Q&A: PS3 launch endgame with Kaz Hirai

SCEA prez discusses supply flow, game releases, and how the planned PS3 launch differs from the reality.

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With less than a month to go before the PlayStation 3 hits North American shores, the excitement among Sony fans is palpable. That enthusiasm was stirred up today, when Sony staged a Gamers' Day event at Dog Patch Studios, an über-hip urban display space in the China Basin district of San Francisco. Its primary purpose was to show off the PS3's controversial Sixaxis controller and some of the functions of the PS3's online service. At the same time, Sony formally announced the PS3's final 21-game launch lineup.

Presiding over today's event was Ken Kutaragi's right-hand man in the States, Sony Computer Entertainment America president Kaz Hirai. Despite several bumps in the PS3's road to release, the always indefatigable and arguably suave executive remains as enthusiastic as ever about his company's product. And when GameSpot caught up with Hirai this week, he was more than eager to explain how he thinks the high-tech console will be a game-industry cornerstone well into the next decade.

GameSpot: So tell us how you're looking for launch and is everything lining up the way that you planned?

Kaz Hirai: The PlayStation 3 is rocking for a launch in North America for November 17. All the preparations that we've worked so hard to get ready for the launch, both internally and also working with all of our external partners, are really coming together. We're really excited for the launch and looking forward to it. It's about a month's time now.

GS: How have you adjusted your plans between now and when you guys started planning the launch?

KH: I think that with every launch comes unique challenges. And this time, for example, it's not only about the software that's going to be available day one, but also all the things that we'd like to try to accomplish and launch in terms of our network platform initiatives as well. That's also been a challenge as well as a learning experience for us as we embark on really a new chapter in the PlayStation family of products.

GS: One of the things that is going to be heavily scrutinized is supply quantity of the PS3. We know that you guys want to make them as quick as you can but obviously you had some production issues. So how close are you to ironing out the manufacturing issues that have slowed down production so far, and when do you really expect production to ramp up?

KH: Production is ramping up for the PlayStation 3 as we speak. Obviously production has already began and we want to make sure that we keep the ramp and get the install base up as quickly as possible. We have both the Japanese market as well as the North American market to ship to, and we also need to be prepared for launch in Europe for March of next year as well. So we want to make sure that we get the ramp up as quickly as possible.

GS: How close are you guys to making that happen? I know right now you guys are cranking as hard as you can, but we're only going to get a fixed amount of consoles.

KH: All the issues have been ironed out; now it's just a matter of being able to replicate the process to as many lines as possible--which is going to help you, obviously, get as many units as possible. We're in the process of getting as many lines as possible up and running for all the components that go into the PlayStation 3.

GS: Now about the preorder program, which lasted all of about a day... Can you speak to how you guys are going to handle the demand on launch day? I mean you've heard some retailers say they're getting only eight for preorder and maybe more on launch day.

KH: Well the preorder programs are something that the retailers have really decided to do on their own initiative. Some retailers have done it. Others have decided not to. Ultimately, we're going to look at the number of units that we have in our warehouse ready to ship as we get closer to launch date. And we'll obviously communicate the initial allocation to all the retailers before we start shipping those units out.

But just as important, I think, to certainly the retailers and all the people looking to purchase a PlayStation 3 is the flow of product after [launch]. We want to make sure that we're not only communicating the initial launch allocation but also the flow after the launch as well.

GS: How are you going to manage the quantities of PS3 software and accessories? Are you just going to throw everything that you can out in the marketplace, or are you guys trying to match software and accessory quantity with hardware in stores?

KH: As far as software goes, that's a process that we manage here in North America. We manufacture the Blu-ray discs in our factories in North America, and so we're able to quickly turn those around. As you probably know, manufacturing an optical disc is a lot quicker than manufacturing a console or a peripheral, which is really a hardware device.

But we do want to make sure that when we're pressing a particular title on PS3 that we're looking at the flow of the hardware product as well so that we're not oversupplying into the market or that we're not undersupplying the market. The beauty of all this, obviously, is that because it's an optical medium we can turn up the production or adjust it accordingly on the fly. Whereas, with previous generations, you had to really plan out the software side as if you were planning out hardware. But that's obviously no longer the case.

GS: And how about accessories? Are you guys assuming that everybody's going to get four controllers?

KH: We get one in the box and then we look at historic tie ratios of additional controllers at the launch period. We also look at which kind of games are available, which games we think will the gamers really want to take advantage of multiplayer aspects. Then we come up with a number that we think is appropriate as a tie ratio to the number of hardware units that go out the door.

GS: Now are you guys able to speak to the percentages of 20GB and 60GB PS3s that will be on the market?

KH: We've been speaking to all of our retail partners since E3, and that's been kind of an ongoing dialogue with all of our retail partners. Just generally speaking, it seems to me that the 60GB version has gotten a lot more traction with our retail partners and also just in general. The feedback that we've been getting from the gamers as well really points more towards the 60GB version than the 20GB version.

GS: So are you going to be skewing more toward providing 60GB to stores?

KH: We'll probably end up, at least in the initial launch stage, putting more emphasis on the 60GB version as opposed to the 20GB. Now, that's only an estimate that we can make in conjunction with our discussions with retailers and feedback that we're getting from the gamers. Ultimately, I think what will decide what kind of product mix we'll have is going to be looking at the sell-through rates at retail and then we'll obviously have a better gauge of what the consumer demand is.

