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TGS: Sony focuses on Japan, strong yen hurts PS3 pricing

Wednesday, 19th September 2012 13:32 GMT By Rob Fahey

Sony’s TGS press conference this morning was a solid if unremarkable showing for PlayStation, says Rob Fahey, though western gamers will find little to get excited about.

Sooner or later, Sony is going to have to make tough decisions on pricing – both for PS3 and for Vita. Even if TGS was a solid enough showing, price is still the elephant in the room.

TGS 2012 was never going to be a huge event for the common-or-garden western gamer. Nintendo, which has generally dodged the show for years anyway (Iwata keynotes notwithstanding), has already unveiled everything worthwhile about the Wii U. Microsoft and Sony are entirely unlikely to have anything to discuss regarding the next generation until the middle of next year – and Microsoft, after banging the drum in Japan for a few years after the launch of the Xbox 360, seems to have largely given up on that market again of late, albeit not without good reason.

Still, even if Sony wasn’t about to spring any really huge surprises on us, it was at least on its home turf, and despite having a tough time commercially recently, is still riding high after an extremely well-received showing at gamescom in Germany last month. It was reasonable to expect the electronics giant to pull something out of the bag at TGS.

Well, we got something. The new super-slim PS3, which didn’t really come as a surprise to anyone after being widely leaked ahead of gamescom, will lead Sony’s charge into the Christmas season. It’s smaller, lighter, clearly cheaper to manufacture (which is a big deal when your margins are being squeezed as tightly as Sony’s) and gives the company a new shiny thing to push at the people who can’t help but buy every new shiny thing that appears.

I’m not being facetious with that last statement, by the way. This really is a new shiny thing for lovers of new shiny things, and that’s the problem. The super-slim PS3 is going to sell for around the same price point as the existing PS3 models – in fact, it’s probably going to be a bit more expensive (retailers who have slowly dropped their prices for the PS3 will jack them back up towards the SRP for the new model) and it’s arguably worse value for European consumers, thanks to the peculiar decision to give us a next-to-worthless model with 12Gb of flash storage as the base model, replacing the much more sensible 160Gb drive model we’ve got now.

In other words, the PS3 super-slim is resolutely not going to achieve the thing we thought it was meant to achieve – getting the PS3′s price down by a meaningful amount and unlocking the many, many consumers who buy consoles when they’re cheap, mature and blessed with big libraries of high-quality, low-cost software. Sneer at the casual market all you like, but they’re the ones who pushed the PS2 past 100 million sales, and Sony knows it – not to mention that they’re also the kids and teenagers who then end up being core consumers next time around.

It’s not hard to see why this has happened. Every time I write anything about a Japanese company of late, I end up banging the drum about the valuation of the yen – a boring topic, but a pretty important one right now. You used to get well over 200 yen to the British Pound; now, in the wake of financial and natural disasters, it’s more like 120 yen to the Pound. What that means to games hardware is that when you buy a PS3 now, Sony (whose accounts are all in yen, obviously) is actually getting less than two-thirds of the money it would have received if you bought a PS3 for the same price a few years ago.

The super-slim PS3 is going to sell for around the same price point as the existing PS3 models – in fact, it’s probably going to be a bit more expensive – and it’s arguably worse value for European consumers.

In other words, Sony doesn’t have much wiggle room. Something like the PS3 super-slim has probably been on the roadmap for the PS3 since day one, and the plan was probably to use it to make the PS3 cheap as chips. Instead, it’s using the low manufacturing costs of the super-slim to try and prop up its own failing profit margins, by selling a cheaper device to consumers for the same price as before. It’s worth explaining the yen thing, I think, because while consumers have a right to be grumpy about the super-slim’s pricing, they should also understand that Sony’s not so much being evil, as fighting for its corporate life against an exchange rate that’s damaged every major company in Japan over the past few years. (Of course, if the yen exchange rate miraculously recovers and Sony doesn’t rapidly drop its international pricing, you may feel free to return to your mental images of Kaz Hirai wearing a black robe and cackling while he sits on a throne of money.)

So that’s the super-slim. Love new shiny things? You probably can’t help yourself. Everyone else? Not so exciting, I guess, but we wanted something from Sony, and this is unquestionably something.

How about software, then? In software terms, Sony’s TGS conference was – unsurprisingly – pretty much all about Japan. It’s easy to forget that TGS is a consumer event; although there’s a business day, most of the show is open to the public and it’s really designed to showcase new products to Japanese gamers. Sony’s conference reflected that pretty clearly. Little of what was announced will have been of any huge relevance to western gamers; a fair bit of it had already been seen at gamescom (but not, remember, by Japanese gamers or by the huge swathes of the Japanese press who didn’t travel to Germany). Much of the new Vita software, in particular, fell into the category of being the kind of stuff that Japanese gamers love, but is only of interest to a small sub-set of gamers outside Japan.

That’s not necessarily a bad thing. Plenty of western gamers will roll their eyes at the TGS showing, but the fact that TGS played well to a Japanese audience, while gamescom played well to the west, suggests that Sony is doing a good job of understanding the different needs of different markets, and is doing its best to provide for everyone. Moreover, if the Vita’s software line-up can make the platform successful in Japan, everyone benefits – one can imagine a situation not dissimilar to the PSP, which was much more successful in Japan than elsewhere, but as a consequence western gamers could still benefit from the high-quality software being produced originally for the Japanese market.

