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The truth about Sony's scheme

There's a lot of crap flying around about Sony. Some say they're going to come out on top, others say they're going to go bankrupt. From what I've seen so far, Sony isn't going to do either one of those. They won't win this generation of video game consoles, and I'm here to tell you why.

First and foremost, Sony is arrogant. Too arrogant. They have gone so far as to make statements like "If we make it, they will buy it." They're convinced of the strength of their Playstation brand. It is a strong brand, to be sure, and Sony will sell a lot of consoles. The problem is that Sony has set themselves up for a very hard fall. The very fact that the console will sell well will be their undoing. The problem is their world-wide launch. They are going for a world-wide launch with 2 million consoles. 2 million. For 2 months. That's it.

If you want an example of why this will fail, try the Xbox 360. It launched early, and did not go for a world-wide launch. The Xbox brand is not even half as strong as the Playstation brand. They sold 1.5 million consoles in North America, Japan and Europe alone from November 22 to December 31. Think about this: Microsoft sold a mere 100,000 consoles in Japan by the end of 2005. Sony has an enormous Japanese market. That alone will cause that 2 million to run out, and fast. But that isn't alone - Sony will be selling all over the world. Even with its titanic price tag, I predict that the first batch of 2 million consoles is going to sell out in around 2 weeks. That leaves a month and a half before Sony can launch its second batch of 2 million consoles.

What's going to make it sell? Two things: the Playstation brand, and Blu-ray. Sony is trying to push their format with the PS3 - they're marketing the PS3 as a cheaper Blu-ray player (which are normally around $1000 each). The problem is that Sony has a history of failing when it comes to introducing new formats (Betamax, Laserdisc and UMD). Their last attempt at pushing a format with one of their gaming systems didn't save it. It died just like Betamax and Laserdisc. Blu-ray stands more of a chance, as it is on their main console, but its success is still questionable. The real question is this: will people rebuy their entire movie collection, which they only recently bought, just for Blu-ray? I'm betting on no.

But what happens in between the time it takes for Sony to ship the next batch of systems? Nothing good for Sony. As with the PS2, there is a high likelihood of problems and glitches with the first batch of consoles (and unless Sony introduces a more robust costumer service system, this is not a good thing. No one is going to spend $1200 on buying this console twice). The fact that $600 will begin to leave a bad taste in many more people's mouths as they realize just how little there is on the console around launch time. Word of mouth is going to be a bad thing for Sony. A very bad thing. After the PS3 is sold out, what do you have to do besides sit around and ask your PS3-owning friends what it's like? And they will tell you that it is overpriced. The graphics are the same as the Xbox 360. There is no difference besides lack of consoles and games. But here's the real killer: Sony is launching during the holidays. They are going to be having shortages around Christmas time, while the Xbox 360 is going to be nice and stocked up - ready for anything, particularly high sales.

So what next? The games. Xbox 360 games cost $60 each. Sony will either match this, or exceed it. I wouldn't be surprised by $65-$70 games. Sony is going to be losing serious money with every console they sell, so how do they make up for it? With gargantuan game costs, and a draconian scheme to keep games revenue from slipping through their fingers. Just as the rumor states, they are going to make it illegal to sell used games. No longer will you be able to find games at a lower price by giving up their new condition - you either buy it from the store, or not at all. This is Sony's ultimate catch, and they want people to fall for it. And fall for it they shall - until the fact that Sony is screwing everyone over catches on. It shouldn't take long, either. I'm wagering that it will catch on around the second or third shipment of PS3s, and it will be indicated by steadily decreasing console sales.

Sony has priced themselves out of long-term competition. The Xbox 360 and Wii will forever be less expensive, with one offering comparable graphics and the other offering a new way to play games. After the chaos of the Playstation 3 launch, sales will die down. And they will continue to die down, particularly because Sony has no top-sellers as exclusives this time around (with the exception of Final Fantasy XIII, which may well not be promising enough for many buyers). Sony is going to lose first place to Microsoft this time around, and they haven't even realized it yet.