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WWW.MCVUK.COM
MCV INTERVIEW ANDREW HOUSE, PRESIDENT, SCEE
House pricing Last week, Sony confirmed at Gamescom that it was introducing a new, slimmer PS3 model – and dropping £50 off the UK price, taking it down to £249.99. Michael French speaks to SCEE president Andrew House to find out about Sony’s thinking behind the cut and its hopes for a sales uplift… Why was now the right time to drop the price? It’s simple: we have been able to secure a full redesign. It’s the point in the PS3 lifecycle that allows for some critical cost reductions. In keeping with past formats this price cut is about passing on as much of our cost savings as possible to consumers. It’s consistent with what we said before; that we would do it when the price was right. The other point I would make is that experience in past lifecycles has told us that you get few opportunities to address price, and the way to make the most of it is by having a significant price reduction to get as much impact and momentum as you can. Is £50 a significant amount to consumers? There’s a different mindset or attraction to bigger numbers like £100 – in the US and Europe the machine has come down by €100 or $100. I do think £50 is still significant. Is 100 better than 50? Of course, consumers will always say yes to that. But within the current regiment we have right now we have passed on as much as we could. There was much demand for a price cut and lots of speculation. Did that create adverse pressures for Sony in the wait for the cost-reductions? No, that’s part and parcel of being in the hardware business. There are always expectations on new iterations of the hardware and expectations on delivering value for the consumer. We’re just as conscious of that as anyone else is. But as we said at E3, we had to wait for a number of different factors to align; the cost of making the units had to come down, as did the lead time for manufacture. A fairly radical amount of design work has gone into addressing the lower weight, lower power consumption as well as the physical form factor.
There’s been a year-on-year decline in PS3 console sales. Will the new price and model reverse that trend? I hesitate right now to make predictions for a couple of reasons. We haven’t yet launched the console – but we have very high hopes for it and think it will deliver a significant increase on our sales. Vis-a-vis the competition, especially in Europe we are competing quite heavily head-to-head with Microsoft and this gives us an opportunity to compete even more aggressively with them. The other factor that leads me to be hesitant to make predications is that we are in a seasonal business, and I think it would be wrong to make predictions based on the summer seasonality we’ve seen so far. Several people have also asked me if we’re seeing an impact from the economic crisis – there are some reports in the US that say the industry is, but I think it’s too early to say how we are affected until we’ve seen the full year figures.
shifted the lifecycle from the short-form toy lifecycle to a more sophisticated, electronics device lifecycle. Consumers are more receptive to that – after all, people only upgrade their TVs every five years or so. We’ve got a very future proof machine that I think consumers will appreciate. So is there even an opportunity to outlive the rival consoles? I don’t want to make predictions about the other consoles lifecycles. But what I do know is that we are on track for a lifecycle of over 10 years.
So there’s still an opportunity in your eyes to convert that PS2 audience to PS3? Definitely – our early successes on PS3 will have come from those dedicated consumers who saw the device as an extension of what they wanted. For us it’s a question of knowing what will prompt consumers to migrate to a new platform – it’s a case of key titles, the age of consumers, the move to hi-def movies and price.
If, come October, retailers were to say that the PS3 still isn’t selling the way they want, what opportunities are there It’s a question of knowing for Sony? Can you lower what will prompt PS2 the price more? consumers to migrate to the I will make a prediction there – I don’t think we new platform. will be having too many of Andrew House, Sony those discussions. But let’s talk in a few weeks once we’ve seen There’s talk of another 360 price how well the machine has sold – there cut – and Microsoft’s machines are will be a lot to say then, I think. already cheaper than PS3. Are you comfortable with the PS3 still being There seems to be a quiet at the premium end of the market? confidence about that statement. I’d rather wait before giving you a full Sony talked often of the 10 year If we look back at when we made answer to that, until I know what the plan – is that still an active strategy? similar price moves on PS2, there was a competitors’ offers might be. What I Or is the price and new form factor significant uplift in the business. will say is that sales for PS3 and even evidence of you tweaking that plan? Obviously I don’t want to be overly PSP have been bang on track with what This is exactly as we planned it. In fact I we expected this year – so our price cut confident, we are in a different lifecycle think it’s the ‘10 years plus’ plan. With and a different set of economic will take them even higher. We have this new device there is the opportunity circumstances – and we will be mindful something of an advantage as a company to exceed the existing lifecycle of the of that. But when we moved the price in that we benefit hugely from PS2, the PS2. What I am excited about with the before, it really delivered – so I’m numbers are far ahead of where we PS3 business is that now that we have hopeful that will happen this time. expected them to be. It sells very well this new model we are able to offer a in many markets, especially North new value proposition to consumers What about stock of the new America, and that’s something coming on board for the first time. At console – will there be enough? publishers recognise and are mindful of. the same time, because we have a That’s one prediction I will go out on a network device and are continually limb on – I’m very pleased with how So there are new games for PS2 this refreshing and improving the network, we have managed our inventory on the year? Or is it just back catalogue? we are able to add value for existing existing model. We’ve done that very There are a decent number of releases users. Those two trends are very well in Europe and have had fantastic heading for it this year – and going beneficial for the consumer and bodes support from our parent company to forward there is an opportunity for us to well for the business. deliver good supply. There are trucks work with publishers to keep those It’s no secret that since Sony has been consumers who haven’t yet walked and trailers leaving right now – it’s on in the games business that we have the road. And not under wraps any more. away from that device satisfied.
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