Sony’s PlayStation 2 Making Its U.S. Launch From a Shaky Platform
By most accounts, Sony Computer Entertainment should be doing victory laps this week with the U.S. launch of its highly sought-after PlayStation 2 game console.
But in Japan--although Sony has sold 3 million PS2 consoles since the launch in March--the devices have clearly fallen short of expectations.
Programmers grumble that the machine is difficult to work with. Hard-core game players grouse about blurry and “jagged” images. Designers still don’t have a blockbuster PS2 software title after 18 months on the job. And component shortages have forced Sony to delay its European launch and halve its promised 1-million unit delivery this week as U.S. retailers enter the all-important Christmas season.
Granted, Sony trounced competitors with its first-generation console. It has 76 million PlayStation users worldwide. And the powerful new PS2 machine--with its music, DVD and Web capabilities--has been touted as a “Trojan horse” poised to unseat the personal computer as people’s preferred gateway to the Internet.
The early tribulations in Japan, though, have heartened competitors. And most would love to have Sony’s problems right now, as U.S. customers try desperately to get their hands on one of the sleek black consoles. Still, Sony needs to arrest the problems quickly or it risks undermining customer loyalty and eroding its lead in an area strategic to its future.
“A rain check under the tree doesn’t go too far,” said Peter Moore, president of Sega of America Dreamcast. “Their early grade for the launch is a C minus, at best.”
Sony officials decline to comment on supply problems but say they’re doing their best to spur production and expand the machine’s potential.
Last March, when the PS2 launched in Japan, Sony’s Web site crashed under a deluge of advance orders and young game freaks camped out for days in front of major retailers. Seven months later, the ardor has cooled with sales lagging some early bullish projections.
“So far, the market has been a bit disappointing,” says Kazumi Kitaue, a director at software maker Konami Corp., which is working on several new titles for the PS2. “It’s very difficult to forecast what’s ahead.”
Furthermore, an estimated one-third of the 3 million sets sold here so far have gone to customers primarily interested in using the PS2 as a DVD player, not as a video game machine. Last year, DVD players went for upward of $800 in Japan, making the PS2 at $379 a relative bargain. This is not the case in the U.S., where low-end DVD players go for as little as $110.
Relatively weak Japanese console sales also are blamed on the dearth of software blockbusters. This dovetails with complaints from some software makers of programming difficulties. Sony makes most of its money from software licensing fees, so having good titles in the market is key.
“So far there are no ‘killer applications’ in Japan. Even Sony hasn’t had any really strong offerings,” says Motoharu Sone, an analyst with Tsubasa Securities. “If the software doesn’t sell well, the hardware won’t sell either.”
A string of new U.S. and Japanese game offerings are expected in coming months, however. And some early grumbling may reflect little more than the inevitable learning curve problems.
“It’s true PS2 is a tougher machine to program,” says Hisashi Suzuki, president and chief executive of Tokyo-based Square Co., a leading maker of role-playing software. “But anything new is difficult at first.”
The machine clearly has tremendous capabilities and the graphics quality is impressive. With the benchmark set so high, however, some users say texturing and definition fall short of expectations.
“Of course the PS2 is much better than the PS1,” says Hiroyuki Hoshii, 24, an avid game fan with 10 years of experience at the joystick. “But when there are a lot of characters on the screen at once, the edges blur and you can sometimes see little parts of it stop.”
Some also wonder whether Sony is trying to do too much by offering a DVD player, Internet gateway, game machine and music system all in one machine, an approach that leads to inevitable technical compromises. Nintendo, the creator of Pokemon, boasts that it remains focused on core game players. “Adding so many functions is a very traditional marketing ploy,” says Nintendo Deputy Manager Yasuhiro Minagawa. “Costs rise, but the performance is not that great.”
The last six months in Japan offer little insight into whether Sony ultimately can convince consumers to download Sony songs and movies online, play network games, shop and handle their finances through this deceptively simple device in their living room. High-cost Japan lags well behind the United States in Internet and broadband use.
“Phone bills are so expensive in Japan, I can’t really expect to see that any time soon,” said Akihiro Matsushita, 15. “At $75, the PS2 software is also a bit expensive.”
In part because of the U.S. Internet lead, the size of the market and its dynamism, North America is shaping up as the major battleground for the $17-billion global video game industry. “It’s a battle for the living room,” says Sega’s Moore. “It will get ugly.”
Sony, Microsoft, Nintendo and Sega all are introducing new game platforms within a 10-month period. Price wars, exaggerated claims, consolidation and shifting software alliances are expected, with Sega viewed as the most vulnerable.
Sega already has reduced the price of its Dreamcast machine to $149 from $199 and hints at a further cut to $129. Sony is pricing the PS2 at around $80 less in the U.S. than in the Japanese market even as it relaunches a first-generation PlayStation machine. And Microsoft’s X-Box game console and Nintendo’s GameCube are slated to join the fray next year.
As the battle heats up for consumer loyalty, a lot of the outcome will depend on independent software makers and the platforms they ultimately choose to support. At Square’s headquarters in Tokyo, hundreds of programmers huddle over powerful workstations in cubicles that stretch across an expansive skyscraper floor. Muscled heroes and eerie villains slowly take shape on oversized monitors as the twentysomething programmers translate dry data points into life-like movement and nuanced backdrops.
The job of ensuring that the graphics, storytelling, texture, motion, sound, background and translation teams all come together in time for the expected spring 2001 launch of the PS2 “Final Fantasy 10” game falls on production manager Hikeki Imaizumi.
The latest in the Final Fantasy role-playing series is eagerly awaited by fans worldwide, and Imaizumi hasn’t had a weekend off in months. He’s got a sleeping bag tucked away in his office and can go for days without returning home or eating much more than instant noodles. “Quite often, I’m just not able to leave this place,” he says.
As the stakes rise with each video game generation, independent software companies want to make absolutely sure the hardware makers they write for prosper long enough for them to earn a return. Sega and Nintendo both enjoyed top industry billing in the past before stumbling. “If we believe they can’t make it, we withdraw, even if they have lots of money,” says Square’s Suzuki.
Sony is clearly the odds-on favorite these days given its huge customer base, marketing prowess, expansive ambitions and the buzz surrounding the PS2. And this helps the designers map out their own futures.
That said, they don’t want to see Sony get too far ahead of its rivals. The global entertainment giant has already grown noticeably more arrogant as it’s become more successful, several companies complain. And Sony’s market dominance could prompt it to demand higher revenues and tougher licensing terms. That leaves many game developers rooting for the more recent arrival: Microsoft. “X-Box, please do well,” says Konami’s Kitaue. “We need some balance.”
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Hisako Ueno in the Tokyo bureau contributed to this report
