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Kutaragi Speaks on $1 billion Loss |

Not long ago I mentioned that Merrill Lynch Japan is predicting a $1.18 billion dollar loss for Sony on the PS3 during its first year. Mr. Ken Kutaragi has responded:

Ken Kutaragi … understandably refutes MLDS’ analysis; “Whether consumers think a product is expensive or cheap all depends on the balance between its appeal and price,” said Kutaragi, again hinting that the PlayStation 3 may indeed be a pricy piece of kit. “Our idea is for consumers to think to themselves, ‘Right, I’ll work more hours and buy it.’ We want people to feel that they want it, no matter what. When Nintendo was selling its 16-bit machine at around 12,500 yen ($114), we sold the first PlayStation at 39,800 yen ($364). The press was saying that it was expensive, but it was a huge hit. It’s the same thing with the PlayStation Portable from last year. The Game Boy Advance is a similar handheld gaming machine, and it costs less than 10 thousand yen ($91). On the other hand, our PSP had cost 25,000 yen ($229). And there were people lined up overnight to buy it, and it sold out on the day of launch. It all depends on whether people want it. Of course, I’m confident that PlayStation 3 is a product that people will definitely want.”

SPoNG points out that Mr. Kutaragi is making some orange-to-apple comparisons here, but that doesn’t mean we can’t see what Sony is thinking. They obviously believe the PS3 will be something everybody wants. They obviously believe that gamers will be willing to pay a premium for it. This is not unlike Apple’s strategy to date. Give consumers an exceptional product, and expect them to pay for it.

Will it work?

On the hardware side alone, I think they have a little more work to do. Sure, the specs show that it’s about as powerful as an Xbox 360. (Once developers learn how to use all 7 SPE’s, that may change.) But it also has some extra gadgets on it like memory card readers, BlueTooth, Wi-Fi, and dual HDMI outputs. So I guess you can give a slight edge to the PS3.

But that’s not enough.

What Sony really needs is knock-out games. So far we’ve had hints that games like Unreal Tournament 2007, Lair, Fatal Inertia, and WarHawk will be launch titles. Unless the developers haven’t been showing us the real goods, those titles don’t really seem like killer-app games to me. So where are the killer-app games? Sony needs titles like MGS4, Gran Turismo 5, Heavenly Sword, MotorStorm, and Killzone. At launch. Actually, just three, or maybe even two, of those titles would be good enough to make the PS3 a must-purchase at launch.

Do you agree?

Kutaragi refutes $1 billion PlayStation 3 hole will bring SCE to its knees – News at

  • I do not agree. There have been many expensive systems in the past that offered functionality, features, and promises beyond just gaming only to fail. The PS3 is not offering anything that will compel the average person to “Work more hours and buy it.” Blue-ray is not a significant feature that Sony is leading many to believe because there is no content and there won’t be any for a considerable period of time. When PS2 was released, there were already hundreds of DVD titles available. The PS2 as a low cost DVD-player solution drew many to console regardless of its anemic launch lineup. PS3 will not have that appeal with blue-ray in the same regards as PS2 had with DVD.

    The reality is that the PS3 is loaded with a lot of bullsht that will serve no practical use to many of those who purchase it. I believe it was just a marketing stunt to downplay the Xbox 360’s announcements. I won’t be surprised if Sony scales back the functionality of the PS3 to hit a “reasonable” price before launch; which I believe they’ve already started (no more gigabit router). As far as the other specs Sony threw out there, we all know – whether thou choose to acknowledge it or not – that Sony has always presented theoretical numbers that are not representative of real world performance. I will laugh uncontrollable when Sony finally unveils something – other than a video that the public can play – and it looks no better than what we are seeing now on the Xbox 360 and PCs.

    Consumers are so gullible and Sony is feeding on that vulnerability. Sony claimed PS1 could bust out 1.5 million polys. Yeah right. PS2 was suppose to give us Toy Story in real time gameplay. I’m still waiting. PSP was suppose to stomp Nintendo’s portables. Nintendo’s lead is still growing. Now we have PS3 promising world domination. By the time PS3 drops, the Xbox 360 (Which is here now) will start to hit it stride and we will begin to get the first glimps of what this animal can really do. I’m not waiting for PS3 because the Xbox 360 is copesettic for many and many developers have stated that PS3 and X360 will not hold any significant advantage over the other in actual applications. So why wait? The Xbox 360 has exclusive content I like and Xbox Live is like crack.

    People, fanboys, whatever… open your eyes and stop being so stupid. Look at shit objectively and stop buying into all this crap out of Sony’s mouth. I like the PS line (I have a PSP) so you can’t label me a hater. I’m just telling it as it is.

  • For the record, the router was never promised functionality. It was something Sony considered and decided not to include. They never told anyone the PS3 would have it.

    But I agree that the 1st generation PS3 games won’t look much different than Xbox 360 games. Sony really has a hard job ahead of it. They have to come out with some really killer games.

    I think you’re partially right about Blu-ray: hardly anyone has an HDTV, so the benefit for most won’t be there. But for those of us that do (like me) it’s a great feature that I’ll be glad of. And with 5 of the 6 major studios supporting Blu-ray, there will be movies.

