How Sony Can Win the Next-Gen War

By Steve Peterson   Google+

Posted October 29, 2013

Editor's note: This is the second in a two-article series looking at how Microsoft and Sony can find success with their next-generation consoles. To see our analysis of Microsoft's position, read "Making Xbox One Number One."

Sony was the undisputed leader of the Big Three Console makers when the PlayStation 2 was the dominant console. That was many years ago, and soon it will be two entire console generations. While Sony and Microsoft had roughly similar numbers for the total consoles sold between the Xbox 360 and the PlayStation 3, both were handily outpaced by Nintendo's Wii. The Xbox 360 has outsold the PS3 in the US for years, despite Sony's best efforts.

The battle is shaping up very differently for the next generation, because it's not just a console battle any more. Sony and Microsoft are competing in a global multiplatform battle for gaming hardware dominance, between consoles (current and next-gen), smartphones, tablets, streaming, VR headsets, and beyond.

Sony starts with some distinct advantages. First, Sony CEO Kaz Hirai understands the game industry very well, since he led Sony Computer Entertainment for many years. Microsoft doesn't even know who its next CEO will be at this point – and that CEO may not feel that games are an important part of Microsoft's future. Second, Sony has 20 years of game creation to draw on, with a solid library of games and deep experience in game making. Third, Sony has large and successful divisions creating music and movies, with an enviable content library in those areas. Finally, Sony is now producing an array of excellent smartphones and tablets that can work well with its overall gaming strategy.

You shouldn't minimize Sony's challenges, though. The company has struggled in recent years through major losses and restructuring, and while the picture is looking better right now this does not leave Sony with the sort of financial reserves enjoyed by Microsoft (with cash in the bank of around $80 billion). Sony's content divisions have historically been loath to work together with each other or with Sony's hardware divisions.

Sony does have the early lead in pre-orders for next-generation consoles, at least according to reports so far. The price of the PlayStation 4, at $399, gives them a $100 advantage over the Xbox One. And Sony launches a week ahead of the Xbox One... OK, that's not much of an advantage in the long term, but it will help in securing bragging rights over who sells the most next-gen consoles in 2013.

Here's some strategy suggestions for Sony as it strives to once again be the clear leader in console sales, and to become the undisputed #1 brand in gaming. 

Get it Together
That is, get the separate divisions working together, from hardware to content. Let's not have the music division resisting having its music sold online through gaming devices, or movies being unavailable for downloading. The PSP could have been an incredible sales machine, if it had possessed a comprehensive content store where you could buy movies, music and games. Sadly, factional fighting within Sony kept that from happening. Kaz has to make sure that won't happen again. Beyond that, make sure the smartphones and tablets all work well with the PlayStation Suite, the new PlayStation app, and everything related to gaming. Oh, and whatever new TVs you create, make sure they have great lag-free connections for the PlayStation 4, and gaming devices comfortably fit into the onscreen menus. Make Sony TVs the very first choice for gamers looking for a new HDTV.

Get Streaming
Take advantage of your purchase of Gaikai and get that high-quality, low-latency streaming going everywhere, soon. This has many important ramifications, such as full PlayStation 3 compatibility on the PlayStation 4. More than that, it means you could have any PlayStation game from any era playing on any PlayStation console --- or any computer, smartphone or tablet, for that matter. Microsoft is working on cloud gaming, but it's behind Gaikai's technology. Don't give Microsoft a chance to catch up.

Get PlayStation Everywhere
Using that Gaikai technology is just a means to an end, and the end is getting Playstation games everywhere. Sony has another initiative for that – PlayStation Suite, which brings old PlayStation games to Android smartphones and tablets that have been qualified. It's a great plan, but it's still limited to a handful of Android devices. Push this harder, and get PlayStation Suite on all major Android devices, and make more PlayStation games available. Upgrade the graphics where you can on these old games. Make sure there's a properly resourced, dedicated team that can crank out PlayStation classics. While you're at it, make a run at getting the PlayStation Suite on iOS and even Microsoft Windows. Why not? All parties would benefit from having high-quality games handy.

PS Vita TV is a vital part of the strategy, with a great shot at taking the low end of the market by storm. If the price is less than $100, as seems likely, it will be very hard to beat. Get this hardware out to all markets as soon as possible, and build a broad audience for PlayStation content by securing the market share at the low end. Microsoft doesn't have a device there yet, so make sure you are first to market in that area. Get a jump on Amazon's Kindle set-top box, too, and any other low-price-point competition in the streaming content category.

Get the Right Business Model
Craft a winning business model across multiple devices and a wide variety of content. Why not a version of PlayStation Plus that gives you a rotating supply of free games not just on your PS3 or PS4, but on your Android tablet or your Smart TV? Find the right pricing through experimentation; the great thing about digital content you own is you have complete freedom to price it any way you want, and you can try out all kinds of pricing schemes and change them instantly. In this era of big data, you can analyze your way to greatness – or at least, to the best-performing pricing mdoel, which will lead you to greatness. You've seen how well the PlayStation Plus concept does, now bring it to the widest possible audience. There's where your PS Vita TV can really be a killer piece of hardware, but becoming a low-cost gateway to the best game library around.

In Conclusion
Sony's got all the pieces necessary to win, and from the moves the company has been making it's well aware of what it needs to do. Now it will come down to how well Sony can execute this game plan, and how fast it can move. Microsoft and other competitors aren't standing still, and there are companies bigger than Sony (with much deeper pockets) eyeing the same territory. Can Sony be more nimble than its size and age would seem to indicate? It will need to be, for the next-gen race will be won by a combination of speed and strength and smarts. We'll be watching to see how well Sony can execute their game plan.


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