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The PlayStation 4’s 2013 launch was so successful that it highlights everything Sony has learned since it last released a home console in 2006.
The PS4 is fighting a close battle with the Xbox One, but it appears that Sony’s newest gaming device is — at least for now — the market leader for the new systems. Consumers are snatching up the box as quickly as Sony can manufacture them. The relatively low price and Sony’s recent upswing in terms of consumer confidence is helping the console sell like crazy. That is putting the corporation in position to get a strong handle on the multibillion-dollar console-gaming industry.
But is the PS4 really doing that well? To find out, we decided to compare it to the counterpart it most closely resembles, the PlayStation 3. While that won’t necessarily show how well it’s doing against its direct competition today, it does illustrate how much Sony has learned.
Sony says PlayStation 4 had the biggest console launch in its history, but is it really that much more impressive than PS3’s November 2006 debut?
Well, yes. It really was.
The first two months
Let’s put it plainly. Sony sold more than twice as many PS4s than PS3s when comparing each console’s first holiday season.
Sales from launch through Dec. 31:
PlayStation 3 (2006): 1.7 million (worldwide)
PlayStation 4 (2013): 4.2 million (worldwide)
Clearly, Sony crushed up and mixed in some Pac-Man power pellets into the PS4.
Comparing PS4 to PS3 isn’t exactly perfect, but it is pretty close to fair. Both debuted in November. The PS3 didn’t launch immediately in Europe. PS4 still isn’t in Japan. The PS3 had an early Black Friday while Black Friday didn’t kick off the 2013 U.S. holiday shopping season until Nov. 29.
In terms of timing and availability, things mostly even out. And the variations wouldn’t create a 2.4 million unit advantage for PS4. No, the only thing that could do that was smart planning and marketing by Sony.
What Sony did better
The PlayStation 4 is a fine machine. It’s packed with components that make it capable of visuals that whiz and bang. Games like Battlefield 4 already look amazing, and it’s likely that the system will continue to wow us with its graphics for years.
While pretty visuals are nice, the PS4’s components are perhaps more notable for where they come from.
“[The PlayStation 4 is] essentially a high-end PC with modifications, which means that components are in ready supply,” R.W. Baird analyst Colin Sebastian told GamesBeat.
Plentiful parts means that Sony was able to manufacture a ton of PlayStation 4s before launch, and that likely made a huge difference in the early months. Having more consoles to sell made it much easier to sell more consoles.
“[The impressive early numbers] may be pent-up demand among core gamers for new platforms, but the biggest difference was supply,” said Sebastian. “Last time around, both Sony and Microsoft were highly supply-constrained with very specialized custom hardware.”
In late 2006 and early 2007, a PS3 was very difficult to come by. Just as a PS4 is hard to find now. We’re into February now, and Sony is having continued difficulty keeping retailers supplied with the hardware. The difference is that this time, Sony is building many more PS4s than it did PS3s at this point of each console’s launch, and it is selling them just as fast it can make them.
“While the good start is still a positive signal, to some extent sales were just pulled forward compared to the prior cycle [due to the increased supply,” said Sebastian.
Coming off of the PlayStation 3, Sony looks like it has learned something valuable: the need to sell to its base of early adopters first and go after the average consumer later. That means understanding that early adopters are gamers — and gamers want you to woo them.
In the lead-up to the PS3’s launch, Sony did not act like it needed gamers.
“The PS3 is not a game machine,” PlayStation creator Ken Kutaragi said before releasing the console. “We’ve never once called it a game machine. With the PS3, our intentions have been to create a machine with supercomputer calculation capabilities for home entertainment.”
On the price of the PS3, which at launch was $500 to $600, Kutaragi was out of touch.
“It’s probably too cheap,” he once said. “If you can have an amazing experience, we believe price is not a problem.”
Another time, Kutaragi infamously suggested that fans would want to “work more hours” just to buy a PS3.
“We want people to feel that they want it, irrespective of anything else,” he said.
The pre-PlayStation 3 Sony at least appeared like it didn’t respect people’s time and didn’t really care if gamers liked the system. With the PlayStation 4, under the leadership of chief executive officer Kaz Hirai, the attitude was completely different.
“I think that Kaz Hirai’s vision is to maintain leadership with technophiles — and hardcore gamers,” IDC Research manager Lewis Ward told GamesBeat. “They want to position the Sony brand as a premium brand. In the context of gaming, that means going after the [core gamer].”
Instead of “it’s not a game machine,” Sony positioned the PlayStation 4 as the ultimate system for people who love games. It even adopted the slogan “PlayStation 4: For the gamers.”
