Thursday, February 21, 2008

Can PS3 retake gaming crown?

Blu-ray platform gives Sony boost

No industry is as aggressive about maintaining momentum as the entertainment world, a lesson Sony Corp. clearly understands after its PlayStation 3 video-game console got the boost it needed after Toshiba Corp. abandoned its HD-DVD business on Tuesday.

It came at a crucial time. As NintendoInc.' s Wii continues to be snapped off retail shelves more than a year after it was launched, video-game pundits began to declare "game over" for the Sony system.

It was deemed too expensive and not as innovative as other Sony products, critics claimed, as the lack of Play-Station 3 sales contributed to Sony's games division posting a loss of US$1.97-billion in the last fiscal year.

Now with Blu-ray, the next-generation high-definition video player, on a roll as major companies back it, can Play-Station 3 reclaim its crown as the world's most popular video-game console?

Absolutely, said Paul O'Donnell, London-based Gartner principal analyst.

"The real winner in this race is the PlayStation 3," Mr. O'Donnell said. "The Blu-ray was such a critical part of their business model, they couldn't let it go. And now they've won."

While reports suggest Bluray was poised to capture the lion's share of the US$24-billion home-entertainment market, the figure dwarfs the US$37.5-billion worldwide video-game industry, a larger pie that Sony is now primed to take more of.

Although video games have been a relatively insular activity, it was only when Wii emerged that video gaming truly took off. To date, more than 21 million households have purchased Nintendo's console, lauded for its innovative wireless remote-control interface.

Both Sony and Microsoft Corp. marketed their consoles as more of a media centre than a video game. However, only Microsoft's Xbox 360 has proved to be a hit with consumers, with 17-million units sold, aided in part by the popularity of Halo 3, the best-selling video game of 2007 in the United States.

Today, Sony's strategy to marry the Blu-ray with its next-generation video console looks to be a winner, said Mark Perrella, IDC Canada vice-president of technology.

"They're giving more of that high-definition premium experience and now it's more attractive to a greater amount of consumers," he said.

Taking several cues from other failed format wars-- BetaMax, MiniDisc, the Memory Stick--Sony learned that to be successful with a new media player, it had to be able to control the content available.

When Blu-ray was introduced in 2002, Sony made sure it partnered with as many film studios and retailers as possible to strongarm consumers into adopting its technology.

After several years with no leader in the high-definition video world emerging, the real tipping point, Mr. Perrella says, was when Warner Bros. Entertainment decided last month it will release films only on the Bluray format.

"The key thing is having compelling content widely available consumed in that format," Mr. Perrella said.

The cheapest Blu-ray player on the market has a price tag between $399 and $499, and Mr. O'Donnell expects Sony to cut prices further within the next few months to maintain momentum.

"[Sony] will do everything it can to come back from the brink," he said. "You'll see pricing, bundled with Bluray discs and TVs. It's seen as more as a media centre for your living room that can play games as well".


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