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

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

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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