SCE Australia boss on the 40GB PS3

Sony has recently confirmed its PlayStation 3 plans in Australia. The 60GB model is being discontinued, with the newly introduced 40GB version the only one available for the foreseeable future. GameSpot AU chatted with Sony Computer Entertainment Australia and New Zealand managing director Michael Ephraim on why the company decided to introduce a brand-new retail unit, what flak he's expecting from gamers, and how much of an impact he expects the new 40GB model will make on PS3 sales.

GameSpot AU: Why bring in a new 40GB model to Australia?

Michael Ephraim: Clearly the 40GB model is to bring the cost down and bring in a price point that we can expand the market going into Christmas.

GS AU: So how will this affect sales?

ME: I'm very confident that if you talk to any retailer we're involved with, that they're ecstatic about the announcement--they're unanimous that this will give it a real kick along.

GS AU: Do you want to quantify what effect it will have?

ME: I'd rather not go out on a limb and try to do crystal-ball gazing. But we have a predetermined amount that we want to sell before Christmas which we think we'll achieve, but it's not something I want to make public right now. We're sitting at 83,000 units install base, and by the end of the year we should come very close [to] or exceed that number in this quarter. So that gives you an idea of what we want to do. We're confident that this new price point and the introduction of some great new games like Uncharted and our Haze exclusive from Ubisoft will basically tick two boxes: price and range of software. Both of those will be addressed this quarter.

GS AU: So what is it about the 40GB PS3 that does not allow it to play PS2 games?

ME: I'm not technologically versed, but my understanding is there's no PS2 chip in there which was removed when we talked about software emulation, and that software emulation program is not in there. The decision in this is that we've really done a lot of research, and the PS3 is such an advanced technological product that the people who are buying it now are enjoying all the other applications--games in HD, movies in HD--that the issue of backward compatibility on PS2 hasn't really hit the Richter Scale. These people are enjoying new technology. A lot of people have also commented that there are 2.4 million PS2s in Australian homes--if you want to play a PS2 game then you can play it on a PS2, and I don't want to be cynical or rude about that. But if you think about what the PS3 offers, there are so many functions to keep the consumer happy and busy that backward compatibility is not high on their agenda.

GS AU: So this decision to remove backward compatibility is from research Sony has done of what people do after they get their PS3 at home?

ME: Exactly. And the PS3 has so many new "wow" factors that people are enjoying those and not going back to the PS2 games.

GS AU: Do you still expect to cop flak from gamers out there, though?

ME: To be honest, no matter what we do we cop flak. We seem to be copping flak on just about everything we do. What we just have to say on that is, if you look at the sales figures, we've done 82,000 PS3s since launch in March 07. Nintendo Wii has sold 168,000 units since December 2006. And Microsoft's Xbox 360 has sold 222,000 units, but they launched March 2006. When you look at that--83,000 units at a price that everyone said was expensive--that's a very solid result. We think now that with the price reduction, we're going to come very close [to] if not exceed doubling that number by the end of this year.

We got flak about the price, but if you look at dollar value we're ahead of the other next-generation consoles, especially when you look at 82,000 PS3s at a A$1000 versus Nintendo Wii's 168,000 units at A$400. We've copped flak about the price, but the product is still selling extremely well. We copped flak about putting in new technology such as Blu-ray, and we think that will resolve itself when high-definition and Blu-ray becomes a standard. We'll probably cop flak about backward compatibility, but as we sell more PS3s, people will come back and say, you know what, at the end of the day it didn't really matter.

We will cop flak, but we have to take that on the chin, because we believe the PS3 product will prove that the vision was correct. Whenever you have a new item that is establishing new boundaries in entertainment, you're going to cop flak. If you look at the price point of the PS3 now, I cannot bring myself to compare the PS3 and the Wii. Although they're both next-gen systems, one has taken a right turn and one has taken a left turn--it's like comparing apples and nuclear bombs. Nintendo Wii should be compared with PlayStation 2 for the functionality, the experience, and the demographic it appeals to. Consumers in that space will compare between a PS2 and a Wii, not a Wii and a PS3--they're just completely different animals.

GS AU: So what will happen to the 60GB PS3 model here in Australia?

ME: The 60GB model--with what stock we have left in trade--will be phased out, and the 40GB model is what we'll be supplying stores with going into Christmas and the new year.

GS AU: So once current 60GB stocks are depleted there will only be one SKU--40GB--left?

ME: There will be one SKU--40GB. And any de-speccing of the unit we've done on PS3--except for backwards compatibility--can be upgraded by the consumer very easily. If you want portable media slots, you can buy USB adaptors. You can increase your hard drive or use an external hard drive, and you can also use USB port extensions. We haven't taken any applications away--we've just reduced the capability of the machine in those areas, but people can upgrade if they want to use that functionality more.

GS AU: So Australians won't see a price drop or a new bundle package that UK consumers received on the 60GB model?

ME: We've already done that--that's the starter pack that's been running out there that has Resistance: Fall of Man, MotorStorm, and a second controller.

GS AU: So that will be ongoing?

ME: Yes. That offer is out there as long as there are 60GB units out there. Once that fades away the 40GB will be the only SKU.

GS AU: Care to make a guess how long the 60GB model will last in the channel?

ME: There are very limited stocks. I would say 20-30 percent of retail stores have them in stock right now. That was always part of our plan to transition smoothly to a new SKU.

GS AU: Michael Ephraim, thanks for your time.