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PlayStation 2012: mid-term report

Submitted by on Friday, 13 July 2012One Comment

The first six months of the year are always quiet due to publishers holding back their big guns to catch the Christmas bonanza. However, at this stage of the generation, doubts begin to creep into our minds and we find ourselves closely monitoring the games industry, furiously checking for a pulse.

Those barren spells in June suddenly become clear and undeniable proof that our consoles are on their last legs. The PS3 is mid-way through its sixth year and is, without any shadow of doubt, an ageing piece of kit.

However, from a gamer’s perspective we haven’t exactly been short of games to play.

The PS3 boasted a strong line-up for the first six months, including The Darkness II, Max Payne 3, Final Fantasy XIII-2, Dragon’s Dogma, SSX, Kingdoms of Amalur, Spec Ops: The Line, DiRT: Showdown, Sorcery, Ghost Recon: Future Soldier, Sniper Elite V2, Prototype 2, SoulCalibur V, Street Fighter X Tekken, LEGO Batman 2, FIFA Street, Journey and others.

Let’s not forget Mass Effect 3, which – botched ending aside – was one of the biggest blockbuster events of recent years and a fitting conclusion to the trilogy.

We wouldn’t go as far to invoke the spirit of a prior UK Prime Minister by saying that we have never had it so good, but the above collection does at least stand up against any January-July collection from recent years.

Yet, the picture isn’t that rosy. Reports from GfK Chart-Track have shown that year-over-year numbers for UK games retail declined by 34% in March, 34.1% in April and 38% in May. These are overall industry numbers, not helped by declining Wii software sales or by GAME almost going out of business, but it is still a clear indication that the retail market isn’t in a healthy state.

The situation in the US hasn’t been much better with GameStop posting a 12.5% decline in like-for-like sales for its fiscal Q1. April was particularly grim, with NPD numbers showing software sales across PC, handhelds and consoles down 42% year-over-year.

The picture isn’t just bleak for retail. The last six months have seen a string of miserable announcements from publishers, platform holders and studios. We’ve seen the closure of Big Huge Games and THQ San Diego, alongside significant fiscal 2012 losses for THQ ($239.9m), Take-Two ($107.7m) and Sony’s PlayStation division ($2.8bn).

Julien Merceron, Square Enix’ worldwide technology director, has recently said to “This generation has been way too long…” Merceron isn’t alone in thinking that.

Have another look at that list of games. How many of them made you gasp with excitement? How many pushed the boundaries of what you thought the PS3 was capable of achieving? The answer is likely few, if any, but most of them would have been huge two years ago.

Take-Two CEO, Strauss Zelnick, does not share this view. Last month, Zelnick told MCV, “There is still ample opportunity in the market with the current generation, provided that you deliver the highest quality entertainment experiences – which we always aim to do.”

Take-Two managed to shift over 3m copies of Max Payne 3, and EA also totalled more than $200 million sales for Mass Effect 3. This shows that Zelnick probably does have a point; gamers are happy to spend money for something special.

However, it’s clear that the current model isn’t sustainable for everyone. Low-budget titles pose little risk so they can continue, as can AAA titles because they generate huge returns, but the middle ground is being squeezed. A huge amount of money is invested here for very little return. The troubling thing is that many good studios occupy this middle ground.

There may be a lifeline. New revenue streams are becoming available through digital retail, and we’ve already seen some major developments in this area so far this year.

NPD figures showed that in the US for Q1, the public spent $1.38bn on digital purchases, just over 40% of the total sales numbers. It is inevitable that digital sales will soon overtake traditional retail sales. No wonder EA predicts a free-to-play future.

We’ve seen a rise in premium services with both Battlefield Premium and Call of Duty Elite earning a pretty penny for EA and Activision. But these services are offering more than just an additional income stream, they are encouraging brand loyalty. Who would jump ship to another FPS after investing significant sums in one of these?

Sony is also pinning its hopes on digital revenue streams, with PSN being one of the company’s key growth areas in Kaz Harai’s One Sony realignment strategy. The platform has undergone some subtle changes over the last six months. Most were so small that you probably didn’t notice them, but they were significant.

For example, it’s now common for full retail titles to arrive on PSN at the same time as they arrive in shops. What’s more, Sony is now starting to price its items more aggressively. Gone, we hope, are the days when a game is £20 in the shop but £50 on PSN. The ability to pre-order some games is also now possible.

For Journey, we saw Sony for the first time put together a significant marketing assault for a PSN game. They got the word out and the game got the sales it deserved by becoming the fastest selling title ever released on the PS Store in both SCEA and SCEE regions. It now looks like The Unfinished Swan is being primed for the same treatment later this year. This shows Sony’s growing confidence for PSN.