GS: OK. Now, obviously people are still talking about the price. What do you think is going to win people over? Is it going to be software or hardware features? If it's a mix of both, let us know what you feel are the key aspects that will connect with consumers.

KH: I think that both with the $599 for the 60GB version and $499 for the 20GB version, we are offering a fantastic value to the consumers. That's both in terms of what we have brought in terms of cutting-edge technology into the PlayStation 3 as a hardware platform as well as the software experience that the gamers will be able to enjoy through the PlayStation 3 games.

Talking about the hardware, we've packed in the Cell processor, and it is also a Blu-ray disc player that also plays games in Blu-ray. That also means that, given the storage capacity of Blu-ray, the PlayStation 3 is a platform that's going to be here for the next 10 years at least, just like the original PlayStation and PlayStation 2. Right now, [the PS2] is in its sixth year and is outselling all other competitive platforms.

Traditionally, console cycles have been five years, after which you drop what you were doing and then move on. We've never done that. And the reason why we have been able to sustain a longer platform life cycle is because of the technology that we've packed into any of our consoles, including PlayStation 3, from day one.

On the software side we're embarking, literally, on a real quantum leap over anything you've experienced before, again in conjunction with the Cell processor, but also outputting the games onto true HD and onto 1080p and in some cases running at 60 frames per second.

All those things, I think, are combining to make a great value proposition to the consumers. And I would challenge any other console to match the features and the functions and the technology that we've packed into the PlayStation 3 and then do a price comparison. I don't think you'll get a better value at this point in time.

GS: Now speaking of the technology you've put in the PS3, you guys are taking a bit of a risk in putting this much in the console. Are you guys confident this is the right time to introduce this kind of technology into the market? Do you worry you are maybe a little bit ahead of the curve?

KH: We always need to be at least two steps ahead of what is currently available in terms of conventional technology to make sure that we have a console that really is relevant in five or 10 years' time. It's the easiest thing in the world to do to just cobble together conventionally available technology, put it in a nice-looking box and say, "This is a next-generation product for consumers."

Ultimately, though, you're doing a great disservice because what you're doing is providing a consumer something that doesn't technologically push the envelope. Therefore, it also means that you're going to ask the consumers to drop that platform in four years' time, five years' time. Then they have a repeat performance by buying the next console, which basically is cobbled together from conventional technology that's available at that point in time.

We don't want to be going down that path. What we want to do is put a stake in the ground and put in the latest and the greatest in terms of cutting-edge technology, whether it's the cell processor, whether it's the storage device or the Blu-ray and, again, make sure that we're providing a value to the consumers that's going to be relevant in five years' time or 10 years' time.

GS: You talked about managing a lot of the different aspects of things that are associated with the platform. So how are you managing the software portfolio this year? How many first- and third-party titles do you see out by the end of the year?

KH: We see about 20 or so titles for the launch period for North America on November 17. [NOTE: Sony has since confirmed 21 day-one launch titles.] And my estimate right now is that by the end of December, we're looking at upwards of 30 titles or so between first and third party for the PlayStation 3.

GS: Now the cross media bar on the PS3 display is going to evolve over time. Is this true for other aspects of the hardware? For example, do you think that there might be a day that the controller will get force feedback?

KH: Well, I think that just like we are able to offer firmware upgrades to the PlayStation Portable, we want to make sure that we're offering firmware upgrades or functionality upgrades on a periodical basis for the consumers of the PlayStation 3 as well. And that's one of the beauties, again, of a console that's always connected.

As far as other peripherals and how they may evolve in the future, including the controller, that's something that we will have to take a look at as different kinds of game concepts come about. The important thing for us with the PS3 controller is the fact that we've kind of moved away from the vibration because it was more important for us to become an extension of the user's movements via the motion-sensor controller. That is more of an active involvement in a game with your movements, as opposed to a rumble feature, which is just reacting to gameplay. Between a reactive functionality and an active functionality, I'd much rather take the active function of an input methodology over a feedback device any day.

GS: Are the Wii's launch day and launch window titles something you guys are even taking into consideration?

KH: Can somebody tell me when they're launching, because I don't know...

GS: They're launching on the 19th.

KH: At E3 we talked about our launch dates, so it's been something that we've been planning for a very long time. Other manufactures may decide to launch before or after us. That's obviously their decision to make, but it doesn't really affect our decisions on launch dates of hardware or, quite honestly, launch dates of software. We decide when we want to make the decision to set a date for a product and we stick to it.

GS: How would you say this launch compares to previous Sony hardware launches? What would you say you've learned from them and how has that affected the PS3 launch?

KH: The launch of any PlayStation family product, in terms of hardware, I think is a very important milestone for certainly the video game industry but also for Sony corporation overall as well. The PlayStation 3 not only involves the traditional companies involved in the video game industry, but also, for example, the PlayStation 3 is going to stimulate demand for high-definition TV monitors, whether it's Sony or other manufacturers.

The fact that it does play Blu-ray movies is going to stimulate, I think, a demand for Blu-ray motion pictures, which are released by the studios. So it affects more industries than perhaps the launch of PlayStation or PlayStation 2. That, I think, makes it very important for the entertainment industry as well as for the electronics industries, certainly more so than previous platforms that we've launched.

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