It's been a rough year for Sony. The announcement of new handheld the, PlayStation Vita, has been completely overshadowed by the recent PlayStation Network hack, and back in March the Japanese earthquake and tsunami took its toll, severely disrupting manufacturing and distribution across the entire Sony corporation.
So at E3 last week in Los Angeles, as positive as the PS Vita message was - helped by a price point that surprised many critics - there were still many questions about ongoing PSN and the impact of the natural disaster on supply issues. In this interview with GamesIndustry.biz, Sony's Andrew House took all those questions on, and even had time to offer a few thoughts about pricing strategies, what's next for home 3D and rival consoles.
Q: The PS Vita price was a nice surprise at E3. But at that price is the system going to be sold at a loss form day one?
Andrew House: I think as a business it will definitely be profitable from day one. In terms of hardware specifically, it's really not something we tend to comment on, but I would say it will be a significantly better situation than for example, the PlayStation 3. This is in a much, much healthier place from a profitability stand point.
Q: There's some vagueness with a release date as well, what's holding back the decision there, beyond pegging it for release at the end of the year?
Andrew House: There's a very good and sensible reason why we haven't clarified exact timing in regions and geographies, and that's as you know, we were significantly impacted by the events of March 11 in Japan. We've undertaken, across Sony but also SCEE, a significant assessment of impact on our supply chain and what we think the long or medium term impact is going to be. Once we've completed that assessment and have a full understanding of what our supply chain looks like then we'll be in a position to be more specific about launch in specific regions.
In contrast to the PSP the [Vita] price point and the appeal of connectivity will allow us to move much more quickly into a mass market than we did previously in the portable space
Q: Are you targeting a global roll-out for all territories or will it be staggered?
Andrew House: I'm not able to talk about that at this point because of the impact of those events. It's forced a very close and well-managed assessment and once we've done that we'll be in a position to talk about specifics.
Q: Do you think the price of the console is too high for the handheld market? If you look at the 3DS it hasn't sold as well as expected because of that high-end price.
Andrew House: I think it does represent very good value for money. The reason we think that is we're talking about a very powerful device with a wonderful screen, a set of interfaces that really have never been put together in this package before and I also think that because it's a device designed with connectivity and that connected experience from the ground up it gives it a significant value to people that will justify the price point.
Q: The European consumer, the UK in particular, seems to get the rough end pricing due to currency conversions and taxes, etc. How aware are you of that complaint from consumers and is there anyway you can sweeten the deal?
Andrew House: We clearly have used content bundles as a tool to try and improve the value proposition for consumers in Europe with some degree of success. I think we need to do a better job of explaining issues around sales tax as well. The fact of the matter is the UK price will have 20 per cent VAT included in that, the US price by contrast in LA is without the sales tax included. If you're buying it in California you can add another 9 per cent thanks to Arnold Schwarzenegger. Just in terms of sales tax there's a 29 per cent difference and that starts to make the price gap a little more sense, if not fully account for it.
Q: You presentation on at E3 was very slick, and seemed mainly focused on the core audience...
Andrew House: It's interesting, you're not the first person to say that. And that's surprised me because I don't think it was at all a conscious strategy on our part. We approached it as we always do, how to show the best range of content and hardware that we have on offer. I don't think there was any particular targeting that went on from a Sony point of view.
Q: What I was going to say was, was it a conscious decision as a way to reach out to the core audience and speak to them after they've seen so much disruption due to the PSN hack?
Andrew House: I don't think that was part of our intention at all. Possibly what may have given an impression of looking for communication to the hardcore audience was an awful lot of the presentation was around Vita. It's a brand new format and a brand new device. Clearly we are looking to have the core audience be excited by that and embrace it because they are extremely important, they have a huge impact in validating the device and providing recommendations to other users. What we're trying to do is strike the balance between a phased approach to Vita. Yes, the initial purchase will be from technology enthusiasts, entertainment enthusiasts, but I think in contrast to the PSP the price point and the appeal of connectivity will allow us to move much more quickly into a mass market than we did previously in the portable space.