  • There never was a router? I always thought Sony was promising that feature. Especially when they were promiting the PS3 as media hub. I also read several articles in the past that reported Sony has opted not to include the feature. Regarless of whose right, we can count on it not being there.

    I still have to rebutt you on blue-ray. There will still be an adoption period for blueray movies that could very well last longer than a significant portion of the PS3’s lifespan. Remember, the studios have to push blue-ray to non-gamers who may have NO interest in video games including the PS3. To many of those non-gamers, DVD is good enough and serves the needs of many including those with HDTV. In fact, a lot of people feel that a new format introduction may be a little premature.

    With the exeption of maybe videophiles, I don’t forsee a substantial interest being generated in blue-ray to benefit the PS3 as Sony is gambling on. Its common knowledge that PS3 could break the bank and thats because Sony can recover costs from accessory and software royalties/sales. What about other vendors who don’t have this revenue stream and have to charge full price for a player? People are going to wait until the price drops. Supporting studios will continue focusing on DVD and will move slowly releasing Blue-ray materials until the adoption rate picks up. When DVD first came out, sales were barely anyhing cuz of the price. I see no indication why history will not repeat itself when blue-ray becomes available. This is just the nature of business.

    As far as PS3 games: There have been many systems in the past that may have had some of the best games ever & still flopped. Sony is flaunting graphics as a selling point of the PS3, well, graphics are reaching a saturation point and as a result, its going to becoming increasingly difficult to sell a system on merits of graphics when its competitor can do the same thing. Between the X360 and PS3, the graphics in the top games will be too close to give a damn about. I truly believe that this generation and future ones, will be based on content (probably why Revloution may have a good chance). Sony has some hot titles in its lineup but so does everyone else. Xbox Live is HUGE advantage that Sony or Nin cannot match right now and it doesn’t seem like they will.

    I think Sony has become too arrogant and may have set the bar too high for its own good with the PS3; it very well could come back and bite them in the ass. Hate Microsoft and downplay X360 as much as you will, but with much more digits in the bank and great software tools, I don’t see Sony strolling through the park this time as it did with PS1 and 2.

  • I agree that Blu-ray will have a slow take-up. You mention that “When DVD first came out, sales were barely anything”. Yup, but there was still software available. I bought a first generation DVD player (a Toshiba) and while movies came out slowly, they did come out. I was there. I bought those movies. But now the DVD market is reaching saturation. Studios are desperately looking for ways to gouge the consumer again, and Blu-ray/HD DVD is it. Unfortunately for them, only 10% of households own an HDTV. But I don’t care. Because I do have an HDTV, and I want a Blu-ray player. I’m exactly their target market, and I look forward to watching movies in HD. And studios will be putting out movies in HD. Sure, it’ll be slow taking off. I’m not denying that. But it’ll happen and I want to be there when it does.

    Does that make putting Blu-ray into the PS3 a wise choice? Maybe not. But for gamers like me, it’s definitely a bonus.

    I also totally agree that content is where it’s at. Not quite sure where you stand on this. At first you mention that there have been many systems in the past with great games that still failed, and then you say that content is where it’s at. So which is it? I don’t believe that any of the systems in the past that had lots of great games failed. Name one. The obvious first answer is the DreamCast. Sure it had some great games, but I wouldn’t say it had many of them.

    And backing up a bit: graphics don’t make a great game. A great game has to be fun to play, first and foremost. And while the eyecandy of Killzone 2 and MotorStorm is undeniable, they also looked like they’d be a blast to play. And there’s nothing wrong with Sony saying that they want to offer games that look great and are fun to play.

    And I totally agree with you that Sony won’t be strolling through the park this time around. They’re going to have a tough job of it.

  • “I will laugh uncontrollable when Sony finally unveils something – other than a video that the public can play – and it looks no better than what we are seeing now on the Xbox 360 and PCs.” -BlackGuy

    Start laughing bud. MGS4 for PS3, real time demo. They change the light sourcing, colors, objects on the fly. Within the game engine and on ps3 hardware.

    Link here.

    And another thing. Wow, your posts reek of elitism it makes me cry. Just post and let it be, don’t condemn or preach. But I guess you succeded in trolling me. ๐Ÿ™‚

  • Black Guy


    “Start laughing bud. MGS4 for PS3, real time demo. They change the light sourcing, colors, objects on the fly. Within the game engine and on ps3 hardware.”

    Just like how Killzone 2 was realtime too, right? As far as MGS4 I’m still skeptical cuz that demo looked too scripted to be a game. As far as that demo u referenced; saw it, looks good but, Gears of War and Unreal 2007 look as good or better. Not impressed.

    “And another thing. Wow, your posts reek of elitism it makes me cry. Just post and let it be, donโ€™t condemn or preach. But I guess you succeded in trolling me.”

    Don’t be jealous cuz u can’t form complete thoughts beyond a 2 sentence post. Thats not problem. You should have went to a better school.

  • Tone it down guys.