These are steady improvements to the current service, but we’ve also seen Sony make some bolder moves. The addition of an Instant Game Collection to PS Plus was possibly the biggest announcement that the company made at E3.

The Instant Game Collection makes PS Plus significantly more attractive, gently nudging more PS3 users on to long-term subscription plans. This means reliable and sustainable revenue streams for Sony, but more significant is the fact it introduces a new way for us to consume our games.

For a few pounds or dollars each month, we will receive over 40 games a year. We’re not talking small games; we’ve picked up inFamous 2, LittleBigPlanet 2 and Deus Ex. These are AAA quality titles.

This service model is similar to a TV subscription package, such as the kinds offered from Sky, LOVEFiLM or Netflix. You pay your monthly fee and you get a selection of films, TV shows or channels; in Sony’s case, you get games.

Therefore, far from being a quiet few months, there’s a good chance we’ve been witnessing Sony take its first baby steps towards an ambitious and radical new way of working, a way that would represent the most fundamental change to PlayStation since the inception of the brand.

It got more interesting last week when Sony announced its intentions to acquire cloud-gaming company Gaikai in a $380m deal. This bold move paves the way for a future service whereby you can play games through an online stream. Using Gaikai, that Instant Game Collection could really live up to its time-saving moniker in the near future.

Gaikai has the potential to revolutionise Sony’s PlayStation platforms. For instance, it could solve any compatibility issues between different consoles, ensuring that your games are always yours to play and keep.

Crucially, all those PS Plus subscribers will find their transition to PS4 natural, because they can keep all of their digital content. “Once a member, always a member” will be Sony’s secret motto. You’d be reluctant to defect to another platform if it means losing your extensive library of top quality games. We hear it all the time from iPhone users. They say, “I wouldn’t mind having an Android phone, but I’ve invested too much on the App Store.”

The industry won’t change overnight. It can’t. We will continue to consume our games in the traditional way for the time being, and everything will seem rosy. Why wouldn’t it?

We have lots to look forward to, such as Assassin’s Creed 3, BioShock Infinite, Beyond: Two Souls, The Last of Us, Black Ops 2, Watch Dogs and Grand Theft Auto V. It looks good for retailers over the next 12 months, but further afield it looks bleaker for them as the tide begins to turn towards an all-digital future.


Another major point of interest this year has been Sony’s return to the handheld market with PS Vita. The console finally arrived outside of Japan in February with the most impressive launch line-up ever for a console. It boasted over 40 titles, many of which were top quality games, not the dross you usually expect at launch.

Any platform holder would be proud to launch with Uncharted: Golden Abyss, FIFA Vita, Everybody’s Golf, Rayman Origins, MotorStorm RC and the wonderful WipEout 2048, to name just a few. It was certainly a more glorious start than PS3 had. Can everyone remember Genji?

Yet, the decision to throw everything out at launch left us with few games to get excited about post-launch. This was a big mistake. Sony’s been in the game long enough know that the 24/7 game news cycle never looks back, that gamers have an insatiable appetite that must be fed on a weekly/monthly basis otherwise they lose interest.

We have regularly seen the PS Store update with little content of note for Vita. In addition, Sony has been slow to get PSone Classics on the device, so we can completely understand why some say “Vita has no games”. It’s a false claim, but it’s all about perception.

Perception issues have dogged Vita so far. Some perceive it as being too expensive, as not having enough games and as having no chance of surviving the threat from smartphones and tablets. A lot of it may also come down to trust. Many felt burnt by their PSP experience, a device that Sony failed to properly support in its later years, and they will be reluctant to jump in earlier this time.

Whatever the reason, Sony must do a better job of promoting Vita if they intend on reaching their expected figure of 10m units worldwide. It’s nowhere near reaching that target on current form. Only 1.8m units had been shifted when we last got an update, which was back in May. Sales have been reasonable in most territories but they are dire in Japan, where it has shifted as little 10k units in some weeks.

There has been a spike in recent weeks following the release of Metal Gear Solid HD Collection and Persona 4, suggesting that Japanese gamers have been waiting for their favourite games to arrive before upgrading. That excuse doesn’t work so well in other territories because there has been an excellent selection of Western-focused games.

Sony needs to market the device better. We still chat to people in the street who have never heard of Vita, never mind know what it’s capable of playing. The World is in Play ad was fun but it didn’t attempt to get across Vita’s strengths: its stunning OLED screen, excellent control interface, full PSN support, cross-play, its games, etc.

We’re otherwise happy with how Vita is coming along. We get nothing but praise from friends and strangers whenever we give them a shot of ours. That’s always a good sign, but Sony has some way to go before everyone can start believing that Vita is going to be around for the long haul. Maybe an Instant Game Collection could help.

How’s the year been for you? Has it exceeded your expectations or are you growing weary of this generation and waiting for the next leap forward? Let us know in the usual place below…