Q: Something that has worked with the PS3 is the update to services, the additional features that have been rolled out over time. Is that a strategy we'll see repeated on Vita?
Andrew House: I would hope so. In the case of Vita, that's where 3G connectivity provides us with a huge opportunity. We're at early stages right now so I can't point to specific apps or services that we're yet to announce, but we will be talking about those in the reasonably near future. 3G opens up a whole other area for us that we've not encounted with our devices before and gives the consumer a sense of immediacy around connectivenesss. How that will impact games is in the hands and minds of great developers that are out there working and experimenting with vita right now. That's a great opportunity to continue building value into the device long term. It was a very deliberate, conscious strategy and it allows the PS3 to have the potential for longevity. It's interesting to see my US colleagues, probably for the first time, placing an emphasis on 3D.
Q: The 3D monitor you unveiled at E3, is that coming to Europe as well?
Andrew House: Yes.
Q: Do you have a time frame for that?
Andrew House: No, but we'll be talking about that more in the coming months.
We're at early stages right now so I can't point to specific apps or services. But 3G opens up a whole other area for us that we've not encounted with our devices before
Q: It's an interesting strategy to bring down the barrier of entry to 3D gaming...
Andrew House: The intention there is two-fold. It's to lower the barrier to entry which we've heard a lot about from consumers. But it's also to demonstrate that our belief that 3D gaming and interactive experiences can be a very powerful driver to 3D in the home. And just as powerful as movies or other forms of linear entertainment.
Q: Obviously the PSN breach was a big problem for Sony and consumers, and it's going to cost in the region of $170 million this financial year. Where's that money coming from, is it going to impact development of hardware or software? Will you need to reduce development budgets?
Andrew House: No. It's a cost for which we'll have to make provisions and that I think we, ironically, were also at the same time talking about very, very strong profitability for our division overall. I'm hoping that profitability will allow us to just sustain our business at the operational level in much the same way as we would have done without any of this happening.
Q: Is there a danger of confusing the consumer by having very comparable gaming experiences on PS Vita and PS3? Why do I need both when both seem to be doing the same job?
Andrew House: But I think Uncharted is an example of where we're showing just how the new interfaces can be delivering very differentiated portable experiences in the actual play mechanics that aren't possible on the PlayStation 3 version. Our consumer is incredibly versed, really knowledgable about games and has generally has very strong opinions about the games they want to play and content they want to see. I'm sure there will be no confusion there.
Q: What was your reaction to Nintendo's console announcement at E3 and are you worried that it's going to encroach on PlayStation 3 growth?
Andrew House: Honestly, the way these conferences work, I've had zero exposure to it.
Q: But you know it's happened, right?
Andrew House: Yes, of course. I'm aware of the announcement but in terms of details I've not seen a great deal. It's intreaging, but I'm interested to hear your reaction as a journalist because I've heard varying opinions.
Q: I was confused by it. But it's too early to judge. I'd like to hear more solid technical details, game details.
Andrew House: Is it an extension of the Wii? Is it definalty a next generation step for them? Or is it like a DSiXL more?
Q: They're positioning it as new console.
Andrew House: Did they say what the additional controller strategy is going to be?
Q: It uses the Wiimote and other peripherals.
Andrew House: But that means then that the lowest common denominator is going to be a Wii interaction for the vast majority of consumers. What if you've got a family of six?
Q: You're questioning me now. [laughs] I can't comment.
Andrew House: I always wanted to do this to a journalist.
Q: But what I'm trying to get around to is, Nintendo has admitted that the third-party content they showed was footage from PlayStation 3 and Xbox 360. How do you feel about Nintendo using your content to sell their product?
Andrew House: The only thing I've got to say is mimicry is the is the highest form of flattery.