So yes; the hardware announcement wasn’t everything it could be, but it’ll give Sony a bit of a boost anyway. The software side probably didn’t stir the pulse of many western gamers (and many of those titles may never even see western release, so if your pulse was stirred, I suggest you hit the kanji study books), but it was very well targeted at the Japanese market which is, after all, the target market for TGS. Not a legendary showing for Sony – but it was a solid one. Sooner or later, though, the company is going to have to make tough decisions on pricing – both for PS3 and for Vita. Even if TGS was a solid enough showing, price is still the elephant in the room.

Read our full report of Sony’s TGS 2012 press conference here.

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10 Comments

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  1. Lord Gremlin

    Well, I’m excited. God Eater 2, Muramasa, Soul Sacrifice gimme gimme gimme!

    Also, lol at digital future. Still importing Sony games from japan.

    #1 2 years ago
  2. Dragon246

    Completely agree with everything said here. I hope sony gets out of the mess its currently in. Their hardware is the best in the industry.

    #2 2 years ago
  3. SplatteredHouse

    Nice analysis. I like this kind of content from VG247. Anybody can offer verbatim, but if after reading you’re asking yourself what it means, what the impact may be, it helps to have informed opinion and pieces that invite discussion to sum it up sometimes.

    #3 2 years ago
  4. Razor

    The price increase is pretty worrying.

    Japan keep saying they’re going to do something about the exchange rate, but it never seems to work.

    #4 2 years ago
  5. monkeygourmet

    - Their hardware is the most expensive in the industry…

    Corrected for you :)

    @2

    Current mess is linkied to having too many fingers in too many pies…

    One devision makes profit, the other crashes… Unfortunatly they are all pretty much linked…

    They sell, TV’s, PC’s, Audio Equip, Tablets, Games Consoles, Music and about a million other things…

    Even though gaming side of things is kept seperate, R & D on the consoles and trying to internalise everything doesn’t help over all. The Cell for example…

    Lets hope they have learnt their lesson with the PS4

    Sony tend to try and lock out their hardware more than other companies do, this always pisses me off as it shows aggrogance when dealing with situations like piracy.

    Nintendo used to be as bad, not so much now though…

    #5 2 years ago
  6. Dragon246

    @5,
    -WiiU is the most expensive in the industry…
    Corrected for you :)
    What you are saying about too many fingers is completely true. Instead of getting hands out of non-profitable businesses or downgrading them, they just keep building more products which confuse customers.
    I will give Kaz 1 year. Hopefully being a japanese will improve his influence over the gluttonous engineers (not all of them)at sony who produce 100 failures before a single success.
    “Sony tend to try and lock out their hardware more than other companies do, this always pisses me off as it shows aggrogance when dealing with situations like piracy.”
    Sony suffered the most from piracy too. PSP game sales tanked because of it. Pirates piss me off more. Geohot can just go die in a corner smoking marijuana.
    Nintendo is still the worst. Also what do you mean by locking. PS provides more features than other consoles generally speaking.

    #6 2 years ago
  7. OlderGamer

    I think the Yen problem will almost all but hand the next gen to MS. Sony could be in real trouble. Price point means everything.

    #7 2 years ago
  8. ManuOtaku

    I do highly recommend muramasa the demon blade, it is a great game one of the best of the wii library alongside with little king story, both coming to the vita, vita owners dont let those tittles pass you by, they are great.

    I think the Yen issue will hurt Nintendo more than Sony, becuase Sony has multiple divisions and productss, which can absorb the gaming divisions hits, therefore they can price their devices with a little more gap or room, nintendo doesnt have this luxury; I just hope Sony did learned from the ps3 key issues with the price and the Other S things, in order to handle them better on their new home console.

    #8 2 years ago
  9. NightCrawler1970

    I think $199,- with 12GB stick on Black Friday and $250,- with drive…

    #9 2 years ago
  10. monkeygourmet

    @6

    Yeah, I guess Nintendo are still pretty bad.

    Sony has done better with no region lock etc…

    It’s the firmware updates that really get on my nerves.

    It seemed every time I turned on my PSP, Vita or PS3 it asks for an update. I generally get the feeling they think the best way to combat piracy is constant updating.

    I had certain games locked out of features completly when PSN went down for a while, it was very annoying.

    Also, downloading an update for 20 mins… Then INSTALLING after that?! That sucks! O__o

    I always feel the threat of piracy is by far overrated compared to some of the profits big companies can make.

    I will ALWAYS support small Devs if I feel the games have a certain something, but I would be lying if I didn’t say I’d never used copied games (especially imports that weren’t getting released in the Uk).

    Piracy is rife, but prices are bullshit way too high…

    The media section is kind of getting the idea. Things like Netflix make it less likely for people to pirate as it can offer good value for service quality.

    Also IOS pricing is making companies like Nintendo realise they can’t charge 29.99 for puzzle bobble again.

    The majority of people will pay if it’s fair. Some people will always pirate regardless…

    I had a SNES Super magi drive back in the day. All it made me realise was too many games make you appreciate them less…

    #10 2 years ago