebody's home is to put it on a Blu-ray disc and to sell it in a store. But we think there are opportunities to engage users and players in very meaningful ways after they buy that game, either through commercial or non-commercial means.
1UP: Do you feel that these digital downloads like Gran Turismo HD aren't getting the word out to the public because there's no point of purchase. If you go to a store, you don't now that GTHD exists and there is no commercial for it. Do you feel Sony's maybe missing the opportunity in terms of informing the consumers about these downloads?
PH: Well I think we're just starting out with what the PlayStation network means and how people engage with the PlayStation network, but to correct you, we did run a TV commercial. We ran it in Japan only.
But we did do a call to action in Japan to say that the PlayStation network is there, you can download game, and you can experience all this richer world of content through your broadband connection. But the attachment ratio of the broadband network for the PlayStation 3 is phenomenal. So, people who are online, they are downloading this content. Obviously this is part of a plan to get as many connected consoles as we can for the future of our business.
1UP: And do you think the fact that PS3 has larger downloadable games -- that aren't mini-games, they're not Xbox Live Arcade titles -- gives you an edge that your competitors don't have?
PH: Well we made a very conscious decision in putting a hard drive in every machine and a minimum of 20GB, 60GB and who knows in the future, maybe that will rise -- you know, that tends to be a trend.
The decision we made to put a hard drive in every PlayStation 3 was because we saw the long term benefit. The ten year plan of allowing people to download all kinds of digital content to their PlayStation 3 -- not just games but movies, music, HD, standard definition TV, you name it. And that was a significant investment, but it was absolutely the right thing to do.
1UP: Microsoft's Video Marketplace has been a successful feature for them. Considering Sony is a media company, will the PlayStation Network see downloadable TV and movies soon, or is that a bit further off?
PH: I think it's incredibly important that we establish what PlayStation 3 stands for. And I think PlayStation 3 needs to stand for gaming and digital entertainment in the living room pushing the envelope of high definition, pushing the envelope of broadband, and of course that includes more than just games. We don't have the announcements that you're probably looking for today, but it is digital data. We have a hard drive, we have a commerce engine, it doesn't take a rocket scientist to figure out we will have that on the network very shortly.
1UP: With Microsoft readying their biggest guns for 2007, does Sony need a big showing at something like GDC next month? Sony needs to compete with Microsoft this holiday season, are March and GDC going to be Sony's coming out party where we see some firm plans for the rest of the year.
PH: Well, I'm not, unfortunately, going to enlighten you on my plans for GDC although we have some interesting announcements to make. I think it's no secret that we're going to make a couple of exclusive announcements there. But it's important to understand from our point of view, we are not focused on one competitor, trying to adjust or change our strategy because of what one competitor is doing in the market. We have our strategy, we're here to grow the market, we're here to build out the PlayStation brand and experience on a worldwide basis, building on the success that we have and we're continuing to do that. We're not going to slate our lineup just because of competitive activity. We'll continue to plow our own furrow.
1UP: Is the extended lifecycle of the PlayStation 2 part of the strategy to combat potentially slow adoption rates for PlayStation 3 because of the barriers to entry the system faces (price point, availability)?
PH: Yeah, I think that's fair. I think we have that tremendous advantage of having those loyal consumers who were enjoying PlayStation brand in whatever incarnation that might be and different consumers buy into new technology at different times at different price points when different kinds of games are available. This has been the tradition of the industry and therefore no surprise to us now. But what we're seeing with PlayStation 2 is not just the kind of demographic reach changing -- we're getting to a really really wide section of the population -- we're also seeing the geographic reach of the console expanding as well. We're seeing a market evolving really rapidly in Eastern Europe and Russia which never existed before, and this will keep the economics of the business going strongly for developers and publishers for a long time to come.
1UP: Recently, Takao Yuhara indicated that price drops are a part of Sony's plan to expand the market when the timing is right. Is it damaging, this early in the console's lifecycle and just ahead of the system's launch in Europe to already be talking about price drops?
PH: Well, do you know what he said was, cost reduction, not price drop, and there's a big difference between cost reduction and price drop. So, that I believe is where the confusion came from. Obviously, we are investing our money in making PlayStation 3s cheaper to manufacture -- that's part of our business plan.
1UP: You're not going to pass the savings along?
PH: When we can, when there are savings to pass along to the consumer, we would obviously choose to do that. That's the business model.
1UP: Wait? You guys are doing this to make money? Really?
PH: That's videogame hardware 101.
Source
