Will Sony ever make Playstation 4?

Possibly not. The costs of developing and marketing a global gaming platform are in the billions of dollars. Playstation 3 looks like it will come a very lowly and unprofitable 3rd in this generation. So they are almost going to need to bet the whole company if they are going to go on to do PS4.

What went wrong? The main thing is that they didn’t have their eye on the ball of entertaining people. Instead they tried to use the PS3 as a Trojan horse to get Blu-ray into people’s homes and as a tool to allow them to escape from American processor manufacturers. And they expected the console buyers to pay for this.

Not only is the PS3 massively too expensive to make and for the market to pay for but it also had another technology related problem. It was too late. Everyone knew that Microsoft was after first to market advantage in this generation. Not only did Sony let them get away with it, they also had long additional delays forced upon them by all the new technology.

Then there is Nintendo. Currently making more profit than any computer game company has ever made before. In the whole of history. Their Wii sales are only limited by how many they can manufacture. If they made 3 million, 4 million a month they would sell them. And they make a profit on every one. So just about every console game developer and publisher in the world is rushing to throw resources at developing for it. And where are those resources coming from? You guessed it, from developing PS3 games.

So we have a virtuous circle with Nintendo, the more it succeeds the more games will be made for it so it will succeed even more. With Sony we have the opposite, the less it succeeds the fewer games will be made for it and so it will succeed even less.

Meanwhile Microsoft are cruising to second again, it has always taken them three generations of a product to win. And they are just about to play their joker. Releasing Halo 3 going into this holiday season is going to create massive demand. By all accounts Bungie have learned the lessons of Halo 2 and have made a blockbuster of game of the year proportions.

With demand so rampant for the Wii and 360 where will the money come from to buy expensive PS3s? It just isn’t going to happen. All that is keeping Sony in the market is the PS2, the PSP is fatally flawed as a platform and will just fade away, even in it’s new slimline form.

So is this just a gross exaggeration or do you detect a germ of truth? Let us know by using the comments.

17 comments ↓

#1 Evan on 09.18.07 at 7:32 pm

Thanks for the interesting post. Clearly, Sony over-reached with the PS3 — Sony has created a remarkably elegant console, but it has taken much too long to get the games out. I wouldn’t say that Sony has forgotten how to entertain people, but rather that it has forgotten that most people do not require a super-powered console to be entertained.

In some ways, Nintendo has lowered the bar for consoles and console games by showing that huge numbers of people can be entertained by games that are much simpler than what is required to attract the ranks of experienced gamers. This is probably good for the industry as a whole because eventually a large number of the Wii gamers will demand more sophisticated games. Clearly, Sony’s future will be strongly influenced by how successfully Nintendo is able to hold onto gamers as they become more experienced and as their tastes become more sophisticated.

#2 Tyler on 09.18.07 at 7:34 pm

What will keep Sony alive is what happened with Nintendo in the first place. The NES sold like hotcakes but the casual consumer isn’t prepared to continually upgrade their videogame console. My DVD player still works…why do I have to buy a new Wii? Without upgrading though games will never look any better (Wii games still have yet to hit that late PS2 caliber but Galaxy could get there.) I’m thinking a new Wii will debut in ’09/’10 when HDtvs have a larger base. And Microsoft still has yet to convince the Japanese market as well.

Also the PSP is not a failure. Compared to the DS Lite? Yeah but that sells something amazing. If they can profit off the PSP hardware and finally get their media service in gear they’ll be in good shape.

They are in bad shape but I would hardly write them out of the game just yet.

#3 xiong on 09.19.07 at 5:21 am

Exaggerated, but no grossly so.

Evan is right. Sony and the entertainment industry has forgotten that we the public do not need “a super-powered console” or an epic trilogy to be entertained.

The problem with the PS3 is that Sony wanted it to be the be-all-end-all “entertainment system.” In reality it was far from it. The online network is inferior to Xbox Live. All the promised online and multimedia functionality is lacking especially when virtually everyone owns a computer, which does it better.

It’s still early in this generation of the console wars, but I do not think Sony will be defeated yet. Even if they fall this generation I’m sure they would not mind coming in second or even third in the next. Just look at Nintendo, they fought, lost and ran away last generation. However, this generation, because they live to fight today, they are actually winning this generation’s fight.

Also, don’t forget, gaming is an international pastime. In the land of the rising sun there are probably more Sega Dreamcast owners than Xbox 360 owners.

