Wii to Lose Market Share to $99 PS2, says Sony

GameDaily BIZ just got off the phone with John Koller, Director of Hardware Marketing at Sony Computer Entertainment America, to discuss the news of PS2 dropping down to just $99. And of course, we had to talk about PS3 NOT getting a price drop as well...

BIZ: I think a number of industry pundits were expecting a PS3 price drop today in addition to or instead of the PS2 price cut. With the fiscal year having just ended, we thought Sony might kick off the new year with a bang... So my question is why not PS3 right now? And for the PS2, was this move already pre-planned long ago?

John Koller: So, I'll take the last question first. We do plan price cuts and most major moves well in advance; they're done for a variety of reasons. This particular reason on the PS2 price cut was done really to extend the overall viability and versatility of the platform. We're looking at 70-80 titles launching on PS2 this coming year, and about the same number next year in 2010. PS2 shows very little signs of slowing down, and we wanted to continue to really target that lower income consumer, as well as that lapsed gamer or young family consumer that is still purchasing PS2 and wants some of that evergreen entertainment – the social gaming and sports are what they are particularly gravitating towards. A lot of the development is going in that direction.


"We do look at those as similar consumers. So, yes, we do think the $99 price point could steal some share [from Wii]. From a technological standpoint, the Wii is much closer to the PS2 than it is to the next-gen consoles."


In terms of the PS3, our is on the versatility of the system and the overall value that's inherent to the system. We've been focusing on development of key software franchises, and this year should be the best software year launched yet. On PS3, we look at that as a significant advantage versus Xbox 360. In particular, our first party group has really stepped up with some tremendous franchises, whether they're iterations [of existing properties] or new IP like LittleBigPlanet, MAG, etc. You also look at the continued strength of the Blu-ray format and we're starting to see some cases where movies are helping to sell hardware - Dark Knight certainly did for a time in December. So we're seeing different patterns of growth. Last year was the best sales year ever for PS3 and we are very bullish on the platform this year.

BIZ: Although sales for PS2 have remained quite strong for a nine-year-old platform, PS2 has withered somewhat as this generation of consoles takes hold. What kind of uptick are you anticipating in terms of hardware sales thanks to the $99 price point?

JK: Good question. We can't give specific number, but I can tell you that last year the NPD number was 2.5 million units [sold], so we expect at or north of that number [this year]. And certainly when you're looking at the game pipeline and also what Nielsen reported about PS2 being the most played console in 2008, there's still a lot of viability left. A lot of people tend to think there's only life in next-gen, but in reality there's life in next-gen, in our handheld business and in PS2. We enter the 10th year of its life-cycle in October of this year, and there's really no sign of slowing down. We ended up 'sunsetting' the PSOne because the development spigot kind of dried up, but that's not happening with PS2 right now. With 1,900 games (250 Greatest Hits), there's really a wide variety of game options for that new consumer to the category.

BIZ: PS2 is already the best-selling console ever, so wouldn't Sony rather drive these consumers to convert to the PS3, instead of continuing to propagate the PS2 message?

JK: We don't look at it as an either/or situation – it's really an and. So if you look at when PS2 consumers purchase, that's how we analyze when they'll be ready to move up the loyalty chain to PS3. The PS3 cross-ownership rate with PS2 is about 80 percent, so much of the PS3 installed base is a PS2 consumer or had been at some point. You have to look at when they're purchasing; there's certainly strata of purchasers in the PS2 world. So if someone purchases tomorrow for the price drop, then we believe that's a PS3 owner in the future. It may not be April 2nd, but it will be in the future. By definition, they're a bit of a later adopter, so that's someone that we think will gravitate towards PS3 as we continue along the growth curve... Currently, we're making a big push to grab the PS2 consumer that purchased in the middle part of this decade (maybe 2002-06), because that was an early to mid adopter and someone very interested in the large franchises on PS2 like GTA and Final Fantasy and Gran Turismo and Madden. That consumer is probably ready [to buy a PS3]. We've made a concerted push against that individual. But we don't give up on any of the PS2 consumers – they're PlayStation fans for life and we believe they will eventually purchase a PS3 at some point in time.

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