Naturally, fans loved this. They saw it as proof that Sony had their best interests at heart. That type of messaging extended from the marketing campaign all of the way to the top of the corporate ladder. Kuturagi retired in 2007 after a shaky start for the PlayStation 3. The new management team not only avoided embarrassing gaffes like the ones Kutaragi was famous for, but they were also responsible for some of the biggest positive moments for the PS4 prior to its November debut.
Sony’s on-point messaging culminated in a video that it debuted during the Electronic Entertainment Expo trade show in June.
Earlier in the week, Microsoft attempted to explain the confusing digital-rights management for the Xbox One (which it later got rid of) in a series of announcements. One of the major sticking points with fans was that the Xbox One (as Microsoft had originally planned it) would make sharing games difficult if not impossible. On June 10, when Microsoft and Sony were both scheduled to give their pre-E3 presentations, Sony Worldwide Studios boss Shuhei Yoshida and PlayStation third-party manager Adam Boyes released a video designed specifically to highlight just how consumer friendly the PS4 is:
The video postures like it is going to give a long-winded explanation regarding how gamers can share software on PS4. Instead, Yoshida hands the game to Boyes and the video ends. The joke is that the process only has one step and is familiar to anyone who has ever lent anything to a friend.
The joke was one of the most-viewed videos on YouTube for all of 2013, and it seemed to cement in consumers’ minds that Sony was on their side. That’s a narrative that stuck with the console through launch, and it’s something the company did not have in 2006.
Finally, when comparing PlayStation 3 to PlayStation 4, you have to consider the price.
The PlayStation 4 costs $400. It’s simple. It’s relatively inexpensive. When the PlayStation 3 launched, it retailed for $500 … or $600. Less simple. Much more expensive. In fact, adjusted for inflation, $600 in 2006 is worth about $695 today.
“The PS3 launched at $600, which you could say was hubris on Sony’s part,” Ward. “It was too expensive.”
Again, Sony seems like it learned a lesson from the PS3. It designed a simpler console that is cheaper to make. It passed the savings on, and that is likely encouraging more people to pick up the device.
“Pricing, especially for PS4, is very competitive,” Eilers Research managing director Adam Krejcik told GamesBeat. “We believe consumers do see the perceived value in [the console] — perhaps more so than last generation.”
“The big reason PS4 is performing so well out of the game is the price,” said Ward. “It’s $200 less than its predecessor and $100 less than the Xbox One. In our survey of the reasons why people were leaning toward one system or the other, price was the deciding factor along with the games catalog.”
The future of the PlayStation 4
The PS4’s launch will only represent a fraction of its eventual life. Things could change. Sony could announce that the console will require a subscription to its new Jelly of the Month service in order for games to work offline, but that doesn’t negate the success the PS4 has had so far.
Looking back again, we can see that the PS3 didn’t get off to a great start. Sure, it had a better first holiday than the Xbox 360 (which sold 1.5 million in its first November and December), but the Xbox 360 had a years head start. And yes, the PlayStation 3 was sold out in stores, but that was because of supply constraints.
The fact is that the PS3 didn’t have a “bad launch.” It was just slower than it could have been, and the system struggled over the next seven years to catch up. In the U.S., it never did. From January 2011 through September 2013 — a 32 month period — Xbox 360 outsold the PlayStation 3 in the U.S.
The PS4 is much better positioned to change that up. At 4.2 million units sold in less than two months, the console has already sold better than the PlayStation 3 did in its first nine months. The company can use this as a foundation to launch into 2014 and beyond.
Sony is a Japanese multinational conglomerate corporation headquartered in Kōnan, Minato, Tokyo, Japan. Sony Corporation is the electronics business unit and the parent company of the Sony Group, which is engaged in business through i... read more »
Sony Computer Entertainment, Inc. is a major video game company specializing in a variety of areas in the video game industry, and is a wholly owned subsidiary and part of the Consumer Products & Services Group of Sony. The company was... read more »
Kazuo (Kaz) Hirai brings nearly 20 years of experience with Sony to his position as president and chief operating officer, Sony Computer Entertainment America. In this role, Hirai is responsible for the day-to-day management of the com... read more »
Colin Sebastian is senior equity research analyst covering Internet and interactive media for Robert W Baird & Company. He is also an advisory board member for Sgrouples.com, a social media alternative that allows users to control thei... read more »
Shuhei Yoshida serves as President of Worldwide Studios at Sony Computer Entertainment America LLC and served as its Senior Vice President of Product Development since March 2007. Mr. Yoshida was responsible for all software developmen... read more »
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