Sony’s “self-inflicted blow” (as the WSJ puts it) of failing to get the PlayStation 3 (PS3) out the door in sizeable quantities before the Christmas season is a bigger deal than most press reports suggest.
As it so happens, I was completing a report on Sony Corp. and its TV 2.0 activities (TOC here) yesterday when word came down that Sony was delaying its launch of the PS3 in Europe until March 2007, with only limited shipments to the U.S. and Japan in November 2006. This is Sony’s second delay in the hot gaming platform — a manufacturing problem with its proprietary Blu-Ray disc player, a key part of the PS3, is to blame. I had to scramble to redo my analysis because, as my report spells out, the PS3, along with the PlayStation Portable (PSP), is key to Sony’s growth.
It’s not just that Sony needs the revenue bump that the PS3 will bring, although that would help. The Japanese giant’s revenues are stagnant. Its prized electronics division is more often than not a money-loser, its music business is in a downward spiral and its film and TV businesses are grappling with declining box office receipts and major shifts in the TV syndication business. So gaming (along with Sony’s financial services, which are always strong) is just about the only bright spot at the electronics and entertainment conglomerate.
More importantly, the PS3, the PSP and even the PS2 are dandy little devices because they are capable of receiving, storing and playing all kinds of content beyond video games — movies, music, TV shows and more. Oh yeah… and Sony also happens to own some top businesses that produce movies, music, TV shows and more.
Sony has a unique competitive advantage in the entertainment business by also being a manufacturer of consumer electronics and media gear. Not only does Sony control major motion picture, television and music businesses, it also supplies the devices through which a large number of consumers can access that entertainment content.
The PlayStation is the veritable “Trojan horse,” as Sony CEO Howard Stringer put it back in 2000 when Sony launched the PS2, for putting Sony smack in the middle of the broadband content business. It’s the “other set-top” aside from cable or satellite boxes that can be a true convergent media device.
Our analysis shows that by 2010, the number of shipments (yes, even factoring in the current delays) of the PS2, PS3 and PSP to the U.S. could reach a total of 86.94 million units. As of June 1, 2006, Sony had already shipped 50.47 total PS2s and PSPs to the U.S. See graph below.
That’s a whole lot of eyeballs, a reach that’s possibly bigger than even the entire U.S. cable industry. Sony has a grand opportunity to leverage its spectrum of entertainment products in the PlayStation platform. Let’s hope Sony doesn’t blow it with any more delays, giving rivals Microsoft XBox and Nintendo Wii the chance to steal its best customers.
Cynthia Brumfield at 8:42 AM|Comments(0)
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