Where revenue lives.
Consider this a companion to the previous post…
As you may have seen Sony announced earnings. This snippet from Next Generation is interesting:
During the quarter, Sony sold 710,000 PS3s, 2.14 million PSPs and 2.7 million PS2s. The latter two were up 730,000 and 370,000 units year-over-year, respectively. On the software front, PS3 software sold 4.7 million units during the quarter, PSP sold 9.9 million units of software (up by 600,000) and PS2 sold 31.1 million (down by 1.6 million). 70 percent of sales in the division came from hardware and accessories.
As Eric pointed out, this doesn’t just point out the weakness of PS3 sales, it also points out the continuing strength of PS2 sales and, importantly, PS2 software sales. The Playstation 2 currently has an installed base of around 100 million units. Loyal fans who still want to play PS2 games. This is a fantastic audience by any measure.
Imagine if, instead of having spent billions on developing PS3 hardware, Sony had invested a fraction of that into creating a services platform for the PS2 (perhaps solving online gaming)? If done properly, they could have actually created a brand new experience. As well extending the life of the platform, it could have possibly transformed it into something even better.
It would have been a big win for people who’d already shown loyalty to Sony, but it would also have been a huge win for Sony. The cost of goods for developing and distributing a services-based platform would have been minuscule in comparison to the cost of developing and distributing a complex piece of technology like the PS3. The cost of acquisition would have been negligible, they’re already Sony customers. Importantly they could have so far distanced themselves through this action that it would have made dislodging them by Microsoft or Nintendo extremely difficult.
What the earning report shows is it isn’t too late for Sony. It would require a massive re-orientation but they have the development expertise necessary.