PS3 Sinks Lower

Santa was not kind to Sony, who not only suffered body blows in cameras and television product categories, but was hit hard on the PS3 as Nintendo and Microsoft saw gains. At this point the market is essentially Nintendo and Microsoft, there is no compelling reason to consider a PS3.

But early results from this holiday season aren’t promising. U.S. sales of the PS3 fell 19% last month from a year earlier, while sales doubled for the Wii console and rose 8% for the Xbox 360, according to research firm NPD. Analysts say they expect PS3 sales for this month to be flat or lower than last year, while sales for its rivals are likely to rise. And Sony may not reach its goal of selling 10 million PS3 consoles in the fiscal year through March, analysts say.

[From PS3 Sags in Battle Again Xbox 360, Wii – WSJ.com]

I’ve written a lot about this over the last couple of years because it’s a fascinating case study on how misplaced product to market trends, pricing, and the inclusion of an orthogonal product (Blu-ray) dictated aspects of product and price to great detriment.

For Sony to move forward and rescue a very expensive mistake they should consider the following steps: 1) cut the price dramatically to be price competitive with Xbox360, 2) buy exclusivity for hot game titles, 3) bundle content from Sony Pictures and integrate video title content in a streamlined online service, and package the product for family gaming instead of power gaming.

Blu-ray is stillborn, they won a war that simply wasn’t worth winning. Sony would do well to invest minimally in Blu-ray while investing heavily in online content distribution capabilities that become the iTunes for gaming consoles. Lastly, partner up with Netflix or Amazon to integrate their download services with the PS3.