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Sony and the pre-launch price cut

10 Years Ago This Month: PS3 woes begin to mount, Apple takes first step into gaming, and Curt Schilling's new studio promises to debut in "epic and remarkable fashion"

The games industry moves pretty fast, and there's a tendency for all involved to look constantly to what's next without so much worrying about what came before. That said, even an industry so entrenched in the now can learn from its past. So to refresh our collective memory and perhaps offer some perspective on our field's history, GamesIndustry.biz runs this monthly feature highlighting happenings in gaming from exactly a decade ago.

PlayStation Trepidation

Sony had a bad month in September of 2006. It started by delaying the launch of the PlayStation 3 in Europe to the spring of 2007, a full year after the system's original launch window. And even for the markets that would receive the PS3 in 2006--North America and Japan--Sony was cutting shipments in half, from 4 million total to 2 million. Launch day would be even worse, with the US receiving just 400,000 PS3s and Japan getting 100,000 systems. Making matters ever-so-slightly worse, Sony also revealed that the hardware would not ship with HDMI cables for high-definition TVs, even though the technology was such a key part of the company's strategy that it originally planned to include two HDMI ports on the system. (This would be as ridiculous as selling a handheld gaming system that runs on a rechargeable battery and giving customers no way to recharge it. But this is the games industry, so of course that happened.)

Microsoft, still riding the positive momentum of the Xbox 360's simultaneous global launch from the preceding November, took the opportunity to kick a little sand in Sony's face, with Xbox UK boss Neil Thompson saying, "We know how challenging it is to pull off a global launch, so it's not surprising that Sony has backed away from their previously announced launch plan, due to the unproven technology they are trying to pack in to their console."

While Sony's PS3 Cell processor was indeed unproven at the time, Microsoft didn't have much room to be throwing shade considering that same month it admitted Xbox 360 launch units were so prone to failure that the company would repair any systems manufactured prior to 2006 for free, and refund those who had already paid for service. It would turn out the units coming off the assembly line as Thompson made those comments were still riddled with issues, as Microsoft in 2007 addressed the Red Ring of Death epidemic by extending all warranties for the problem to three years, a move it expected to cost it more than $1 billion. (It's really kind of amazing Sony never returned fire in the same way, especially when that same month Microsoft execs were practically begging for mockery.)

Hardware failures aside, Microsoft was clearly positioned to make huge gains in market share, a fact that only became clearer as September drew to a close. While Microsoft was busy announcing that Grand Theft Auto IV DLC episodes, BioShock, and Splinter Cell: Double Agent would all be exclusive to Xbox 360*, Sony was taking the drastic step of cutting the price of the PlayStation 3 in Japan months before launch. Predictably, industry watchers did not look upon the move kindly. At a time when most consoles are hitting their stride when it comes to pre-launch hype, the PS3 was limping towards the starting line.

*"Exclusive" in the sense that all of these games would eventually find their way to PS3 and PC as well.

The Ultimate No-Hitter

Sometimes big news stories are obvious when they happen. Other times, their significance doesn't really become clear for years after the fact. September 2006 had a few stories like that, including this one about the founding of Green Monster Games.

At the time, it was a bit of a novelty story about Boston Red Sox pitching ace and noted EverQuest enthusiast Curt Schilling founding a game developer with help from comic book artist Todd McFarlane and fantasy author R.A. Salvatore. The studio would eventually change its name to 38 Studios (after Schilling's jersey number), move to Rhode Island for $75 million in loan guarantees from the state, rack up $150 million in debt and ultimately go bankrupt, all while displaying an unconscionable disregard for the impact the business' failure would have on employees who weren't even informed when the studio let their health insurance lapse.

The entire fiasco dragged on for years, and was still generating headlines as of last month. In its six years as a going concern, 38 Studios released one game, Kingdoms of Amalur, and even that was a game it picked up through the acquisition of Big Huge Games and re-worked to take place in the same world as its original project, the never-released MMO Copernicus.

In the original Green Monster Games announcement, the studio promised that it would "burst onto the scene in epic and remarkable fashion" and "turn the industry on its ear with a product release and business model never before seen." So.... mission accomplished?

How to Turn Yourself Into an Industry Caricature

That wasn't the only bit of news that gave no real indication of the turbulence to come, as Vivendi announced 10 years ago this month that it would be publishing the next game from Double Fine Productions. Studio CEO Tim Schafer praised his new partners at the time, saying, "Combine a developer-friendly attitude, support for innovation, major-publisher status with a worldwide scope and you have a perfect match for Double Fine."

Meanwhile, in a seemingly unrelated story on GI.biz that month, Activision CEO Bobby Kotick was telling investors that he was "laser-focused" on exploiting franchises, proudly talking about his strategy of "taking those franchises that we own and control, annualising them, increasing their penetration and their interest to consumers every single year."

Those two stories became much more relevant to one another when Activision merged with Vivendi's gaming business the following year, and suddenly the match Schafer talked about wasn't so perfect. Activision's primary interest in the merger was Vivendi's Blizzard subsidiary, which was made all the more clear when Kotick took a chainsaw to Vivendi's upcoming slate of games, including the Double Fine game, Brutal Legend. At the time, he said the dropped projects lacked the "potential to be exploited" in the Activision way.

Brutal Legend would seemingly land on its feet, as Electronic Arts soon announced it would publish the game. That didn't sit well with Activision, which sent EA a letter claiming it still owned the game's publishing rights. EA dismissed the possibility of litigation, with a spokesman saying, "That would be like a husband abandoning his family and then suing after his wife meets a better looking guy."

Activision sued anyway, and the two companies reached a settlement in time for Brutal Legend to make its October 2009 release. There were clearly some hard feelings, as months later Schafer would publicly call Kotick "a dick." Kotick would fire back, saying Schafer had missed every milestone, overspent the budget, and produced "not a particularly good game."

Around the Horn

  • One more from the "Didn't Seem as Huge at the Time" file: Apple launched its gaming initiative with a handful of $5 games playable on the latest models of the iPod media player. The iPod interface wasn't especially game-friendly, but Apple would improve on that with the iPhone touchscreen the next year.

Remember, you can find plenty more historical perspective on how far we have come as in an industry in the last decade (or not come, as the case may be) on the @GIbiz10YearsAgo Twitter account.