Tyler sums it up just right, “They are in bad shape but I would hardly write them out of the game just yet.”

#4 Evan on 09.19.07 at 3:24 pm

It strikes me that the good news for Sony is that, of the three console makers, Sony arguably has the most complete suite of assets and capabilities to bring to bear on the gaming market. Sony simply needs to re-think and re-focus its efforts.

In many ways, it should be much easier to come up with a Wii-killer than a 360-killer. Nintendo has shown that a much simpler console with much simpler games can be very profitable. If competitors do not need to push the technology envelope to beat the Wii, then the battle boils down to good content and good marketing. Sony is capable of plenty of both if it focuses correctly.

Of course, now that Nintendo has lowered the technology bar for entry into the console gaming business, it would be an interesting time for other companies to try their hands at it. A company such as Apple or Google could probably out-market Nintendo, and both know how to do content deals. I suspect that gamers would go wild over a new console entrant if the approach was well designed and executed. It would surely be interesting!

#5 a714generation on 09.19.07 at 7:45 pm

I believe that Sony is now trying to push ahead of the curve in Gaming 2.0 strategies in hopes that it will boost their sales. Home is an ambitious and unique approach–a concept that many people, gamer and non gamer alike, will eventually embrace.

The downside is that it’s too soon and and pushing the boundaries too far. Nintendo has done an excellent job of percieving what is “now”, as opposed to “what will be”. They’ve positioned their machine perfectly to take advantage of the features and price point sweet spot that consumers are willing to pay.

Sony’s attempt to push us all into the future too fast has cost them their lead and possibly the continued life of the Playstation brand. PS4 will be a tough call from the financial side of things.

#6 Bruce on 09.20.07 at 12:30 pm

And now Home has been delayed till 2008: http://news.bbc.co.uk/1/hi/technology/7004232.stm
And Sony have announced rumble. But not till spring 2008 in Europe and America. So lots of people won’t buy a PS3 over the forthcoming holiday season.

Sony have a machine gun aimed at their foot with the trigger fully pulled back.

#7 a714generation on 09.21.07 at 4:25 pm

Yet another set back for Sony.

I did see a few news stories Wednesday and yesterday about a new online patent for Sony involving voice recognition for a console. Perhaps they are doing some early PS4 planning after all.

The latest analyst report that you posted on recently does seem to cloud up the picture. From a lay person’s perspective, it seems obvious that Sony will finish third. But the report is predicting that the demand for the 360 will fall off.

I tend to agree with your analysis of the landscape, but the report is intruiging. Maybe they see something we don’t yet.

#8 Bomax on 09.23.07 at 9:50 pm

I remember all the pundit predictions, I would hate to be any type of market analyst at times like this. I regard Michael Pachter a good one, he felt like many still do that 2008 is the year that PS3 must come into its own and eventually win out.

One think I keep going back to is that 100m people bought a PS1, 100m have bought a PS2, so even as the Wii comes along and knocks eveyone out, even if half of those people upgrade to the PS3 surely that inbuilt audience can help Sony at least come second. Also, more people in this cycle will buy more than 1 console, as the wii is so cheap, there will be a segment of people that also buy from either Sony or Microsoft, and Sony can still appeal to more people than Microsoft. All this leads me to believe they will still be able to sell at least 50m PS3′s over time, when the price is forced down, albeit at the cost of Sony’s corporate health.

They do have so much latent potential that 2008 could be a turning point however its true that a ‘large beast’ like Sony may not be able to fully leverage its resources this way. I repeat, I would hate to be a market analyst!

#9 Bruce on 09.24.07 at 10:42 am

I really want to see Playstation 4. And 5 and 6……
There seem to be two routes out of their current malaise.
1) Raise the subsidy on each console sold so as to lower the retail price. This will at least make them price competetive with the Wii and 360. Sony seem to have been raising the funds to do precisely this.
2) Engineer compelling USPs. They seem to be trying this with Home and I think that there will be some great exclusive content in the second half of next year. The big trick they are missing out on is integrating their movie studio IP with their game IP. This is a genuine USP that would give them huge competetive advantage. They need to co develop the game and the movie to get massive development and marketing synergies worth billions of dollars.

I agree that multiple console ownership will be far more common this generation than it has ever been before. Let’s face it, when they get to $199 they are an easy purchase. The differences between the consoles are far more marked in this generation, both in hardware capabilities and exclusive content so there is a great imperative not to just own one.

