Can PS3 survive for long?

[20 June 2007]

By Victor Godinez

The Dallas Morning News (MCT)

The latest U.S. monthly sales numbers for video-game consoles came out last week, and you almost have to feel sorry for the PS3.

The PS3 is doing so poorly, and it’s costing Sony so much money, that I wonder how much longer Sony can afford to keep this albatross around its neck.

According to the tally from the NPD Group, Nintendo took the top hardware spot in May, with about 423,000 Nintendo DS handhelds sold. Nintendo’s Wii console was in second place, with sales of 338,000. Third was the handheld Sony PSP (a quiet success story that deserves its own column) with sales of 221,000, while the venerable PS2 was in fourth place with 187,000 consoles sold.

Huffing and panting across the finish line in fifth was the Xbox 360 with 155,000 consoles sold, while the PS3 was sixth, with a mere 81,000 systems sold.

The PS3 is occupying the sales slot that, in the last two console generations, was reserved for Nintendo’s GameCube and N64 systems.

The difference, though, is that Nintendo always eked out a small profit on those consoles, even when they were easily outsold by the PS2 and original PlayStation. Sony will lose almost $500 million on its game division this year, according to analysts polled last week by the Financial Times.

That is simply untenable for Sony.

Not only is the console not selling well, but people who do buy it aren’t buying games, which is where the real money is.

According to GameDaily.biz, of the top 10 best-selling games in May, four were for the Nintendo Wii or DS, four were on the Xbox 360, and two were on the PS2.

Not a single PS3 game made the top 10.

Microsoft can ride out the wave of Nintendo mania a little longer, because Xbox 360 fans are dedicated, and they’re being rewarded with excellent games. Halo 3 alone could easily entice several million people to buy a 360 later this year.

But Sony’s console isn’t seen as the system for the hard-core gamer, as is the 360. It’s seen as the system for rich people who already own a 360 and are looking for something frivolous to spend their cash on.

For a mass-market consumer electronics maker like Sony, that customer demographic is simply too small. After all, more than 100 million PS2s have been sold since the system was released in 2000. At this rate, we’ll all be dead and buried - or be cyborgs kept alive by nanobots and genetic engineering - before the PS3 hits that milestone.

So Sony has two choices: slash the price (and a $100 discount may not be enough anymore) and hope that higher game sales can offset the hardware loss. Or get out of the home console business and focus on handhelds.

Things sure do change in a hurry.

Published at: http://www.popmatters.com/pm/article/can-ps3-survive-for-long/