Archive for October, 2007

Derrick sent me this photo showing a 60GB PS3 going for just $399 (after mail-in rebate) at Hastings. Why bother with the 40GB at this price?

Here a few theories for why Sony is dropping PS2 BC (and other features) on newer PS3 models. Speak up in the comments and vote for which one you think is most likely or add your own theory.

Reduce Production Costs: As seen in Sony’s last financial statement, they are writing off hundreds of millions of dollars on hardware losses. Obviously, they need to sell at a low price point to stay competitive, but they’ve committed to providing some pretty high-end, expensive technology in the PS3. Given that the PS2 BC was at least partially software based, I wouldn’t believe that this would cost too much, but every dollar counts.

Grocery Store Psychology: Grocery stores often sell generic brand and name brand versions of the same basic product. They intentionally make the generic brand look uglier, not because it saves them money on production, but so they keep the price-sensitive shoppers with the generic brand goods and still sell for a higher price to the less price-sensitive shoppers.

Car Dealership Psychology: Car dealerships often sell a stripped down version of a brand new car for a really low price. They run this price heavily in newspaper circular ads. This gets customers in buying mode and pulls them into the showroom. However, once the consumers realize the features that are missing, they begrudgingly agree to go up in price for the features that they want. The low price model is more of a teaser model to get consumers interested than the model they are actually going to buy.

Push developers to migrate to PS3 titles: Tons of premier 2007 titles are *still* being released for the PS2 rather than the PS3 (Manhunt, Persona 3, Odin Sphere, etc). Pulling BC support would give the developers a push to move to PS3. The counter-argument to this is Sony’s own studios are among the slowest to move. They have highly popular series such as Buzz, SingStar, SOCOM, and God Of War, but the 2007 releases from these series are PS2 only. In 2008, these series will mostly move to PS3, but that’s a pretty slow transition.

Protect PS2 Sales: Sony makes money by selling PS2 hardware and is losing money on PS3 hardware, so pulling BC support would encourage some consumers to buy new PS2 units rather than PS3s. There are two counter-reasons. First, the more PS3s they sell, the lower the price/unit is for them. Sure, they *may* lose more money by selling more PS3s (and we can’t say for sure without seeing internal financial data), but the loss per unit drops as volume increases. Secondly, it’s important for the future of the PlayStation brand to accelerate the PS3 growth and they are clearly willing to make short term sacrifices to achieve this.