Is the PlayStation 3 Over-Reliant On Exclusive Games?

Sony is betting that a price drop in their PlayStation 2 console will cause many of those buyers to eventually adopt the PlayStation 3, better securing its foothold in the North American market. Unfortunately such a move will not free Sony from its dependence on exclusive gaming content to stay relevant.

Some industry observers have applauded Sony’s decision at the beginning of this month to drop the price of their nine-year-old console to the magic price point of $99. They reason that the PS2 matches up technologically with the Nintendo Wii and appeals to the same demographic of casual gamers. They also think that the PS2 will act as a gateway to the PS3, noting that a large percentage of current PS3 owners are former PS2 owners.  Finally, they reason that the price cut will attract the budget conscious to the Sony line of gaming products.

While I can see how they can arrive at that conclusion, I can’t help but think that there is a serious flaw in their logic. The “x factor” in their strategy is the PC. At the $400+ price point, the base cost of a PlayStation 3, a lot of gamers don’t just decide between getting an Xbox 360 and a PS3 but also consider whether to buy a new PC instead or upgrade their existing one. While $400 doesn’t quite get a gamer a top of the end PC, a reasonably well equipped PC could be had for just a couple of hundred dollars more. And no one can argue that the PC is not only just more versatile in its possible uses but also possesses the largest library of games available.

The PlayStation is too expensive and I think its price point is the stickling point on why it doesn’t have larger market share in the United States. No one is arguing about the PlayStation’s technical capabilities or even the library of games, though in this category, it lags behind its competitors. Developers go where the market is and when they see far more Xbox users versus PlayStation users, it’s an easy decision for them to make more games for the former.

This is why I think games like God of War III, which is exclusive to the PlayStation 3, is so important for the console. The God of War franchise is one franchise that is good enough to cause someone to buy the PS3 just to play this game. It’s akin to a number of PC games that actually forced their users to purchase new or seriously upgrade their existing hardware. However, this advantage drops if this franchise ever becomes cross platform.

This is unfortunately the crux of Sony’s strategy of staying alive in North America:  exclusive games. It’s these few, rare games that only come on the PlayStation 3 that prevents it from being practically be driven off the continent. I’m not saying this to bash the platform; however, when your biggest technological selling point is unrelated to gaming (i.e., you can play Blu Ray movies and your major competitor cannot) then it’s apparent that your business strategy isn’t focused primarily on competing on providing a better gaming experience.

I don’t like seeing Sony in this situation. I would like them to succeed and don’t want to see yet another medium in which Microsoft is so dominant. But I also think Sony has only itself to blame for the predicament in which it finds itself.

The price cut on the PS2 won’t drive PS3 adoption because it’s easy to see that budget conscious consumers aren’t going to buy the most expensive console in the market. Maybe the PS2 could compete successfully against the Wii, but the wisdom of putting 9-year-old console up against something that the public perceives as generations ahead technologically is certainly questionable. Also, as I mentioned before, at the $400+ price point, the Playstation faces competition from gaming PCs. And with competitors that can offer a comparable gaming experience at lower prices, the PS3 is almost wholly dependent on exclusive content to differentiate itself. That doesn’t seem like a winning strategy.

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