DFC Intelligence, a game industry research firm, has given its views regarding the PS3,s possible future with surprising predictions. In as little time as less than a year ago, Sony was considered the shoe-in favorite for top honors in the next gen game machine race. Now, in a shocking, if not surprising reversal of fortune, DFC Intelligence now believes that the possibility of a last place finish for the PS3, is indeed, a real likelihood for Sony,s new game console. In the opinion piece, DFC stated that:
"It now appears clear that this new generation of console systems is going to result in a big shake-up in the game industry power structure. While it has always been clear that Sony,s dominant market share was destined to decline, there now appears to be the distinct possibility the PlayStation 3 could end up third in market share behind both the Xbox 360 and Nintendo Wii…when we say the PlayStation 3 could end up in third place that is a worst case scenario for Sony. Furthermore, much will depend on variables such as Sony,s execution and most importantly how rapidly they can bring down the PS3 price.”
DFC also points to the misdirected emphasis upon the PS3,s power, as Sony,s marketing strategy, as another reason why Sony,s machine has failed to capture the general public,s imagination. GamerNode has long maintained that this inability for Sony to draw interest in its new machine has been a major reason as to why Sony has had such a difficult time in promoting its PS3. According to DFC:
"Sony would like to point to the hardware horsepower and extra features like Blu-ray. The problem is that is only one factor in our forecasting matrix. Furthermore, with the competition having features like Xbox Live and the Nintendo Wii controller, the PS3 may not have that much of an advantage in the elusive ‘Wow Factor., That gets to the heart of the biggest concern with the PlayStation 3. Sony has done very little to justify why the system is worth a premium price for consumers that don,t care about raw hardware performance and are not hard-core audio/visual consumers. Unfortunately we believe that represents over 90% of the consumers in the marketplace.”
The market analysis company also questioned Sony,s strategy to go after the high end user, rather than concentrating on the user base that has traditionally been the driving force behind their products-the average consumer. “With the PlayStation 3 the company is going after the high-end power user. It is almost as if Coca-Cola not only decided to go with a new formula, but also decided to exit the low brow soft drink business to go into high-end wines. Of course, there is a market for high-end products but it is 1) a very different consumer type and 2) not nearly as big as the blue collar mass market. Wal-mart sells more toys than FAO Schwartz and McDonald,s sells more beef than Ruth,s Chris Steak House.”
In addition, DFC pointed to the one factor that the public and press have pointed to as the primary stumbling block to the PS3,s success-its price point. “Of course, the big problem with the PlayStation 3 is price, and in theory that can be easily solved by simply lowering the price. There is always that core group of consumers that will rush out to buy a new PlayStation system no matter what the price. So it would make sense for Sony to gain as much revenue as possible from those consumers before lowering the price. The vast majority of consumers will not be in the market for a new system until holiday 2007 or later.
"Our concern is that 1) Sony,s hands may be tied in regard to price cuts and 2) Sony drastically underestimated the competition. The price of the PlayStation 3 does not exist in a vacuum and consumers will clearly look at the competitive alternatives. Right now both the Xbox 360 and Nintendo Wii are looking like much better alternatives than they did a year ago. Core PlayStation franchises like Grand Theft Auto, Final Fantasy, Dragon Quest and others are starting to appear on other systems. In short, we have seen absolutely nothing that would justify a $200 price difference.”
Market studies, press reaction and public sentiment all point to a general consensus that Sony,s approach in marketing their PS3 is all wrong-their emphasis on added value when most consumers don,t care about the enhancements and the claim of the PS3 as being the most powerful next gen console that money can buy. In reality, the problem may not be the PS3 game console at all as much as it is Sony,s refusal to acknowledge the consumer,s voice in these matters. Sony,s obstinate position may very well be the factor in the PS3,s demise, more than anything else.
The PS3 is arguably the best technology out there for a game console. But the big question is: Will Sony keep refusing to see the writing on the wall that says they are on the wrong track?