#10 davros on 09.24.07 at 9:44 pm

Taking perhaps an alternative perspective, does anyone think that Microsoft will make another console, or for that matter still be supporting the 360 into 2009? They have yet to turn a profit, ever. The shareholders at Microsoft are not going to forever let the Xbox division turn in yearly billion dollar losses. If they are “winning” this generation and they still can’t turn a profit then they surely must be looking for the exit?

#11 Evan on 09.25.07 at 12:09 am

davros, good question. I don’t know enough about Microsoft’s long-term strategy to answer. Microsoft surely wants to play a role in video gaming, given the huge and growing revenue potential of the industry. I suspect that Microsoft would be quite happy if the PC was the only gaming platform, but as long as consoles are viable, Microsoft will likely feel a strategic imperative to stay in the fight.

In some ways, the 360 losses to Microsoft are more devastating than the PS3 losses to Sony. Sony uses much of the technology in its PS3 in other Sony products, so its path down the learning and cost reduction curves on those PS3 components has long-term value to Sony across multiple products. Microsoft, as a software company, gains little roll-over value from its losses on the 360 hardware.

Of course, as a gamer, I sometimes wonder if we are focused on the wrong target. Spending $400 on a console that will last several years makes more sense to me than spending $60 on a game that I will play, at most, a few dozen hours. I think I would be happy to pay a higher price for the console if the price of games could be reduced.

#12 Bruce on 09.25.07 at 10:26 am

2 things about Microsoft.
Firstly I don’t think they see it as losses. I think they see it as the investment necessary to achieve a market position.
Secondly the top analysts think that the gaming division is going to make a profit in the upcoming Q1 on the back of Halo 3.

The big problem for Microsoft is still Japan. Until they crack this they will not achieve a lot of what must be their strategic objectives.

#13 will sims on 11.10.07 at 4:06 am

i am sure they will make a ps4 in about 4 years but the question is what will it look like if anybody gets a picture of the ps4 send it to me please.

#14 Mihir on 01.09.08 at 1:34 am

Dear Sony People.
I found a quick message on the internet today. It’s actually urgent for the sony Company. I think that you might want to take this more serious now. Since the Microsoft couldn’t stand to see it’s challengers launching the PSP . Therefore the Microsoft software giant is working on to devlop itself a handheld type of console which is equivalent for the Xbox 360 informs the inquier. There have been several rumors regarding that Microsoft’s Portable console rage and the working engineers at the company’s head quarters they are all trying to discover the recipe fpr a perfect portable console.One of their latest rumors has emerged in a significantly more reliable source when compared to fan boy gossip that surface from the cauldron’s of internet forums that of Dean Takashi in his latest book The Xbox 360 Uncloaked writes the inquirer. Microsoft’s enlargement portfolio strategy has been determined by the fact that not only does Nintendo has Ds and DsLite and Sony has a portable PSP but the other manafacturers also developed and released pocketpc’s TabletPc’s and Origami/Umpcs. Moreover it is also said microsoft despites their official statements to develop an ipod Challenger. This is what their system is going to look like. They are also looking to put it at the between the spring of 2010. There is a way you could get into the website.
1. By typing Google.com and googling it by typing is xbox thinking of making a portable system like PSP.
2 WWW. GAmespot.com
3. http://WWW.joystiq.com
4. http://WWW.Game Pro.com
The only reason why iam giving this information to the Sony Manafcturer is that because iam against Microsoft and I hate all the Microsoft stuff.
Iam more of a Sony Fan and i don’t want Sony to loose I want them to win. i wil also send you a picture of their portable system of how it looks like on the next message. from Mihir.

#15 Adnan on 06.03.09 at 10:02 am

D A M N I WANT AN PS4

#16 extreme gammer on 10.25.09 at 8:31 am

I think the big problem is that what will change from the PS3 to the PS4?

they may upgrade the blue-ray in a couple of years but will really change?????

#17 wiiboy101 on 04.15.10 at 11:04 pm

xbox loss =4 billion x360 loss= plus 4 billion

ps3 loss=5.6 billion and counting
nintendo no loss in 120 years existence
every penny ps1/ps2 ever earned has been wiped away by ps3,psp non profitable and destroyed by DS…

nintendo most profitable company on earth per employee

3DS coming soon ds doing well wii continues lead 3rd partys not profiting

DISRUPTION IS BEST SERVED COLD

ALL HAIL SEAN MALSTROM

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