Game Over For PlayStation 3

The game is over for Sony (SNE) and its PlayStation 3. Sony’s sales plunge 19 points compared to sales in November 2007. Sony’s strategy has been flawed from the beginning. 

Sony made two big bets with PlayStation 3. First was the cell processor which promised to be a breakthrough in computing power and bridge the gap between x86 architecture and specialized hardware. It proved to be challenging to develop for. The second big bet was on the Blu-rayDVD format. This bet was a mixed blessing. The shift from standard DVD to HD DVD has been much slower than other industry format changes. Sony ultimately won the format battle with Toshiba but they might have lost the war. The Blu-ray drive which is included in every Sony Playstation 3 causes the price of the PlayStation 3 to be $200 more than other consoles like the Xbox 360.

PlayStation 3’s run rate has a compounding negative impact on Sony. Game developers are less likely to build blockbuster titles something the PlayStation 3 has lacked.  Even more important are the third party royalties that come with licensing the PlayStation 3 platform and contribute a majority of profit to Sony’s gaming business. The PlayStation 3 has become a big boat anchor on Sony’s bottom line. Read more

Wii World

The Wii took the world by storm in November of 2006. It caught everyone by surprise especially Microsoft and Sony. It launched with cheesy comercials that could have been taken as a spoof. But Nintendo did something that no one had accomplished yet in gaming, go mass market. They did this through a little innovation called the Wii Remote/ Nunchuk. This little device made the Wii a must have product that made it go on to sell over 35 million units world wide.

With all the success the Wii has brought Nintendo, they still are not fully realizing the opportuntiy and taking advantege of the mometum. Supply has been one of the Wii’s biggest missed opportunities. The demand has always outpaced supply and even last year you could not find a Wii any for Christmas. Now, two years later instead of the Wii console being the #1 seller on Amazon its not its the Wii Nunchuck controller. The Wii console is sold out again on Amazon. Read more